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Signs of economic recovery boosts fortunes of container leasing companies

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Container Investments has been there for the last thirty years but the recent surge in popularity is mainly attributed to globalization and increasing displeasure with traditional form of investments. The surge in trading agreements between countries and between corporations bolstered by seamless communication in recent years has helped the shipping industry grow at a rapid pace. As a result, the expansion of shipping industry invites more capital investments not only in vessels but also in containers. The top four exporters and importers of the European Union are Germany, Italy, Netherlands and the United Kingdom and China alone accounts for over 30% containerized cargo activities in the world. According trade statistics, UK is the seventh largest importer of containerized cargo in the world, and the trend is expected to continue for the foreseeable future. About 90% of the world trade happens via sea and this has given rise to numerous sub-sectors such as docking, waste management and container leasing.

Containers are built on demand depending on orders from liner shipping companies in different sizes. As the order flow fluctuates in the economic cycle, post 2008 financial meltdown, shipping companies prefer leasing the containers to avoid huge capital investments and this gave rise to the birth of container leasing companies. For number of years now, the share of leased containers is on the rise compared with owned containers. Since Long-term leases with shipping companies were honored in timely manner and the sign of economic recovery visible, leasing companies are sourcing capital directly or via different investment companies to increase capacity in the form of containers.

Pacific Tycoon is one of the famous container leasing companies, and the company helps investor own a single container for $4100. The owner is provided with choice of fixed lease and variable lease, and the company pays 12% on fixed lease and variable lease is an aggressive option to earn up to 30% on the upside. The payments are made quarterly for investor owning less than 5 containers and the income is transferred monthly for those who own over 5 containers.

According to the company, the containers owned by the investors are insured both in sea and land, and also the depreciation can be accounted for taxable purpose with suitable arrangements. The company claims a return of 26% for the asset class, container investments and the containers could be sold off any time as exit strategy.

Into the risk profile, the container investments are neither standardized nor regulated by any government authorities, and numerous offers in the past had turned into Ponzi schemes. The due-diligence and cautious approach should be handy for the investors in choosing the right company. Institutional investors in the past have successfully used container investments as diversification measure. This form of investment has low correlation with financial instruments such as stocks and bonds. With exit strategy in place, unlike other alternative assets, container investments are considered to be relatively liquid, but the purchase cost of containers are moderately high. In-line with alternative assets characteristics, there is minimal information on secondary source which are reliable to assess the real potential and risks.

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Benefits and Risks of Buy-to-let Investments

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Buy-to-let properties are popular investment options not only in UK but across the globe; To-let properties appreciate in value over time and also provides regular stream of income. For an investor who prefers to manage properties and create wealth, To-let property is a natural choice. To-let properties have some advantages over asset classes such as equities and commodities. Physical storage of commodities has no assurance of capital appreciation and volatility in equities is an unavoidable concern. Also, the stream of income of income generated via equities is negligible compared with to-let properties. The value of equity generally comes down by the amount of dividend paid, but it is not the case in To-let properties. There exists a minimal correlation between income stream and capital appreciation in real estate markets across the globe.

Numerous factors comes to into  play in determining value of any investment, and in the case of real estate the location of the property and the type of the property (residential or commercial)are two factors that has more significance than anything else. Also, timing the buy and availing lower mortgage rates would significantly improve the return on investment. Liquidity is a prime challenge in real estate market and during market crash and banking crisis – it is next to impossible to sell properties, and also the market value of properties tends to come down during such periods. To add more woes, the lease owners of commercial properties could cancel the leases and walk away in bad times. Despite all these odds, Buy-to-let investment by all measures seems to be lucrative in nature due to several reasons such as increasing population and people migrating from one place to another for varied reasons. After all, Risk and opportunity are two sides of the same coin

Meticulous planning in acquiring and development of properties would help investors to avoid much of the problems associated with Buy-to-let Properties; managing properties is both capital intensive and timing consuming, and for the same reason calculating the yield becomes more than necessary. Targeting specific audience comes with both premium and downside because when a property is customized for specific group, the rentals can be increased; the owner of the property should be in constant touch with the market for effective capacity utilization. When properties are customized for students, the attractiveness of the property as a prospective home for family comes down. All costs involved in making the purchase and development of property such as agent fees, fees for financial arrangements and tax benefits should be considered before embarking on Buy-to-let investments. Financial Institution may not be willing to lend for properties that are targeting specific audience but may be interested in helping out in commercial ventures, and the ideals on lending vary from organization to organization.

It is always advisable to make investments in worst market conditions but to make such purchases and developments especially in the real estate market, the investor needs to have financial arrangements in place because during such times lending institutions are reluctant to borrow money. Last but not the least, the manager of the property should be empowered with the list of reliable service providers (plumbers, electricians and real estate agents) to successfully run the business.

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7 Things Every Investor Needs to Know about the EIS scheme

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For a long time, investors have been managing risk by distributing their eggs amongst numerous baskets, in order to build diverse investment portfolios. Since the government introduced the Enterprise Investment Scheme (EIS) in 1994, it has become even easier for investors to manage the risk on their investments.  The EIS scheme offers investors the opportunity to engage with potentially very lucrative investments, whilst still retaining an acceptable degree of damage limitation over their cash.

In simple terms, the scheme works by incentivizing individuals to invest in up-and-coming UK businesses who are not registered on the stock market, and thus who generally pose a higher risk to investors. These incentives are tax related, whereby the government withholds many of the usual tax obligations in order to allow investors a more attractive risk-to-gain ratio on their investment.

With this in mind, here’s the 7 most important things investors need to know about the government EIS scheme.

 

  1. Benefit from Tax Relief on EIS Investments

Even if you know very little about the EIS scheme it is likely you will have heard about the promise of a 30% tax-relief on all EIS investments up to £1 000, 000. This means that if you were to invest £50,000 in an EIS investment, you could enjoy tax-relief on £15,000 of your investment.

In order to benefit from the tax relief clause, you should retain your EIS 3 certificate and provide this to HMRC when filling in your self-assessment tax return.

  1. Enjoy Exemption from Capital Gains Tax

As long as you retain your EIS investment for at least three years, any profit you make after disposing of your investment will be exempt from Capital Gains Tax (CGT). Capital Gains Tax rates can vary from 18% to 28% (typically payable after an initial Capital Gains allowance of £11,000), so the potential saving from this exemption is significant.

Many of the EIS shares do make significant, stable profit over time and so investing in the right one over a period of 20 years, whilst being exempt from any CGT, could result in a very lucrative capital gain.

 

  1. Offset your Losses if it all goes Wrong

Perhaps one of the most attractive aspects of the EIS scheme is the ‘loss relief’ that it offers. Firstly, you are able to minus the 30% of tax-relief allowance from your capital loss, as the government effectively agree to be liable for 30% of your investment when you invest in the scheme.  Secondly, you are able to offset a proportion of remainder against your tax bracket for that year.

So, for example: If your capital investment of £50,000 suddenly became worthless – you could minus £15,000 from the capital loss (30% tax relief), leaving you with £35,000 of capital at risk. Furthermore, assuming you’re in the 45% tax bracket, you could then offset the £35,000 of capital against your loss relief allowance, meaning that your actual loss would be £19,250, rather than £50,000. As such, risk of catastrophic loss is managed fairly well in an EIS investment.

As already suggested, the most sensible investors are likely to spread their cash over a wide variety of different investment projects. As such, it is not advisable to invest all of your funds in EIS investment opportunities, as even though the risks are managed, they could still result in substantial losses.

 

  1. Backdate the Benefits to the Previous Tax Year

Another great benefit of this scheme is that the investment can be treated as if it were acquired in a previous tax year. As such, the tax relief of 30% can be backdated to a previous year.

 

  1. Be Aware of the Restrictions

There are numerous important restrictions which you should be aware of before taking out an EIS investment. Some of the important ones being that – you cannot hold more than 30% of the company’s shares you are investing in, and you also must not be employed by, or have any connection of interest with, the company whose shares you are investing in. The other crucial thing to remember is that you must hold the shares for a minimum of three years to take advantage of any of the tax related benefits. If you do not adhere to the three year rule then tax relief will be withdrawn, and this withdrawal backdated where applicable.

 

  1. Tax Inheritance Relief

EIS investments are also completely exempt from inheritance tax after a period of two years, so long as the investor still owns the investment at the time of death. Seen as almost every asset or investment is liable to inheritance tax, this exemption is a noteworthy perk of EIS investments.

 

  1. Decide Whether to Invest Directly or via a Fund

EIS investment funds allow investors to place their investment in various small businesses, whereas a direct investment will involve devoting the funds to just one business. There are clearly positives and negatives to both of these choices. However, investing via a fund may be a further way of managing risk for the more cautious investor, as investing via a fund does seem to align with the more general tendency for investors to build a wide-ranging and diverse investment portfolio.

 

Although this article has tried to cover all the important aspects of EIS investments, it is important to fully research all of your options so you can make an informed decision about whether an EIS investment is right for you. A good place to find more detailed information is on the HMRC website. If you have decided that you want to take advantage of the tax related benefits that come with EIS investments then the next step is to decide exactly how, and with who, you are going to invest your funds.

On balance, EIS investments seem to have a two-fold benefit. Not only are they likely to continue providing a much needed boost to the UK economy, but they also appear to provide a unique investment opportunity for British investors; investment which has good lucrative potential backed up by a significant degree of damage limitation.

 

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The Crude Oil Market: Yesterday, Today and Tomorrow

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Over the last forty years, the crude oil market has endured a topsy-turvy ride. From the days of the Yom Kippur War of 1973 when crude prices spiked to $70 a barrel, to the lean days of the early 1980s when crude oil fell to $10 a barrel, and moving forward to the boom of the first Gulf War, with subsequent price drops all the way to $9 a barrel in 1998, and down to modern times when the price of crude oil has moved from two-digit to three-digit and back to two-digit figures, it has really been a roller coaster ride.

After going above $140 a barrel at the height of the Libyan Civil War of 2011, the price of crude oil has dropped systematically ever since by more than 60%. As at Wednesday August 19, 2015, the price of crude oil fell to 6-year lows of just about $40 a barrel. Many industry watchers and indeed the global population are asking: what next?

An understanding of the complex interplay of factors affecting the crude oil market as well as a historical look at trends in the market, will paint a picture as to what the future holds in this market for market players. Crude oil has always had its peaks and troughs, with various factors responsible for the swings in prices. Some of these factors have remained relevant, other factors have paled in significance and new fundamentals have emerged.

There was a time when the member countries of the Organization of Petroleum Exporting Countries (OPEC) were the kings of the market. Whenever they sneezed, the world caught a cold. Things began to change when the first barrels of crude oil were discovered and drilled from the North Sea, bringing countries like Norway and Russia into focus as dominant world players in the market. The discovery of the second largest crude oil reserves in the world in Canada’s oil sands added to the mix. But perhaps, the greatest changes to the crude oil market were triggered by the Gulf War of 1991, which led to record prices at the time and also led to Iraq being kicked off the global market for several years. At the same time, China began to emerge as a global production powerhouse, guzzling millions of barrels of crude oil to feed its thirsty industries. Global demand soared, prices shot up and oil producing nations were awash with cash. Unfortunately, some of the countries that benefitted from the oil windfall of the early and mid 90s put the money to nefarious use. Leaders like Muammar Ghaddafi simply found more money to sponsor terror groups and rebel insurrections in Liberia and Sierra Leone. Iran and Qatar began to assert regional influence by surreptitiously funding groups like Hamas and Hezbollah, which were classified as terror groups by the United States.

The Global Financial crisis of 2008 led to a drop in demand as cash-starved economies began to scale back on spending, causing crude prices to fall to as low as $39 per barrel in 2009. The drop in prices was short-lived. Within two years, the Arab Spring kicked off in Tunisia and spread across the Middle East, as citizens of oil rich countries who did not enjoy the dividends of the fat years rose up against their leaders. The Libyan civil war, which kicked off in February 2011, drove oil prices to as high as $146 per barrel. High prices were maintained when Iran was sanctioned for failing to comply with calls to scrap its uranium enrichment program.

THE BUBBLE BURSTS

For countries like the US where domestic prices at the pump are immediately adjusted to the global crude oil prices, it was time to change consumption patterns. The United States, which had for a long time borne the brunt of swings in oil prices, decided it was time to secure its supplies by stepping up local production with new technologies and cutting down its dependence on external oil supplies. This led to the development of shale oil technology which effectively ramped up production in the US to a high of 9 million barrels per day.

China, which had contributed to higher crude prices as a result of its rapid industrialization, has sort of slowed down on its consumption as the central government is now advocating for a slower and more sustainable growth pattern, cutting its GDP estimates to a modest 7% for 2015. Recent data suggest that this estimate may be too optimistic.

Increased global supplies helped by the new US shale production and the reduction in global demand caused crude prices to slump by 60% in 18 months to just under $50 a barrel. Prices retraced upwards briefly, only for a deal to be struck between the United States and Iran over the latter’s nuclear program in July 2015, paving the way for the flow of Iran’s oil into the markets once more. Crude prices have responded to this renewed increase in supply by falling to as low as $40 a barrel, hitting 6 year lows.

What makes the new price situation a bit tricky is the fact that some of the fundamental influences that have driven down prices are not transient. US shale oil production is here to stay. Iran has been given a reprieve to sell oil with the nuclear deal, which will add to global supply. China’s economy is not expanding anytime soon going by recent data. Many countries are looking at alternative energy sources with renewed zeal.

So the big question is: what is the future of oil prices in the immediate future, and how can crude oil traders and those who trade commodity currencies trade this commodity heading into 2016?

THE VARIOUS PLAYS

Traders can decide to:

  1. Trade crude oil itself
  2. Trade stocks of companies in the oil industry

Crude Oil

If we follow historical price movements of crude oil, such as price movements between 2009 and 2011, then we can say that crude oil is going to go back to between $65 and $70 a barrel. This level seems to be the sweet spot for stakeholders in the industry and many have agreed with this call. Another factor which lends credence to this call is that shale oil production is actually more expensive than conventional methods of drilling that have been in use for decades. What this means is that if prices fall too low, profit margins on oil made using shale technology will be eroded and shale producers in the US may have to halt production until prices go back up to levels at which their operations can become profitable once more.

However, there are some who believe it will get a bit worse before it starts to get better. Citigroup is predicting that crude prices will get all the way down to $32 a barrel. So we may see prices going a bit lower before they rise. A crucial factor in the equation is what Saudi Arabia will do about its production quota. At the last major OPEC meeting to decide on whether member states should cut back on production, Saudi Arabia blatantly refused to support a cut in production quotas. At US$672.1 billion, Saudi Arabia has plenty of foreign exchange reserves to cushion any shortfalls in prices, and they used this as leverage in the negotiations. They effectively outmuscled countries like Nigeria (with just $28 billion) and other members of OPEC who have foreign reserves that have dwindled massively and were hoping that the cartel would order cuts to shore up oil prices; a move which would help them to balance their budgets. So Saudi Arabia holds the trump card in OPEC. If the Saudis favour cuts in future, this would definitely shore up prices.

Oil Companies

Increased oil prices would not automatically help oil companies. We have been at an era when companies made profits with $20 per barrel, and also seen a time when crude prices were much higher but companies made less money as a result of bludgeoning costs. Going forward, companies would be forced to restructure operations, cut operation and overhead costs and probably merge to form bigger companies. Traders who are trading oil stocks would be more concerned with some of these fundamentals rather than trading simply on rise or fall of oil prices.

Disclaimer

It is important to seek the advice of your professional trade advisor before performing any trades in the market. The information in the article is for informational purposes only and should not be used as a recommendation to trade crude oil, oil stocks or any other associated assets.

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The UK’s Regional Shift: Looking Beyond London

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In recent years, London’s affordability crisis has reached fever pitch. Hailed as one of the world’s most expensive cities in the world to live and work, London’s prices have long been skyrocketing, not at all in line with the sustainable growth seen in most other UK regional cities. In particular, London’s house prices are suffering substantial inflation, at the expense of homebuyers who increasingly cannot afford the exponential prices that the capital demands. On average, a home in London is nearly 2.5 times the price of a home anywhere else in the country, with an average price-tag upwards of £514,000 compared to just £208,000 found in other regions outside the capital.

Because of this overwhelming affordability barrier, many people are increasingly looking elsewhere in the country, where prices are more affordable and economically sustainable in the long-term. In the past 5 years, there has been almost a mass exodus from the capital because of its unsustainable price growth. Instead, those seeking an alternative have found a welcoming home in regional cities, offering a less competitive job market, lower property prices and a generally lower cost of living than their London counterpart.

It could be said that this nationwide shift from London to regional UK cities like Manchester and Liverpool came in the wake of the successful move of the BBC and ITV to their new regional home in Salford Quays, Greater Manchester in 2011. This move from the capital to MediaCityUK has proved a huge success, with the area now being cited as the first purpose-built digital hub in Europe, and the largest digital cluster outside London.

Therefore, following the successful creation of the bespoke MediaCityUK site, more and more individuals and businesses are seeing the benefit of escaping the affordability restraints of London and are instead enjoying the relative freedom offered in the North. This then has a cumulative effect, encouraging an increase in inward investment to further entice people to live and work in popular regions like Manchester. Consequently, it is no surprise that almost all major Northern cities have burgeoned in popularity recently as a result of this nationwide trend, and are set to continue growing and thriving over many years to come.

However, it is not just Salford Quays that has thrived in the wake of the newfound attractiveness of relocating Northbound. Another popular city enamoured by businesses and employees alike is Liverpool, which has been growing from strength to strength of late. The former Capital of Culture is currently, and has been for many years, benefitting from an influx of both public and private investment, which as a result has completely transformed the city’s landscape. New infrastructures like Liverpool ONE, the largest open-air shopping complex in the UK, rub shoulders with beautiful  restoration projects like the iconic Grade I listed Albert Dock, which has unsurprisingly made Liverpool one of the most visited cities in the country, and thus a prime, sought-after area for those seeking a thriving yet more affordable option than London.

Northern cities have so much to offer, from cheaper housing and overall cost of living, to exciting new investments and a growing populace. As a result, regional cities have never been in higher demand, and this surge in popularity looks set to continue for many years to come.[review]

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Investment TipsReal Estate

5 things you should know before buying property at auction

Auction Key

Property has proved a sound investment opportunity for many years now, and with property prices only set to rise, surely 2015 is the time to focus on increasing your property portfolio. Whether you are a small scale investor looking for a buy-to-let opportunity or large scale investor looking to buy multiple properties, investing in this market is likely to be a very smart move.

Since the economic downturn in the UK in 2007, an excess of repossessed properties have been brought to market, and often these chain-free properties are sold through auction houses. Because these sellers are keen to complete a quick sale, it is no secret that there are bargains to be had at property auctions. Moreover, the speed at which these sales complete is very appealing to an investor as well, as there is no need to wait around for 3 months for contracts to exchange; when that hammer is struck, the property is SOLD.

However, it is worth remembering that not every property sold an auction is a viable investment opportunity. Indeed, some of the ‘properties’ up for sale at auction are more half-way-house than ideal home. Navigating the property auction market can seem a bit of minefield, so it is important to make sure you are fully prepared for making a purchase in this type of environment.

With that in mind, here’s 5 things you need to know before you consider purchasing a property at auction. Being clued up prior to purchase will ensure your future investments are as safe as houses…

  1. Buyers must have their finances in place

One of the most important rules to remember is that buyers must be able to pay a 10 percent deposit on any property they purchase on the day of the auction. Some auction houses will accept cheques, but some will not, so investors must be aware of the individual rules before attending an auction.

Moreover, the buyer is not usually allowed more than a further twenty days to provide the remaining 90 percent of the funds. As such, it is important to be sure that funds are accessible, and that withdrawing them from other financial or investment products is not going to incur fees. Failing to meet this deadline would result in the loss of the deposit.

  1. Guide prices are set intentionally low

It’s hard not to be enticed by a property auction because the guide prices placed on properties often seem very competitive. Industry professionals have acknowledged that the guide prices on auction properties are often set lower than market value in order to encourage new buyers to try this method of buying.

Encouraging new buyers to this industry is not necessarily a bad thing, but it could become dangerous if potential buyers become dazed by the low guide price at the expense of sensible decision making. For example, if you are suddenly confronted with a three bed semi in the South East of England, on at a guide price of only 100K, you may feel there is no need to carry out proper research on the property or set a bidding limit in your mind before the auction – because surely any sale around the guide price will be a good deal… As such, unrealistically low guide prices can cause bemusement and poor decision making in the auction room.

However, as long as investors have researched the market value of an auction property, and they are aware that guide prices are often set very modestly, then the low guide price need not confuse matters on the day of the sale.

  1. Some properties never make it to auction

Although auctioneers won’t be quick to admit this, it’s true that sometimes a sale can be negotiated prior to auction. When a buyer first expresses interest in a property, it is possible to enquire whether the sellers would be open to negotiations. If you are very keen on an auction property and you don’t wish to fight it out in the auction room, then this could be a good opportunity.

In the same breath, it is worth telephoning the auction house a day before the auction to check that the property you are interested in is still available, and hasn’t been sold to someone else prior to auction. Indeed, frustration can occur when, after making an effort to view a property and possibly engage the services of a solicitor, you may find out that the sale has been negotiated by someone else prior to the auction house.

If a property does not meet its reserve price at auction, it may also be possible to negotiate a sale with the seller after the auction has finished.

  1. It is always necessary for the buyer to do their research

All of the points thus far have been leading to this crucial point – investors must do their research before bidding on a property at auction.

Not only should you view the property, but you should also look at other similar properties in the area to see what they are selling for. Don’t be scared to visit a few local estate agents and see how their properties compare to the one you are interested in buying at auction. It is also crucial to read through the legal aspects of your role as a buyer in an auction, which will be provided to you in a ‘legal pack’ once you have shown interest in a property.  Different auction houses have different selling rules and procedures and so it is crucial to be aware of these before raising your hand to bid.

  1. Buyers should not underestimate the challenges of the auction environment

Bidding in an auction for the first time can be an emotional experience. As such, it is important to remain calm, and self-assured in this busy selling environment. Because of the speed of an auction, new buyers are often very keen to not let a sale pass them by. However, as a rule of thumb, if you are not able to think clearly, and you feel your decision is being rushed, then you should not raise your hand to bid. Whilst traditional property buyers may find themselves being ‘gazumped’ behind their backs, auction buyers see their rivals up close and personal, and each higher bid can put pressure on novice buyers to stand their ground, even when doing so would make no financial sense.

To ensure you are as stoical as possible on sale day, you should always attend a few ‘practice auctions’ if possible, or at least watch a few videos of property auctions online, so you can appreciate the kind of atmosphere you will be stepping in to.

 

So, whilst there are risks involved in buying a property at auction, most of these risks can by managed by ensuring that the necessary leg-work is carried out prior to auction. Most importantly, by cutting out the estate agent, auction sales can provide you with the keys to your new property in a matter of days, not months. This means that there will be no delay on receiving a return on your investment.

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Information About Investing Online

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The Internet is a great tool for everyone, including investors due to the response speed, and the amount of information that is exchanged. Transactions are executed very quickly, with the click of a button or a few keystrokes. However, the Internet is also another avenue for fraud. Investors must use caution and common sense when using the Internet for securities activities.

The fact that information appears on the Internet does not render additional credibility to the information. Be especially wary if the identity of the source is not identified.

Over the Internet, investors can purchase securities of a company directly from the company. Treat the online transaction as you would a regular investment, and make sure that the securities are registered or exempted under both federal and state law.

Alternatively, investors can trade securities through online brokers. Study and understand the terms, conditions and costs of these services, before you use them. Brokers must be licensed, and must be registered with the Securities Exchange Commission.

Finally, be very careful with information you gather from a “chat room.” It is in these “chat rooms” that persons posing as credible sources send out information to “pump” the price of a stock. Once the price of this stock has increased, they “dump,” or sell their stock at a great profit. These are called “pump and dump schemes.”

Steering Clear of Cyber fraud
The following steps, according to North American Securities Administrators Association (NASAA) and the Better Business Bureau (BBB) can help you keep on guard when you go online.

1. Do not expect to get rich quick – When evaluating an investment you have learned about online; exercise the same caution and deliberation that you would bring to any unfamiliar investment opportunity. The old rule “If it sounds too good to be true, it probably is” applies just as much to offers made in cyberspace as to those made through any other medium.

2. Download and print a hard copy of any online solicitation you are considering – This document may come in handy if problems develop later. Be sure to note the Internet address, date, and time of the offer.

3. Do not assume that an online computer service polices its investment bulletin boards – The vast majority of services take a “hands-off” approach to screening claims made in message postings, and even those that do minimal policing cannot possible keep up with the millions of messages posted each month. Remember, too, that anyone can set up a web site or advertise online, usually without any check on the legitimacy of their claims.

4. Never buy little known, thinly trade stocks strictly based on online hype – Low-volume stocks are the most susceptible to manipulation since their price can be moved through relatively small strategic trades. Even if a hyped stock starts to move up, proceed with caution – this may just be part of the overall manipulation scheme.

5. Be cautious about acting on the advice of individuals who hide their identity – The use of aliases on computer bulletin boards is intended to protect privacy, but con artists also can exploit it. People online may not be whom they claim. What may seem to be two or more different people talking up a stock may actually be a single individual with a personal interest in driving up its price through false information or baseless speculation. In addition, an impressive-looking website can be the product of a laptop computer on the other side of the world, far from the jurisdiction of U.S. law enforcement regulators.

6. Do not get taken in by claims of “inside information” such as pending news releases, contract announcements, and innovative new products – In cyberspace, practically anyone can say anything. Despite the abundance of “hot tips” littered across bulletin boards and discussion groups, it is extremely unlikely that genuine insider information will be publicly broadcasted on an investment bulletin board.

7. Be skeptical about claims that an online stock hypester has personally checked out an investment – One established tactic of investment schemers is to talk up companies, mining operations, and factories in remote corners of the country or the globe, where it can be impossible for the average investor to investigate or visit in person.

8. Take the time to investigate outside sources of information on any investment you learn about online – Check with a trusted financial adviser and always obtain written financial information, such as a prospectus, annual report, offering circular, and financial statements. Ask the online promoter where the firm is incorporated, and call the state’s Secretary of State or Commissioner of Securities to verify that information. Also, make sure that an investment opportunity and the person promoting it are properly registered with your state securities agency. In Hawaii, the agency to contact is the Business Registration Division of the Department of Commerce & Consumer Affairs.

9. If you think you have been duped, do not be embarrassed about complaining – Early action increases your chances of getting your money back and may prevent others from losing money. If you spot a potential online investment fraud, contact your state securities administrator, Better Business Bureau (808) 942-2355, or The Federal Trade Commission (415) 356-5270.

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