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The golden rule of trading is: "Keep your losses small and let your profits run." Stop losses provide a sign that it is time to exit your position as the trade is no longer co-operating with your initial view.

Watching your hard-earned capital disappear down the drain is never a pleasant experience. Most people actually quit trading after their first four or five losses. That's why this is a game for grown-ups with a high level of emotional maturity. As long as the lessons learned from a losing trade outweigh the emotional torment, it's likely that you will stick around long enough to learn how to trade with skill.

Setting a stop loss is an imperfect science. It is in fact one of the most frustrating areas of trading.

There are primarily three types of stop losses:

1. Initial stops
2. Break even stops
3. Trailing stops

Initial Stops

An initial stop is designed to protect your capital. Despite all of our efforts in the analysis component of trading, most traders find that they only make winning trades less than 50% of the time. Even though this sounds discouraging at first, it is the adage of keeping your losses small and manageable, and letting your profits run that will ultimately lead to the possibility of extracting great profits from the markets. If you enter a trade and almost immediately the darned thing heads downward—then you need to exit. Your initial stop loss will help to prevent your equity from washing away.

You may also need to consider a 'time stop'. Consider exiting your position if the share hasn't cooperated with your initial view within a particular time frame (for example five days).

Break even Stops

A break even stop will help lock in a no-loss trade. This type of stop is implemented once a trade has begun to co-operate and there is now little threat of your initial stop being hit. It's always a great feeling when you can move your stop up to cover the costs of your transaction. At least when you’ve moved your stop to break even, there’s a chance that you will end up with a profitable trade. The goal transforms from protecting your equity to protecting your profits.

Trailing Stops

Once the share has trended strongly in the expected direction, you can follow the trend by moving your stop upwards. This will result in you exiting the trade with a profit in your account. Many people don't set a trailing stop and watch their share spiral skywards to an amazing level, but only exit their trade when they have incurred a loss. Learn to protect your profits as well as protecting your initial capital and you’ll be well on the way to trading profitably.

Choose a technique that you feel will suit your trading plan and your personality. Commit to a method and follow it. Write it down in your trading diary. We’ll discuss these methods in more detail in up and coming newsletters. Maximise your chances of success by considering these concepts before you make your next trade.

- Louise Bedford

This informative article was contributed with the kind permission of Louise Bedford who is one of Australia’s most recognised private traders. She is also the best-selling author of The Secret of Writing Options, The Secret of Candlestick Charting, Trading Secrets and Charting Secrets.

I highly recommend them to you as they are invaluable in locating those profitable stocks.
You will find this article plus a host of other invaluable information by clicking on this link
www.tradinggame.com.au

Australian employment kicked up by an unexpectedly higher in June, surprising markets and economists. But it’s not going to last.

With the likes of Southern Pacific Tyres and Insurance Australia already revealing plans to scrap 1200 jobs over the rest of the year, and hundreds of jobs to be cut at Qantas, employment is going to come under renewed pressure.

The Australian Bureau of Statistics reported that an extra 29,800 jobs were created last month, compared to the market forecast of just 10,000 and the near 20,000 drop in May (which now looks like 25,600 after revisions. It was originally around 19,700 in the first report last month).

In fact the net addition to the jobs market was less than 4,000 or so after taking account of the larger fall in May. That is not going to stampede the horses at the RBA.

Four extra thousand jobs over two months isn’t a big worry: it’s almost ’statistical noise’. Seeing employment is a ‘lagging’ indicator, it was probably more a reflection of what was happening several months earlier.

But economists point out that 44,000 jobs were created in the June quarter, compared to an average 74,000 a quarter in the past two years: that’s clearly a slowing in job creation and is what the RBA will focus on.

The RBA referred to the May job losses in its statement after its board meeting on July 1. They won’t get a mention next month.

The ABS said full-time employment increased by 24,000 to 7,664,600 and part-time employment increased by 5,800 to 3,051,100 while unemployment fell 2,800 to 473,800 people. That saw the unemployment rate eased to 4.2% from, 4.3% in May.

The news won’t change the Reserve Bank’s current stance of not doing anything with interest rates, but it’s another oddity to go with the sharper than expected 0.7% rise in retail sales in May.

Both sets of figures contradict other surveys like the consumer and business confidence surveys out this week which showed multi-year lows, and three performance surveys for services, manufacturing and construction, which showed a contraction last month.

Insurance Australia announced Wednesday it would cut 600 jobs, or about 5% of its local workforce, to help lower annual costs by $130 million. Goodyear Tire & Rubber Co., the US tyre maker, said last month it will close its South Pacific Tyres factor in Melbourne factory and shed 600 workers. Qantas has warned that jobs will go as it downsizes in coming months, cutting routes and ending services permanent. At least six big jets won’t be needed, and that estimate could climb.

The news came as the stock market seemed to steady after a sharp opening loss after Wall’s Street’s nasty 2% fall across the board, with eh key Standard & Poor’s 500 index dropping into bear territory, joining the Dow, Nasdaq, our market and others.

The major indices finished down around 1.4% yesterday after being down 1.6% at one stage. It wasn’t a convincing end to the day’s trading.

The latest jobs figures were released as the latest assessment of the Australian economy was also made public by the International Monetary Fund.

In it, the Fund the made the usual warning about the need for the RBA to be ready to tackle inflation, but seeing as how the bank has moved to lift rates before most, if not all major central banks around the world, that seems to be a bit ho hum.

“Sound macroeconomic policies and structural reforms have delivered a prolonged expansion, but recently the economy’s productive capacity has become increasingly stretched,” The IMF said at the start of its commentary, which seems a lot like it came from a recent Reserve Bank statement or three.

“The commodity driven boom has pushed up against capacity constraints, with unemployment falling to the lowest rate since the mid-1970s and capacity utilization rising to historic highs.

“As inflation accelerated over the past year, the RBA appropriately tightened monetary policy, and fiscal policy in the latest budget is providing needed support.

“The global financial turmoil that emerged in mid-2007 and the extraordinary jump in Australia’s commodity export prices in recent months present additional challenges.

“Underlying inflation is the highest it has been since the introduction of inflation targeting in the early 1990s, and monetary and fiscal policy will need to focus on reducing inflation,” The IMF said in a comment that sort of states the obvious.

But the organisation did make one comment that many Australian investors continue to ignore.

“”The global financial turmoil has illustrated the resilience of Australia’s financial system and highlighted the role of the sound macroeconomic policy framework, the flexible economy, and the importance of structural reform.”

In other words the IMF reckons the Australian economy and financial system is strong enough, and sound enough to withstand the continuing pressures from the credit crunch. It’s a comment worth remembering, especially as we look at the damage being done in Britain and the US to their financial systems and economies.

On the outlook for the economy, the IMF again seems to be quoting from the RBA:

“We share the authorities’ view that activity is beginning to slow as required to reduce inflation.

“Growth in real domestic demand has begun to ease with the rise in debt-service costs, higher energy and food prices, and a decline in confidence.

“However, the jump in commodity prices and cuts in personal income taxes will provide support for economic activity.

“Our baseline forecast is that real GDP growth will decline below trend for the next two years, easing domestic capacity constraints and returning CPI inflation back within the target band over the next two to three years.

“Slowing domestic demand and higher terms of trade should narrow the current account deficit.

"The outlook is more uncertain than usual because of large countervailing forces. In our view, the balance of risk to growth is tilted toward the upside, stemming from the recent jump in commodity prices, sizable immigration flows, and the increase in state infrastructure spending.

“These factors could offset the impact of weaker consumer and business confidence and support domestic demand.

“On inflation, the risks are clearly on the upside. Further increases in energy prices are in the pipeline and capacity constraints, especially in the mining and housing sectors, could push wage and CPI inflation higher than envisaged.

“On the downside, a global slump could weaken export demand, and further international financial turmoil could tighten credit conditions and increase banks’ funding costs. In addition, farm output may not rebound from the drought as expected.”

“The highest underlying inflation in more than a decade presents a significant challenge. A firm monetary policy stance is essential for keeping medium-term inflation expectations well anchored.

“The risk that wage inflation will rise further if CPI inflation persists at current levels calls for the RBA to maintain a tight policy stance until it is clear that inflation will abate. Reducing inflation back within the target range will require a significant easing in domestic demand growth.

“With the risks to inflation on the upside, the RBA should be prepared to tighten quickly if leading indicators suggest that domestic demand will not slow as expected or the outlook for inflation deteriorates.

“The existing inflation-targeting framework is appropriate. The benefits of the framework are illustrated clearly when there are large shocks to inflation.

“Despite the pickup in short-term inflation expectations, the absence to date of a notable acceleration in wage inflation demonstrates that the RBA’s inflation target has helped to anchor medium-term inflation expectations.

“The flexible exchange rate has been helpful for monetary policy. The appreciation in recent years, driven by higher terms of trade and interest rate differentials, has contained inflation by reducing import prices and lowering demand for domestic resources.

“We estimate that the currency is above its long-run equilibrium level, reflecting positive interest rate differentials that have attracted capital inflows.

“Over time, the currency is expected to fall back toward equilibrium as the RBA reduces the cash rate once inflation moderates.

“However, with a portion of the improvement in the terms of trade likely to be permanent, the currency is expected to remain above its average for the last ten years.

“In recent years, the build-up in foreign debt, especially short-term debt, has increased external vulnerability. Mitigating factors include the limited currency risk associated with the foreign debt, low public sector debt, the healthy banking system, and the sound macroeconomic policy and financial supervision frameworks.

“Australia’s current account deficits largely reflect high investment rather than low saving, and should be sustainable as long as investment leads to growth in export capacity”.

“The soundness of Australia’s banks was demonstrated during the recent global financial turmoil.

“Since banks had minimal exposure to sub-prime assets, the main impact of the crisis was a sharp increase in funding costs.

“Although the major banks were able to maintain access to offshore markets, the turmoil highlighted financial institutions’ vulnerability to rollover risks arising from short-term wholesale funding.

“Some of the smaller financial institutions that relied more heavily on capital markets, particularly securitization, for funding were more affected than institutions that had sizable deposit bases.

“Nevertheless, banks remain profitable and well capitalized, and asset quality is high by international standards, despite a marginal increase in non-performing loans.

“It is encouraging that banks are drawing lessons from the global turmoil, and are increasing liquidity as well as lengthening the maturity of their funding and diversifying the sources.

“Our analysis using extreme stress test scenarios applied to the large banks suggests that they would remain resilient if there were a jump in funding costs or a sharp increase in mortgage loan defaults.”

This Information is provided to you by the Australasian Investment Review (AIR).
Subscriptions are free at www.aireview.com.au

AIR reports about financial markets and investment products in the widest sense possible. The AIR website and all its contents is prepared for general information only, and as such, the specific needs, investment objectives or financial situation of any particular user have not been taken into consideration. Individuals should therefore talk with their financial planner or advisor before making any investment decision.

There’s a certain amount of highly irrational thinking going on in the market, aided by the active shorting of shares reporting bad news.

We’ve seen it time and time again: more recently with GPT, which brought much of its sell-off on its own head.

GPT shares fell another 11 cents yesterday to close at $1.62. It’s getting painful

Yesterday CSR was hammered after falling short of market expectations for 2009 earnings guidance. The shares dropped 16% at one stage before finishing down 14.7% at $1.97.

CSR hadn’t been below $2 since mid 2004. It was the biggest fall in more than 20 years.

The greedy folk in the market had been looking for 14%, CSR promised 5%, which given the problems in the Australian home building industry, especially in NSW where CSR is strong, is not bad going.

CSR had forecast fiscal 2009 EBIT to grow organically and as a result of the positive impact of its glass business.

That was after 2008 saw earnings down 35% on 2007, thanks in part to lower world raw sugar prices and unprecedented wet weather in Queensland.

Group EBIT was $386.3 million, down 5%.

Obviously quite a few analysts and others who should know better have been too optimistic about some companies and the performance of the industry/industries they operate in.

CSR is big in building products, and in sugar, aluminium and property development.

Of those sugar has improved because of the commodity boom but CSR is a price taker with Brazil, India and Thailand influencing prices, as well as the growing ethanol industry, also in Brazil.

Housing is weak: the building approvals figures make that clear, as do the housing finance figures this week for May which showed a sharper than expected fall in loans and the value of approvals.

Mr Maycock said group like-for-like earnings before interest and tax (EBIT) for fiscal 2009 was expected to be slightly above the previous year, as CSR benefits from a full year of earnings from its Viridian architectural glass business.

“Overall EBIT (IS) currently expected to increase more than five per cent,” he told shareholders according to a slide pack released to the stock exchange.

Mr Maycock also forecast building products like-for-like earnings to be ahead of last year, but cautioned that market conditions remain uncertain.

Sugar EBIT is expected to be higher than last year, based on average weather conditions and current raw sugar prices.

Aluminium EBIT is projected to be slightly lower than last year.

But after hearing what many took as a ‘downgrade’ at the AGM in Sydney, CSR shares were sold off sharply, losing almost 14% in value as they plunged to $1.995 in afternoon trading yesterday.

CEO Gerry Maycock said outside the meeting that the decline in the share price recently had been part of an overall market trend.

“That is symptomatic of the general sentiment in the sharemarket where people are very sensitive to anything they perceive as bad news and there tends to be overreaction,” he said.

Earlier, CSR shareholders had been told that it expects group earnings before interest and tax rise by more than five per cent in the financial year ending March 2009.

Chairman Ian Blackburne told the meeting that the company was frustrated with its recent share price performance.

“Clearly the past year has been a volatile period on world markets,” he said.

“The on-going fall-out from the credit crunch in the US, together with a rapid increase in the price of oil and many resources, driven mainly by economic expansion in the developing world, has put stress on several economies including Australia.

“Investors are cautious and CSR, like most other companies in our market, has not been immune from the effects.

“Like you, we are also frustrated with the share price performance recently.

At least CSR is being upfront with the market and investors.

The CEO also said after the meeting that the company had found the Australian housing market has softened in the past three months.

“It is clear in the last three months there has been a softening in the housing market outlook,” Mr Maycock said.

“NSW remains pretty soft, and we’re seeing some reduction in confidence in Queensland which had been one of the fast growing states.”

“In Victoria, things are looking a little better but still some softening of sentiment.”

Mr Maycock said lower consumer confidence levels coupled with high interest rates was hitting the housing market.

“Overall it is a combination of sentiment, interest rates, house prices remaining high and just general consumer confidence which seems to have taken the wind out of the sails of the market,” he said.

The Chairman told the AGM that: “Some of our core business sectors, such as housing, continue to be challenging.”

“We are seeing clear signs of interest rate stress and loss of consumer confidence.

“Having said that, we are focused on the medium term and I believe CSR is establishing a strong platform for growth to continue to deliver value for shareholders,” he told the meeting.

The market wasn’t listening. For that blame hedge funds and others

This Information is provided to you by the Australasian Investment Review (AIR).
Subscriptions are free at www.aireview.com.au

AIR reports about financial markets and investment products in the widest sense possible. The AIR website and all its contents is prepared for general information only, and as such, the specific needs, investment objectives or financial situation of any particular user have not been taken into consideration. Individuals should therefore talk with their financial planner or advisor before making any investment decision.

Si hablamos de ultrasonidos, quien más quien menos tendrá una vaga idea de qué son, y dónde se utilizan. Sabemos que son sonidos de una frecuencia mayor a los 20 kHz, y que nos los podemos encontrar en ciertas máquinas que se usan para hacernos exploraciones, como son las ecografías.

Pero en cambio, poca gente ha oído hablar de los infrasonidos, y no por eso están menos presentes en nuestra vida diaria. Veamos a qué nos referimos.

Por infrasonido entendemos aquél sonido cuya frecuencia es menor a los 20 Hz. Algunos de nuestros animales más grandes pueden llegar a detectarlos, como es el caso del elefante, que escucha tonos de hasta 15 Hz.

De la misma forma, las ballenas emiten sonidos de baja frecuencia para comunicarse a distancias de kilómetros. Incluso la propia tierra produce vibraciones de baja frecuencia, como es en el caso de los terremotos. De ahí que algunos animales sean capaces de percibirlos antes de que se produzcan.

No tenemos que confundir escuchar un infrasonido con no sufrir sus consecuencias, ya que no es así. Aparatos como calderas, aviones o automóviles emiten sonidos en este rango de frecuencias, y aunque no afectan a nuestra capacidad auditiva, bien pueden causarnos vértigo, náuseas o dolores de cabeza.

Y si subimos un nivel más, estos sonidos de baja frecuencia pueden causar resonancias en las cavidades corporales, pudiendo lesionar los órganos internos. Es para pensárselo a la hora de ponerse delante de un altavoz en una discoteca…

Pero no tenemos que irnos muy lejos para encontrar infrasonidos. Nuestro propio cuerpo emite en esta frecuencia al hacer cosas tan sencillas como mover un brazo. El músculo, al cambiar de longitud, hace que sus fibras vibren y produzcan este tipo de sonido.

Si queremos comprobarlo, no tenemos más que hacer este sencillo experimento: coloquemos los dedos pulgares sobre nuestros oídos, y cerremos los puños. Conforme vaya apretándose cada mano, iremos oyendo un sonido sordo producido por la contracción de los músculos del antebrazo.

Sabiendo que existen todos estos sonidos fuera de nuestro rango auditivo, ¿preferiríais poder escucharlos?

Vía | Neurociencia. Explorando el cerebro
Más información | Infrasonidos
En Genciencia | Sonido

By Michael Yardney

A recent survey in The Economist Magazine suggested that Australia has the most over valued residential property in the world. Once again they predict a property crash in Australia as do a number of commentators

This makes for scary reading and I understand why many home owners and investors are nervous, but a property crash is not on the cards for Australia.

Sure our property boom is over - but that doesn't mean we are going to have a property crash.

There is no doubt that property markets have a lot to contend with this year. Apart from rising interest rates, our property markets had to deal with a global credit crunch, the U.S sub prime crisis, a U.S economy heading into recession, the stock market down turn, plummeting housing affordability, unprecedented rental supply shortages and lenders tightening there belts.

So it is not surprising that one questions whether Australia's property market can survive all these blows or will they suffer the same fate that is happening overseas.

The recent U.S.A. National Association of Realtors house price survey recorded an average 7.7% drop in property values for the year of March. This is the biggest on record since 1982. In some states, including California and Florida, property values have plummeted by up to 30%. There are even reports that some financiers are repossessing homes and then asking the owners to stay there rent free just to protect the property from vandals.

Property values have also crashed in Brittan but not to the same extent as the USA. Britain is also suffering from the fallout of the American sub prime crisis with lenders severely restricting funding for investment properties.

So…… why do I think The Economist and other property commentators have got it wrong?

Firstly I could say The Economist was wrong when it made similar predictions 2 years ago. At that time they predicted a property collapse in Australia yet property values in most of our capital cities have increased by ten, fifteen and in many cases over twenty percent in the last year alone. Of course a counter argument could be: " Well all is means we are now in for a bigger crash!"

I believe the doom-sayers have got it wrong is because they don't understand the difference between the fundamental of the Australian property market and those overseas and the difference between this property cycle and previous property downturns.

In America many residential housing loans are "non-recourse loans." In other words lenders don't have to personally guarantee their loans. They can walk away from their loan commitments, leave their house to the lender and the bank can't make them pay for any short fall when (and if) they sell the property.

This is why you will often see different investment strategies used by property investors in America where the mortgage stays with the house and not with the borrower.

Obviously here in Australia you can't just walk away from your loan. If you can't make the re-payments, the banks may take over your property and the day of reckoning will eventually come when you will have to pay the bank for any shortfall they have after repossessing your property.

Our local housing market is underpinned by the fact that 70% of Australians own their own homes or are paying them off. Considering the strength of our property markets over the last few years, unless you they bought recently or over committed, many Australians have a large amount of equity in their homes and a significant proportion have no debt against their homes.

We are investing in a market dominated by non investors. As apposed to shares investors, home owners don't just sell their house when the news is bad or property market is flat.

If you think about it, at any one time only about 5% of property owners are going to need to buy or sell their homes. This means the majority of property owners are not really affected by what is happening to property values as they are in it for the long term. They won't need to sell their properties if conditions in the property market get worse. This is obviously very different to the stock market where as the share prices plummet, more investors have to sell to cover their margin calls accelerating the drop in share prices

There are many other strong fundamentals that should prevent our property markets from crashing. Our market conditions are very different to previous property downturns.

Currently we have a robust economy, strong population growth, changing demographics a huge deficiency for properties for both owners and tenants, and rising the building costs. All this points to a short downturn with the fundamentals underpinning the next stage of the property cycle.

In previous property market downturns we had an economy in recession, while today our economy is strong and buoyant.

In previous property market downturns immigration fell, as people didn't want to come to a country with an ailing economy.

This time round Australia is experiencing a population boom, with the current rate of population growth the highest in almost 20 years. Recently released Australian Bureau of Statistics figures reveal that the Australian population increased by 331,872 new residents or 1.6% over the 2007 calendar year. Our rate of population growth has not been this high since 1989. In general these are highly skilled business migrants that are coming with money who are keen to buy houses. Many of these migrants are from Generation X or Y and are balancing our aging natural population. This is a good thing and something the ailing property markets in the USA and Britain would be desperately jealous of.

At the same time our changing demographics, the fact that we have more single and two people households, means that we need more dwellings for the same number of people.

In previous property market downturns we experienced an oversupply of properties. Over- enthusiastic builders built too many apartments and excited property investors put too many new properties onto the letting market. This increased supply of stock in the presence of decreasing demand meant that both property prices and rentals had to fall.

This time round we have a deficiency of stock in the presence of strong demand.

If we combine the low number of new constructions with the shortage of available property supply, accentuated by higher building costs and banks tightening finance for new development, we have a volatile mixture that can only lead to a much higher cost of the next round of new dwellings to be built.

What about all the news of rising interest rates and mortgage stress?

In previous property slumps we had low employment. Rising unemployment with no wages coming into the household meant families were forced to sell their homes. Today we have full employment, which means that even though there are higher loan repayments stretching family budgets, with house hold incomes of rising it's not likely that owners will walk away from the houses.

Another factor suggesting this property downturn will be short lived is the strongly rising rentals that property investors are receiving all around the country. Rental increases usually lead to rising property values as investors come back into the market chasing stronger yields.

Putting all this together it is unlikely that a property crash is on the cards.

Our property markets are behaving normally working their way through the individual property cycles. Within each state the property markets are fragmented with some suburbs, in particular the more affluent near city and bayside suburbs, still performing strongly, while other suburbs will languish.

Understanding these cycles means that there are great opportunities out there for property investors who are selective and think long term.

Michael Yardney is Director of Metropole – Property Investment Strategists, and a leading property commentator and publisher of Property Investment Update. He is also author of How to Grow a Multi Million Dollar Property - in your spare time and co author of All You Need to Know About Buying and Selling Your Home.
Subscribe for free at www.PropertyUpdate.com.au

This article is contributed by InvestorsDirect with the aim to help you become more knowledgeable in Property Investment. Visit their website for more detailed information www.investorsdirect.com.au

Takeover favourite last week, now a rare profit upgrade: Macarthur Coal has certainly had a busy few weeks.

And, it seems that for once in the past couple of years, it's been good news from Queensland’s strained coal handling infrastructure, rather than the usual litany of bad reports. The company had better than expected coal shipments last month, allowing for the improved profit outlook.

The company yesterday increased its annual profit guidance by around 19% after a rise in expected sales.

Without the takeover talk, yesterday’s upgrade would have been enough to get most analysts re-rating the company’s outlook for 2008-09.

It now expects net profit after tax (NPAT) of between $80 million to $90 million for 2007-08, less than two months after providing guidance of $67 million to $75 million for the year.

“The revised NPAT forecast follows increased coal sales and shipments in June, due to a reduction in the vessel queue at Dalrymple Bay Coal Terminal, providing the ability to load more vessels than forecast,” acting chief executive Peter Kane said in a statement.

Macarthur shares gained a few cents in the morning, by then went for a good gallop in the afternoon, finishing up nearly 12%, or $1.80 at $17.10.

It was a big reversal of the weakness seen after a stalemate appeared on the share register with ArcelorMittal, the world’s biggest steel maker, Posco of South Korea, the world’s number 4 and the Chinese trader, CITIC having large stakes, but not able to exert control.

Once the market saw that there would be no bid, despite Posco buying its 10% stake at $20 a share and Arcelor getting some of it's 19.9% for around the same price, the shares plunged.

They went lower in the bumpy trading this week, but jumped sharply on the unexpected good news.

Mr Kane said the revised forecast demonstrated a substantial improvement in the second half of the year for the company, compared to the first half profit of $13.5 million.

Macarthur’s largest customer ArcelorMittal is now the company’s biggest single shareholder with a 19.9% stake.

Chinese group CITIC has a 17.7% interest, while Posco - another Macarthur customer - has a 10% stake. Former founder, Ken Talbot’s holding in Macarthur now sits at 4.76%.

Macarthur supplies more than a third of the world’s pulverised coal from its two operations, Coppabella and Moorvale, which are in Queensland’s Bowen Basin.

Its results have been hit in the past two years by the shortage of capacity on Queensland railroads and in the export ports, forcing it to cut shipments and earnings. Its mines were affected by heavy rain earlier in the year.

“The current upgrade to our profit guidance comes as a result of higher than expected coal deliveries in June,” Mr Kane said in the statement to the ASX.

“This is particularly pleasing considering operations at Coppabella continue to suffer residual effects from flooding in the Bowen basin earlier in the year.”

The company will report a $28 million gain on the sale of a 19.61% in the Monto Coal 2 mine, it also said.

And Retail Food Group Ltd (RFG) is another with good news for the market, although its improvement has been long anticipated since a slew of acquisitions in the past year.

The company, which is a ‘carb’ retailer in that it sells yummy things like donuts, French style pastries and bread, as well as coffee and other food, has gained a bigger footprint in the Australian retailing sector as a result of its purchases.

It said yesterday that it now expects full year profit to rise by at least 116% thanks to the acquisitions of the popular Brumby’s Bakeries and Michel’s Patisserie franchises.

The company said unaudited accounts point to a net profit between $16.3 million and $16.8 million for the year to June 30, 7/08, up from the $7.52 million earned in the 2007 year.

It also expects earnings per share (EPS) to grow by around 75% to 18.4 cents, from 10.5 cents, beating its guidance for EPS of 15.75%.

CEO, Tony Alford said in a statement to the ASX that “The business operations of RFG and its franchise systems performed strongly throughout the financial year notwithstanding the well founded and highly publicised commentary regarding continued deterioration in discretionary spending and depressed consumer sentiment,”

RFG bought the Brumby’s Bakeries and Michel’s Patisserie franchise systems in the first half of the financial year.

It said increases in network revenues, due to new outlet growth and average weekly sales growth across each of the company’s Donut King, bb’s café, Michel’s Patisserie and Brumby’s Bakeries franchises have also contributed to the result.

RFG will report its full year figures next month.

RFG shares jumped 12 cents to $1.35, a rise of 9.7% on the day.

I have decided to publish every time I change my portfolio or add to it.So Watch this Space as I have decided to trade a bit more often then I have in the past, as I have more time available to me now.

Today I increased my holdings of Imperial Oil & Gas.(IMP. ASX Code.) The reason for this purchase was that the share had dropped down from .02 per share to .014 cents per share.
The only reason that I can see for this dramatic drop was by margin lenders selling off stock.

With what I already held it reduced my entry price to 0.132 cps.

The fundamentals are good,they are expanding their gas wells in the USA by another 40,they have experienced 100% success rate in drilling the last 24 gas wells.They are looking at locating more areas to prospect plus are on the acquisition trail.They are cashed up and are currently selling off Beemax (BMX) which is being taken over, for a nice $14,000,000.

Incidentally this stock was tipped by David Hasselhurst ( The Speculator) a few months ago in the “Money Magazine.

For more details go to www.asx.com.au/ and do some research or check my past posts on IMP in My Portfolio

The stock closed at 0.15 cps today at close of market.

No es nada fácil encontrar un fósil. Exige estar buscando en zonas muy concretas durante mucho tiempo, para sólo contar con una pequeña probabilidad de encontrarse con un resultado satisfactorio.

Pero hasta que no leemos unos cuantos datos, no podemos imaginar la cantidad de condiciones que se han tenido que cumplir para que un hueso se haya podido conservar durante miles y miles de años.

Veamos cuales son esas condiciones.

En primer lugar, está la ubicación. Sólo el 15% de rocas cumplen con las condiciones idóneas para conservar fósiles. Se tiene que acabar enterrado en un sedimento en el que poder dejar una impresión. Además, no podemos acabar expuestos al oxígeno, para lograr así que las moléculas de nuestros huesos y algunas otras partes sean sustituidas por minerales disueltos, con lo que tendremos creada nuestra copia.

Luego viene el transporte. Al tener que sufrir durante miles y miles de años el movimiento de la superficie terrestre, tendremos que haber quedado de alguna forma que seamos reconocibles, si al menos pretendemos que reconozcan a qué raza pertenecíamos.

Pues bien, se cree que sólo un hueso de cada mil millones llega a fosilizarse.

O dicho de otra forma, el legado fósil de todos los estadounidenses (unos 270 millones de personas con 206 huesos cada uno) se compondría de un total de 50 huesos. No nos llega ni para un cuarto de esqueleto.

Pero aún hay más problemas. Estamos diciendo que esos 50 huesos se conservarán, pero no que se encontrarán. Sabiendo que se puede encontrar algo enterrado en un área de unos 9,3 millones de kilómetros cuadrados, que muy poco se excavará, y que aún menos se examinará, podemos ver de una forma más cercana la dificultad de encontrar fósiles.

Se calcula que sólo hemos podido descubrir cerca de una especie de cada 10.000 que hayan existido. Si aceptamos la estimación de que en la Tierra ha habido 30.000 millones de criaturas, y la estimación de que hay 250.000 especies en nuestro registro fósil, la proporción queda en una de cada 120.000.

Ya por último, debemos saber que la mayoría de animales terrestres murieron en campo abierto, se pudrieron o quizás fueron devorados. Así que cerca del 95% de fósiles son animales que vivieron en el mar.

Pues parece que no es tan fácil dejar huella.

Todos estos datos han sido extraídos de la gran obra "Una breve historia de casi todo", de Bill Bryson. Altamente recomendable.

Más información | Una breve historia de casi todo
Más información | Fósiles
En Genciencia | Fósil

In all of your share trading using a stop loss is vital to help you manage your risk while at the same time it is protecting your trading capital.

It is essential that you know how to apply a stop loss, for if you make it too tight a slight turn in the market will see your stock sold. Whilst on the other side of the coin if the stop loss is too wide you may lose more than is really necessary.

Here is a handy guideline which will help you to set your stop loss at the correct level.

To calculate the stop loss position you need to look at the Daily Price Range of your stock for the last five days.

Here is an example :-

The price range was between

Day 1. $25.00 and $26.00 = $1.00
Day 2. $26.50 and $27.00 = .50
Day 3. $27.00 and $25.50 = $1.50
Day 4. $25.00 and $27.00 = $2.00
Day 5. $27.00 and $26.00 = $1.00

ADD up the total =$6..00

Divide this total by 5 (Days) =$1.20

So the average daily price range is $1.20.

So you place your stop loss $1.20 from the most recent closing price.

Some traders prefer to use a percentage such as 5% of the total capital invested. i.e.$100,000 capital = $5,000.While others prefer a lesser % figure. Really its up to you to decide.

There are no hard and fast rules, but it is vital that you use some sort of protection to save your trading capital from vanishing.

The stop loss does just that.

Happy safe trading.

Insurance Australia Group CEO Mike Wilkins unveiled his much-anticipated strategic review yesterday and it followed the predictable script.

Big cuts, cost savings, job losses, exiting a business bought by the old CEO and a burst in initial enthusiasm from punters in the market, only for the surge to flag as second and more rational analysis set in.

As is typical in these situations, the new CEO indirectly blamed his predecessor for the problems by cutting the value of IAG's struggling UK operations by $350 million and scaling back their future operations.

The Wilkins changes were sweeping: four members of the senior management team are out, including long-serving finance director George Vernardos. All joining former CEO, Michael Hawker in the departure lounge.

The new guard includes two former Promina colleagues of Wilkins, Duncan West who will run CGU and Leona Murphy who will run a slimmed down corporate office.

Job losses were put at 600 here and in the UK. Wilkins claimed there would $130 million in annual costs savings and a $60 million restructuring charge on the way out.

The bottom line is a loss for the year to June.

The shares bounced to $3.75 in an early burst of applause, and sagged to a low of $3.57 before trading unchanged on the day at $3.66, down a cent. That’s hardly a ringing endorsement on a day when the market bravely rose in the face of some difficult news.

Perhaps it was news of the year’s loss, or was it the more intelligent investor realising that for all the problems in the UK (bad floods last year caused it havoc) and in Australia bad weather caused havoc here as well, IAG is like all insurers the world over: the insurance cycle is trending lower and even the very smart folk at Warren Buffett’s Berkshire Hathaway insurance and re-insurance companies have been caught by the down leg of the cycle.

The credit crunch, plunging share values and volatile market conditions are causing all insurers grief as they struggle to make a turn on their ‘floats’.

The revamp makes James Strong's position as chairman of IAG look tenuous, especially given he's been there for seven years. Seeing Strong has foreshadowed the retirement of two directors at this year's November AGM, in Neil Hamilton and Macquarie executive Rowan Ross, will he join them? After all they have been there from 1999 and 2000 respectively.

The most interesting move (the restructuring was predictable and well-leaked to the market and the media over the past five days) was the appointment of former AMP finance chief, Phil Twyman. He went from the AMP to the global operations of big British insurer Aviva.

IAG will report a loss of up to 15c a share for the June 30 year, the company told the ASX in its statement yesterday.

Second-half dividend will drop to 9c a share, from 16c a year earlier. The full year’s payout will be 22.5c a share compared to 29.5c in 2007.

Wilkins said that as he cuts, the company will continue to pursue growth opportunities in Asia, focusing on Thailand, Malaysia, India and China.

But it will conduct a staged exit of the private motor and mass market distribution operations of Hastings/Advantage and Equity Insurance Brokers and an exit of its Alba and Diagonal investments businesses in the UK.

The decision means the group will book a non-cash impairment charge of around $350 million in fiscal 2008.

“It’s clear from our recent financial performance we need to do better,” chief executive Michael Wilkins said.

He said IAG aimed to have a more tightly-managed portfolio of high performing, customer-focused and diverse general insurance businesses.

It would simplify its operating structure, creating end-to-end businesses with autonomy to manage their own brands, customer bases and markets.

“We’ll also stay focused on the fundamentals of our business in Australia and New Zealand, while continuing to selectively pursue growth opportunities primarily in Asia,” Mr Wilkins said.

The market had been expecting IAG, which earlier this year rejected a takeover approach from QBE Insurance, to announce write-downs from its UK operations; and the cut in final dividend was also forecast.

This Information is provided to you by the Australasian Investment Review (AIR).
Subscriptions are free at www.aireview.com.au

AIR reports about financial markets and investment products in the widest sense possible. The AIR website and all its contents is prepared for general information only, and as such, the specific needs, investment objectives or financial situation of any particular user have not been taken into consideration. Individuals should therefore talk with their financial planner or advisor before making any investment decision.

The New Margin of Safety

What do you reckon is more important when buying a stock? Price or value?

It's a loaded question, reader, as you probably already guessed. You need both. The two are separate concepts.

But you can't calculate value without considering price. And in this kind of market, you definitely shouldn't buy the price without figuring out what kind of value it has.

Macquarie Bank, for example, obviously had more price than value. Its price is now lower than it used to be.

Figuring out the value is notoriously difficult. The big cheese of value investing, Benjamin Graham, said to buy companies at prices below their book value, or below their net tangible asset value. He called it the 'margin of safety'.

Safety, because you were literally buying a stock for less than the market value of its assets. With a bit of discretion, that's one of the safest ways to invest.

There are one or two companies we've seen recently that are selling below their book value. AGL Energy (ASX:AGK) used to be, but the market quickly corrected that.

(We like AGL, by the way. It's the cheapest energy retailer going around. There are only two, really.)

Anyway…in a market slump, you might occasionally find value with Graham's book-value method. But other tools will probably help you identify more regular opportunities. One is Return on Equity (RoE).

Return on Equity tells you how well a company has invested cash to make earnings. Simply put, it's the company earnings divided by its equity. It's a bit like looking at the yield on a bond. That way you can get a grip on whether it's overpriced or under priced.

RoE isn't perfect, by the way. Like most ratios it relies on past figures. But it tells us one thing for certain. How much value the market is placing on earnings over different sectors.

We're running a scan of RoE over the entire ASX today. Tomorrow we'll show you which sectors are pulling their weight…and which aren't worth your cash.

US Mortgage Lenders Make Aussie Coal Stocks Cheaper

The Dow Jones fell back to earth yesterday. US stocks los 2.3%. Oil had nothing to do with it this time; it's still US$136 per barrel. And, oddly, the Australian market is following US stocks down as we write. It's opened down 1.6% so far today.

The Dow fell because two government-backed mortgage groups, Fannie Mae and Freddie Mac, tumbled by 13% and 24% apiece. A derivatives trader downgraded both stocks.

The market is terrified about how bad the mortgage situation is. The two major lenders are now at serious risk of collapse…though we're not convinced the US government would let that happen.

A bail-out may be required. But people could still lose plenty of money on the lenders. And they could fall further on the market. The mortgage black-hole is still vacuuming up bad credit.

Now…do you see why the Aussie market's slump is odd? In a sane world, if Australia has any exposure to Fannie Mae, it'd be the size of a ladybug's thimble.

But our world is not totally sane, we guess. So we're not ruling out any finance companies announcing new exposure to the US mortgage lending fraternity. There's no underestimating the enthusiasm of idiots during a credit boom.

In fact, our colleague Dan Denning wrote to APRA yesterday to ask whether it had any info on the subject. Here's the reply he got:

Hi Dan

Thank you for your enquiry about debt owned by Australian banks.

For all of APRA’s publicly available statistics on Authorised Deposit-taking Institutions (ADIs), please refer to http://www.apra.gov.au/Statistics/ADIs.cfm.

There's not much use in looking at those spreadsheets. There's no column titled "Owns US Mortgage Institutions". The fact is, nobody really knows how much exposure Aussie firms have. We'll probably only ever know if some company announces it.

We do know one thing though…Aussie shares are not as exposed as US stocks. And Aussie stocks get cheaper this morning, reader. There's stupidity in the air.

Ahem. Excuse us…who's driving this market? You have your eyes on the wrong lane.

Take Felix (ASX:FLX). It does not lend to home-owners in America. It digs up black stuff called coal in Australia. There is no direct link between the two. Do not try to find one. Someone should tell this to the investors who are willing to sell it for 3% less this morning.

In fact, in the words of a Citigroup analyst yesterday, "the coking coal market is expected to remain tight for many years".

In the meantime we're keeping our eyes on Energy, Earnings and the Economy. Those three factors will have more bearing on Australian shares in the long-term than Fannie Mae and Freddie Mac.

Consumers are Still Low on Confidence

The Economy: Westpac released its consumer confidence survey yesterday. It's at a 16-year low. That makes sense. It's been about that long since we had a recession. Petrol prices and interest rates are high. Credit is not.

The message here: nothing has really changed in the last month or so.

Banks Raise Mortgage Rates

But if that encourages the RBA to halt its rate cycle, it might not matter. Bankwest raised home loan rates by 0.2% yesterday. Now St George has some company up there. It did the same thing last week. Both banks are nearing double-figure interest rates.

This article is contributed by Money Morning. Click on the link below for more information and to subscribe to their free newsletter /20080710/mortgage-lenders-make-aussie-coal-stocks-cheaper .html"

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Supongamos que somos expertos en alguna materia concreta. Por ejemplo, en biología.

Imaginemos que nuestro trabajo se basa en suponer cómo evolucionará la biología en los próximos 25 años. O quién sabe, cuál será el estado de esta materia en el año 3000. Si además estamos bajo el amparo de una organización tan implicada en el futuro del mundo como son las Naciones Unidas, ya podemos dejar de imaginar.

Estaremos formando parte del Proyecto Milenio.

Dentro de este "tanque de pensamiento" podemos encontrar a expertos que forman parte de organizaciones internacionales, gobiernos, corporaciones, ONG y universidades, y que juntos, tratan de realizar anualmente el conocido como Estado del Futuro (aquí podéis consultar el PDF del resumen en español para el 2007).

Pero sin duda lo más interesante es darse un paseo por su Web, y leer algunos de los escenarios con los que trabajan los expertos. Más de uno parece sacado de una novela de ciencia ficción. Y si no, veamos cuál es el escenario de la robótica para el año 3000.

La aparición de los robots hace 1000 años vino de la necesidad de máquinas que hicieran trabajos peligrosos o repetitivos. La gente amaba aquellas primeras máquinas en el siglo XXI. Al principio eran rudimentarias, pero programables y adaptables, y se utilizaban en cadenas de producción mecánicas y electrónicas.

Hoy en día, el legado más importante de todos estos sucesos es nuestra tecnología cyborg: la mejora artificial de la biología humana con componentes fabricados.

Sitio oficial | Millennium Project (en inglés)
Más información | Escenarios en el año 3000 (en inglés)