NAFTA: A Quick History and its Implications

shutterstock_513896659

Representatives from Canada, Mexico, and the United States started the ball rolling for the renegotiation of the North American Free Trade Agreement (NAFTA), which has been the occasional focus of many tirades coming from the U.S. President Donald Trump–who even went on to say that the agreement was “the worst trade deal in history” on campaign last year.

NAFTA took effect on January 1, 1994, which makes it a 23-year-old agreement that has given modest but substantial benefit to the North American economies and even on average citizens. However, it has also never run out of critics and has been a central topic in many political and economic debates and disputes.

A Brief History

NAFTA was created and signed by the three countries in order to promote economic growth following different provisions on intellectual property, environment, agriculture, and transportation infrastructure. A series of events with the agreement as its central issue ensued thereafter.

When the trade agreement came into effect, a group of Mayan Indian guerrilla army declared war against the Mexican government that continued for days of fighting and left dozens of dead. The rebels retreated to the jungle in the end.

In 1999, an enormous number of anti-globalization protesters converge in Seattle, a U.S. city, and were involved in several riots. The protest started a scattered opposition to free trade deals including NAFTA.

In the tenth year since the agreement was signed, the three countries issued a joint statement strengthening expanded trade in North America, celebrating the deal’s effect in the value of U.S. exports, and the rise in agricultural trade between Mexico and the U.S.

2001 saw the integration of China, an Asian trade giant, into the global economy. By 2006, trade deficit in the U.S. shot up to more than $800 billion.

In the beginning of 2008, trade between the three North American countries more than tripled in value.

About a decade later, talks about the “modernization” of NAFTA escalated as Trump constantly criticized the deal and thus led to a renegotiation which started today in Washington, with the U.S. Trade Representative Robert Lighthizer, Canadian Foreign Minister Chrystia Freeland, and Mexican Economy Minister Ildefonso Guajardo as officials in-charge of concluding the modified pact.

In September this year, the second round of meetings is planned to take place in Mexico.

Some Specific Impacts on Canada and Mexico

Canada received considerable positive effects. Canadian manufacturing employment didn’t seem to be affected by an international downward trend and this was attributed to NAFTA’s effectivity. The nation’s bilateral agricultural flows have been boosted. Canada’s 2008 exports to the U.S. and Mexico were more than $300 billion, and imports from NAFTA were around $200 billion.

In Mexico, although the projected large-scale growth wasn’t attained, economic growth was steady. Exports increased from 8.56 percent of Mexican GDP in 1993 to 36.95 percent in 2013, hence the lower Mexican trade deficit. Foreign investment flowed generously , although manufacturing exports became concentrated to select industries.

Oppositions

There have been many groups and organizations opposed to NAFTA, describing the pact as a disappointment on other fronts in spite of its recognized benefits.

In 1992, then U.S. Presidential candidate Ross Perot warned the people to prepare for a “giant sucking sound” pertaining to jobs being moved across to Mexico, where companies used cheaper labor to their advantage. Even the U.S. ex-President Barrack Obama criticized NAFTA and stated that its terms might be altered or renegotiated.

Other groups describe NAFTA as toothless when it comes to labor and rights protection  for workers. Environmental concerns are also raised and claimed that provisions, specifically Chapter 11, give corporations too much power.

The Future of NAFTA

Many critics and experts argue that if the U.S. choose to move out of the agreement, trade barriers would reemerge. This and other unintended effects would then lead to somewhat a “backward” trade system.

Daniel Drezner, a political scientist, put front the argument that if Trump withdraws from NAFTA, Mexicans would turn to left-wing populist strongmen like what other South-American countries have done.

Chad P. Brown, from Peterson Institute for International Economics, emphasized that the reestablishment of trade barriers would not help workers to take advantage of new employment opportunities.

As for its renegotiation, Canada and Mexico also insist on getting what they want out of the deal. Canada is said to aim for an enhanced and deeper access to the U.S. market. Mexico similarly wants to get better access of goods and services, and a stronger energy security.

As the first round of talks is described as “ambitious” by a senior U.S. trade official, many things hang at stake while conversations, modifications, and deals are done by three persistent representatives.

The future of trade in the North American nations is being renegotiated as long term effects are carefully being analyzed and predicted by experts.

The Legends in the Financial World and What You can Learn from Them

In the world of celebrities, there were those who left their marks and have been remembered and idolized by fans, as though they were gods in their own ways. It is actually the same in the world of investment.

One who wants to enter the world of investment will surely learn a thing or two by reading the following list of investors and the philosophies they used in order to beat the market.

1. Warren Buffett

warren buffet

Warren Buffett’s name is one that immediately pops up whenever someone mentions the word “investment,” and it is not surprising. As of March this year, he is the second wealthiest person in the world.

His approach is simple. He buys companies that he understands how to manage, and improves them through his skills in management. Although he has been criticized by some because of his avoidance of certain industries, he continuously gives critics bloody noses by realizing amazing returns for decades.

His example reminds us one thing: never invest in something without enough knowledge of it.

2. Peter Lynch

peter lynch

Peter Lynch became infamous when he brought back the then obscure Magellan Fund to life by managing to accumulate a fund that grew to more than $14 billion in assets—a figure which started with only $18 million when he was named as its head.

He co-authored three texts with John Rothchild: One Up on Wall Street, Beating the Street, and Learn to Earn. Each of the books has a specific purpose and helps investors in different ways.

Just like Warren Buffett, Lynch emphasizes that you should “invest in what you know.” By following this simple mantra, investors find hidden treasures in undervalued stocks. However, one of his tricks is to be somewhat like a chameleon. He is said to adapt whatever investment style worked at a given time.

3. John Templeton

sir john templeton

If Hollywood has John Lennon as one of its biggest icons, the financial world has its John Templeton. In 1999, Money magazine labeled him “arguably the greatest global stock picker of the century.”

He created the modern mutual fund based on his own experiences during the Great Depression and the internet boom. He also made several good investments between those two periods. His philosophy was labeled in two ways: “avoiding the herd”, and “buy when there’s blood in the streets.”

Being described as the ultimate bargain hunter, Mr Templeton believed that the best value stocks were those that were completely neglected.

In short, always keep your eyes open for potentials in different markets.

4. Benjamin Graham

Benjamin-Graham-fundamental

Considered as the father of value investing, Benjamin Graham was an excellent investment manager and financial educator. He published a book, The Intelligent Investor, that articulated his principles in investing.

According to him, one should first find out the intrinsic value of a stock separate from its market price using a company’s factors (assets, dividend payouts, etc.) If the intrinsic value is worth higher than the current price, one should buy it and hold it until the stock price equates with its true value.

In simple words, a wise investor chooses a stock that is priced lower than its true value. That way, one is paying less for something worth substantially more.

5. Carl Icahn

carl_icahn_big_2013_10_07

Carl Icahn is an American investor and a business magnate, and is considered as the 26th wealthiest person on the Forbes 400 with a net worth of $16.6 billion USD.

He also doesn’t seem to mind his reputation as a “corporate raider.” This reputation began after the hostile takeover of TWA, an American airline. Known as a pugnacious investor, one cannot disregard his skills in investing as evident in his famous “Icahn Lift”–a catchphrase pertaining to the rise of a company’s stock price after Carl Icahn buys it.

His tactic is clear: choose an undervalued company due to mismanagement, and change it once in-charge.

 

The lessons are simple. Stick with what you know just like Buffett and Lynch, but don’t be afraid to adapt and try out new potentials just like Templeton. Know the true value of your investments, like Graham. Last but not the least, be persistent like Icahn, for you may be able to give another company your own kind of “lift.”

There are still many other legends in the financial world, and one finds that the more we learn from these iconic investors, the more we can manage our own investments.

 

Ways to Help You Identify Good Investment Opportunities

Ways to Help You Identify Good Investment Opportunities

A lot of investment opportunities are becoming available to potential investors, but not all of them are good investment opportunities. In fact, with the more opportunities that are becoming available, the more likely you are to encounter an investment opportunity that will consume everything you have before you end up finding one that is suitable to your purse.

The following are ways to help you identify good investment opportunities and use them mainly for your financial advantage.

  • Buy Low

Determine the standard value of an investment or purchase, and wait before buying until the purchase price goes below what is acceptable and reasonable. The right time to look for buying opportunities is when the stock market dips and other people are frightened and selling. Ideally you like to purchase an asset after the price significantly declines, with the anticipation that it will upsurge again in the future and produce a good return.

  • Sell High

The best time to decide selling an asset is after the price increases dramatically. This is often a time of stock market growth when many people are so much willing to to buy into a rising market. When a certain investment appears significantly gaining, this means the ideal time to cash out and lock in your return. You could keep the income into a safer investment or find a new under-performing asset to try to repeat your significant success.

  • Learn from mistakes

While trying to execute the first two mention ways above, you are expected to commit some errors or mistakes. If only buying low and selling high is just a piece of cake, everyone would be repeatedly doing it. When you lose money on an investment, try not to lose sleep because of it or simply give up the whole investing. Probably, you want to take a break from active investing for a little while and catch market returns with an index fund, or maybe you will know and understand how to cautiously research an investment before placing more than you can comfortably afford to lose on the line. Never let fear be a reason that can limit and stop your potential from being unleashed. Rather, let the withstanding that storm be the driving force that pushes you to success.

  • Use your fear to self evaluate

Make a  list of the investments you have successfully made in the past, and think about what you can do to yield better results in the future. There is a wonderful insight that can be found by physically writing down the results you would like to evade.  A written plan can help you prevent from thinking and committing emotional investment decisions in the heat of the moment. If you are backed up with a financial planner, tax planner or someone who will monitor your investment ideas, that adds an even greater layer of reliability and accountability.

Investing is mainly about financing the kind of lifestyle you want to live. Making decisions intelligently could bring enough wealth to let you retire sooner or walk away from an unsatisfying job. But you have to use logic and stick to a financial plan or strategy to progressively build wealth.

Characteristics of a Successful Investor

Characteristics of a Successful Investor

Whenever we talk about someone who has successfully paved his way through investing in the stock market, it is never a matter of having a luck, but rather certain personal qualities or characteristics that determine how successful he/she is. Although, the best investors may seem have been born with the appropriate characteristics, it remains possible to discover and acquire them yourself. Believe it or not, most of what you need to know is just stock market investing basics.

Just remember that you can improve your chances of success. Below are some qualities of a successful investor that you need to know.

  1. They carry a well-thought-out investing strategy

Every successful investor has an over-time-developed-and-a-well-thought-out investing strategy that definitely works and they stick to this strategy. Some successful investors incorporate the portfolio diversification strategy and other follow the portfolio focus strategy. However, you are still entitled to have your own investing style. No matter what strategy you use, make sure that you fully know and understand what you are doing.

  1. They are dedicated

Successful investors are dedicated and concentrated on their investment vehicle. They take it one step at a time and one investment at a time.

  1. They make use of the trend to their advantage

Successful investors know how to use trend to their advantage. Average investors tend to panic over market instabilities, but professional investors welcome these instabilities because it is based on these instabilities that they can make their money. They use trends such as market sentiments, political instability and company’s crisis to their benefits.

  1. They are determined

Indeed, adhering to your investing strategy, whether you are winning or losing needs you to have a great determination. Average investors lack persistence and that’s the reason why they will always remain average. They hop from one strategy to another and are always looking for the next hot tip.

  1. They prosper on risk

It is true that investing is a risk, however, not knowing what you are executing is a lot greater risk. Every professional investor, whether experiencing a winning side or losing side still respect and consider the 50-50 chance of success or failure. The big difference between a professional investor and an average investor is that a professional investor will always invest with a strong risk management scheme in place.

  1. They are disciplined

Successful investors are rigorous with themselves when it comes to investing. Aside from their investing rules and principles, they are also guided and driven by a strong self-imposed standard. Professional investors understand that it takes a huge deal of discipline to stand with you investing strategies, in spite of distractions from self-proclaimed specialists or financial experts.

  1. They know their strengths

Everyone possesses their own strengths and weaknesses. Successful investors understand that it is essential to invest inside their circle of competence. There is no quick way to lose money than investing in something you don’t completely understand. If you couldn’t determine what a company does or how it makes money, then it is often suggested to just stay away, no matter how profitable the opportunity might be.

Risk Management Tips for Stock Traders

Risk Management Tips for Stock Traders

Risk management is very important, but often ranks very low on the priority list of most traders. They often overlook the importance of managing risk in their positions or trades. It is normally way behind finding a better indicator, more accurate signals or worrying about stop hunting and unfair algo-trading practices.

As a trader or investor, this is the only thing that can be managed or controlled. Traders can never control or dictate the directions of the markets. They can also never manipulate whether they will win or lose in any position they take. Indeed, the only thing they can take control of is the amount of loss they might incur.

A trader who has produced great profits over his or her lifetime can lose it all in just a single or two ruthless trade, if proper risk management is not applied. Many people can trade, but not all are capable of analyzing the risk and manage the risk in a way that secures and ensures their financial survival in the markets when things go bad.

Without proper knowledge about risk management, profitable trading is never possible. A trader needs to know how to manage his risk, size his positions, create a positive outlook for his performance, and set his orders correctly, if he wishes to have a profitable trading journey.

This article will suggest some tips for risk management in stock trading.

  1. Recognize your risk

Some of the factors that might cause a risk to your trading are: politics, interest rates, liquidity and even the prices of other assets. Know, recognize and learn all the probable risks connected with the asset you are about to trade, and you can begin to go on your way reducing them early.

  1. Prepare your risk limits

Prior setting the line of the profit you are aiming for, think and decide how much you can afford to lose. Your trading plan should composed of how much loss you can take in the whole, and on each individual trade.

  1. Know how to acquire losses

You can actually set stop losses accordingly, if you know your risk limits for each trade. Moving a stop loss on a losing trade, because you expect it might swing back into profit is rarely a nice idea. Leaving losses run on bad trades will make them even worse, never better.

  1. Evade emotional trading

According to a study in 2011, the negative impact of emotional trading can end up costing you 20% in returns over ten years. And it is not just responding badly to losses, as the complete happiness that comes with a progressive trade can be just as risky as the disappointment with a failed one.

  1. Don’t go along with the mob

Every individual trader has their own risk tolerance, and just because other traders are suggesting a trade doesn’t necessarily mean that it is a good fit or appropriate for you. This is actually right for stop losses and strategies as well. Just remember that you should know your own risk, and plan accordingly.

Good trading isn’t always referred to having the right stocks or the right prices. It is much connected to your ability and knowledge of managing your risk, and assimilating a strong risk management philosophy into your trading strategy.

Learn the Different Types of Trading Style

Learn the Different Types of Trading Style

A lot of people who get interested in trading are primarily acquainted with the financial markets through investing. The purpose of investing is to grow wealth slowly over time, and this has normally been done through  a buy-and-hold approach, making investments and allowing price to alter over time. Investors endure the unavoidable downturns with the anticipation that prices will, in the long run, rebound and rise over the long-term.

Selecting the trading style that best fits your personality can be a difficult undertaking, especially if you are a beginner trader, but it is certainly essential to your long-term success as a professional trader. When you finally found the style of trading that best suits you, a light often turns on and you may never look back. If you are not comfortable with your style or have not found a home in a specific trading style, you are prone to committing the biggest sins of trading.

The difference between the styles is based on the length of time that trades are held for.  Below are the different types of trading style you should learn about to help pave your way to becoming a profitable trader.

  • Scalping

This type of trading style requires trading within just a few seconds of each other, and often goes in opposite directions, as it is a very quick type of trading style. This style is very appropriate for active traders who can decide quickly and act on his decisions without reluctance. Impatient people often are the best scalpers, because they always anticipate their trades to get profitable promptly, and will exit the trade quickly if it is going against their trading whims. To become a successful scalper, you have to have focus and concentration. So, if you are a type of trader who easily get distracted, then scalping is not for you.

  • Day Trading

This type of trading style is more appropriate for traders who like beginning and accomplishing a task within just the same day. A lot of day traders would not think of making swing trade or position trade because if they do, it will cause them to stay awake at night knowing that they had an active trade that could be affected by price movements during the night.

  • Swing Trading

This type of trading style is well-matched with people who have patience for a trade, but once they have started a trade they want it to be profitable quite quick. Traders of this style almost always hold their trades overnight, therefore, those people, who get nervous holding a trade while they are away from their computer, are not fit for this style. Generally, this trading needs a larger stop loss than day trading, so it is necessary to have the ability to get calm when a trade goes against you.

  • Position Trading

This type of trading style is the longest term trading of all the styles and often possess trades that last for years. That means, position trading is very compatible for people who have more patience and least excitement. This style requires the ability to disregard popular opinion because a single position trade will often hold through both bull and bear markets. So, if you easily get persuaded by other people, then position trading is going to intricate on your part.

Aside from the reason that picking a trading style needs the flexibility to perceive if a certain trading style is not working for you, it also needs the consistency to stay with the right trading style even when it is not performing optimally.

Some Ways to Improve Your Investment Skills

Some Ways to Improve Your Investment Skills

Investing is a skill that anyone can learn and acquire if only they want to. Some follow the advice and suggestions of analysts and a financial adviser, but they actually can only take you a little far. Yes, they can give you recommendations, but the most appropriate for you will come from making your own choices and decisions for what is essential at what time in your life.

Investors who assess a company can better judge the value of its stock and profit from buying and selling it. Your biggest asset in stock investing is your knowledge. Whether you are a beginner trader or a  seasoned veteran, there are few things you can do to improve your investing skills. Others are making the best of a bad situation by learning about how things went wrong.

To succeed in the world of stock investing, here are some ways to improve your investing skills.

  • Do some research

Some people simply get tips and advice from others when making some of their most important choices in regards to investments. It is very vital that you improve and add your knowledge base and practically learn about the companies you are thinking about investing your money with. Learn everything as much as you can, so you can make informed decisions.

  • Assess your financial goals

Probably something happened in your life that suddenly changed your financial perspectives, and maybe now you have thought of making more wealth for yourself. Perhaps retirement is fast approaching and you would like to adjust your portfolio and eradicate those riskier investments. Whatever the case may be, you must think about where you are and where you want to be. Only then can you make the right action plan that will come across with your needs.

  • Don’t rush things

Some experienced trader will tell you that there are times to bail out and times to weather the storm. You should always make sure that you know what the right strategy is for some of your investments. Take a look back on the past data and see what you can learn from it before you go changing everything in your portfolio.

  • Deliberate your risk

This comes together with your evaluation of goals. Maybe some of your holdings are just becoming too volatile, which could unfavorably affect your assets for years to come. For others, this time of low prices may seem like the appropriate time to buy up affordable shares and wait for the upswing. In either case, you are still going to need to analyze or evaluate the situation and create an informed decision that is right and best for you.

  • Just invest persistently

One of the most important things a trader can learn from these kinds of economic situations is that things come and go or decline or grow in the market. There will always be good and bad times. The primary thing is, don’t

Stop investing your money. Yes, you will have to think of the right place for your money, but don’t just settle on it. Things will get back to normal, soon and you will wish you had kept at it when things are good again.