My Investment Recommendation for 2014

My Investment Recommendation for this month is Allied Irish Banks PLC (AIB). Allied Irish Banks plc is a multinational banking institution based in Ireland that provides services varying from investment banking to asset management services. With an $18.45 billion market capitalization, the Company is the largest regional financial center based in Ireland standing a head above its $13 billion competitor in The Bank of Ireland. Trading as an American Depository Receipt under the US exchanges, Allied Irish Bank (AIB) currently trades at a current price of $41.91 with an approximate P/E ratio of 6.5 despite an industry average of about 10.

While the short-term outlook for AIB’s business remains somewhat up for debate in light of the credit market issues found in both the United States and in Europe, the medium- and long-term outlooks for AIB remain positive. While the economies in the United Kingdom and in Ireland are expected to slow down this year, they are anticipated to pick up again going into 2014. The GDP growth of Poland looks to stay well-above international averages hovering around 5%. Last of all, the downturn economy found in the United States will likely recover from monetary stimulus beginning from the second half of 2013. Combined, AIB’s target economies look to fully sustain themselves and begin to recuperate as 2013 comes to a close.

My Investment Recommendation - why?

The unexpected sub-prime mortgage crisis that recently took the markets by storm has sounded the panic alarms over the last half year for both banks and investors alike located in the United States and in Europe. Yet oddly enough, AIB was able to mostly side-step the sub-prime mortgage fallout when compared to its competitors. In the US market, AIB was only affected through its holdings in M&T Bank (based in the United States) which saw a mere 7% overall decline in it’s holding’s profits. Likewise, AIB’s European subprime exposure was relatively minimal compared its rivals, having only written off about 30 million euro in subprime-related securities.

What differentiates AIB from its international competitors, however, is its approach to targeting the economies to which it is bound. In the UK, where 30% of AIB’s pre-tax profits came from, even with the looming recession on the horizon, AIB managed to increase its regional profits by 20% by concentrating on corporate banking that bypassed the immediate consumer woes. Slowdowns in both the Republic of Ireland and Poland alike were also met by surprisingly successful returns. In Ireland, where 43% AIB’s pre-tax profits were derived, operating income increased 14% over 2012. In Poland, AIB’s operating income likewise increased an encouraging 26% in 2013.

Nevertheless, a quick look at the company’s stock would paint a quite dimmer picture than the reality portrayed on the financials. Uneasy investor sentiment concerning the financial sector has inadvertently brought down AIB’s value by association. Falling about 33% from the 52-week high of $63.16, AIB currently trades around $41.91. Even after declaring single digit growth expectations (although down from previous years) for 2014 despite a worldwide credit crunch, AIB continues to linger around this undervalued price range of the low $40’s. As the financial sector recovers, I believe that AIB will find itself in a highly favorable position compared to its peers through its strong capital position and competent level of funding support.

Up Stock Exchange

Up Stock Exchange. It is good to know that the “up stock exchanges” typically refers to the AMEX, NASDAQ, and NYSE. The amount of respect given to each exchange typically reflects the difficulty to maintain or obtain a listing on the given exchange. It is for this reason to typically distinguish the “lower exchanges” to primarily include the Pink Sheets and the OTCBB (also known as the Over-The-Counter Bulletin Board). These two exchanges are the most lenient in regards to listing standards and listed companies are often subject to loose regulation. The Pink Sheets are recognized to be the most dangerous of all exchanges, infamous for its frequency of corrupt individuals and publicly-traded companies. With no requirement to file with the SEC, traded companies on the Pink Sheets have often been characterized with pump-and-dump tactics which include exaggerated (or false) press releases and hefty periods of dilution. Spam mail advertisements that mention companies with share prices less than $1 are typically solicitations for companies trading on the Pink Sheets (.pk) and OTCBB (.ob). Yet out of the two exchanges mentioned, the OTCBB holds more respect than the Pink Sheets with their requirement of audited financials in order to be listed.

The up stock exchanges typically hold relatively stable companies that can serve as viable investments. The low stock exchange typically hosts start-up and de-listed companies (from the upper exchanges) that wish to enter the capital markets. The lower exchanges are notoriously more dangerous to browse, but often manage to tempt prospecting investors looking for low-priced start-ups with potential in which to invest.

Price of Italian government bonds

European problem does not converge easily. Price of Italian government bonds plummeted on 9 November, and 7.4 percent at one point, yields on 10-year government bonds topped 7%, which is the danger zone. Interest rates surged margin hike overlap where the buyer is reduced from extreme concern at home and abroad, liquidity is depleted. There is a market the world's third largest, Italy government bonds is not a ratio of Greece. Most investors to invest in Europe is owned. Become the order to sell a large amount of everyone just to reduce the high has little by little, I do not support buying out very European Central Bank only (ECB).

Price of Italian government bonds fall

After fire spread to Italy, sparks jumped out to France in the European government debt crisis from Greece. European Financial Stability Fund should be even firemen (EFSF), it is becoming not deceptive. Italy consumer credit amount to only large banks of France, France does not need to be intact. French government bonds and German government bonds that are considered safe assets, light and heavy Ding began to be asked. This is while the government bond yield gap between France and Germany open. Is not only that. Yield of bonds EFSF and the expected halt of the financial crisis is also issued, rising in tandem to French government bonds. Yield gap between German government bonds and EFSF bonds has also expanded to nearly 2 percent. October 26, decided measures to make effective use of funds of the EFSF the Summit of the euro area and the European Union (EU). Is two points - and established EFSF is part guarantee government bonds, such as (1) Italy, (2) special purpose entities the (SPV), and allowed to bind the funds of the public and private sectors and the EFSF, to buy government bonds of problem country are the pillars. However, increasing the risk EFSF will increase the leverage, leading to financial burden of the euro member countries of AAA-rated that extend credit substantially. In the country of AAA-rated, France will pale financially. (GDP) ratio and 7.1% of gross domestic product budget deficit in 2010, it is greater than 4.5 percent of Italy. By any chance, if accustomed to France could lose its position as AAA, credit foundation of EFSF also fluctuation, the amount of funds that can be provided will be much less.

Italian government bonds prices

Fire fighting capability of the EFSF is reduced at a stretch, euro area as a whole do not could burst into flames. In a way that incorporate such a risk, yield of EFSF bonds and government bonds Buddha is rising in conjunction. The Japanese government large investors who hold about 20% of the EFSF bonds. I suffer write-downs EFSF bonds if fall. It is a situation that does not work visibility state that Europe is placed is complicated still. Individual's forecast the future course of events in such a situation is extremely difficult. Individual's investment decisions good timing on their own it is not easy. Is there enough risk of financial assets that I bought today, hit by plunge in tomorrow. While the linkage between assets increases, you will not be able to take off in investment easily in this situation. Is to what really shines in such circumstances, it is the foreign reserve investment is a favorite of his making pension.

Long-term investment ideas

Long-term investment ideas

It is said that if you make a long-term investment, there is no need to worry about the day-to-day price movements and timing to invest in general. However, in the case of the market environment, such as now, the market if hit by plunge the historic or the next day, and next week the investment, it means that you can not count on the eye. People who are not as self-possessed that it "does not matter because it's a long-term investment" would be a minority. In such a case, if you distribute the time to invest, risk can be reduced. But instead of spend all assets at once, invest a certain amount each month, you can spread the risk over time. 

Long-term investment ideas

To make the assets of a lifetime, such as your pension, the concept of risk diversification as well as asset class, in the time axis becomes important. If the investment fund, from ever-increasing rate, towards the market that sandwich the time of drops at a time, will be made ​​great profits in the end from the beginning. If you practice the funded investment to understand properly the risk, market even if bad, you can watch someone with room to spare. 

Long-term investment ideas 2013

Let's look at a simple example in the case of the stock of dollar-cost averaging. By investing a certain amount of money to continue, it is possible to suppress the average purchase price than keep buying shares of constant in dollar-cost averaging. Small number of shares, since you are now going to buy a large number of shares when stock prices are low when a high degree of stock price, you will want to lower the purchase average unit price in the long run. And it may be said that it is one of the investment technique that is suitable for investors who worry about buying and selling timing. average purchase price becomes 987 dollars65 sen if the stock price has moved as described above, when you buy one by $ 10,000 per month, this means you are bought undervalued significantly from 1012 yen 50 sen when I bought each 10 shares each month. By long-lasting this, you can lower the purchase price significantly. A variety of patterns can be considered by the movement of the market, investors are at the start of the funding is even higher temporarily, depending on the price action subsequent profit price even if you do not have back up to start in the dollar-cost averaging 

There is what someone turn positive. However, in order to produce results similar to the above, "that is not to stop on the way" is important. Some individual investors, there are many people who would stop funding from fear for investment at the time you come down. Response at the time of the fall is key in order to not the case. In order to continue not stop the investment, it will be necessary also devised "I do not overload," "it is not too take the risk" and "to continue to fund forces as automatic withdrawal".

Property investing condition in 2013

Property investing condition in 2013

One of the areas hardest hit during the economic crisis in America has been the housing sector. The current state of the US housing market can be difficult to gauge, with hyperbolic reports infiltrating internet searches about all of the reasons that the housing market will fail completely, it is hard to know if it is really that bad, or worse.

There have been many ups and downs in this economic climate, and each region has a different outlook.  In some ways, the housing market has never been this open to change and innovation, and some would argue that it looks to be recovering, albeit slowly. For first time home buyers and property investors especially, the current market has provided some positive opportunities.

Government Assistance - Property investing condition nowadays

Many Americans have been struggling to pay their mortgages, and despite attempts at government assistance, many are left stranded and without financial help. However, first time home buyers were recipients of the recent government aide in 2009, 2010, 2011 and 2012, and were given more incentive to stimulate the market. This worked in favor of many who were reticent to buy new homes, and worked as a small buffer for the market for a little while. Many citizens were able to buy a discounted mortgage and afford a home before they thought they would be able to.

Investors Provide a Floor - Property investing condition in 2013

The housing market troubles have also benefitted property investors in some ways. Many investors have been using this time to start buying property and building portfolios. Many property investors are gathering land and housing in order to rent it when the housing market improves. The renters’ market has also become more varied and has improved its outlook during the housing market crisis, as more and more people are renting homes and apartments. This is good news for renters and property owners. As more people turn to renting instead of buying homes and apartments, property owners have fewer empty units and are able to earn and save money, while renters have more options to choose from than ever.

Regional Differences - Property investing condition now

Since each region has a different outlook and faces unique problems and prosperity at various times, if you are a property investor or a new homebuyer, you will need to consider each region’s profile separately. For example, San Jose has shown a dramatic increase revenue and growth in the housing market, while Nevada and New Mexico are still hemorrhaging in the marketplace with loss of buyer confidence. Despite the bad news, some cities are doing surprisingly well in the current economy. Forbes outlined a list of the top 10 cities where the housing market has seen an improvement in recent years that includes Pittsburg, Pennsylvania and Rochester, New York. In fact, even Phoenix, one of the hardest hit cities in the original housing market crisis, has also shown recent improvement in the housing sector.