How to Invest in Real Estate When Cash Is Tight

Most people have come to mistakenly view cash (including cash to an existing Loans and/or cash to a new loan), rather than benefits, as the driving force behind real estate transactions. So when cash is tight, transactions don't get done, and benefits for buyers AND sellers are left by the wayside.

But knowledgeable creative real estate investors and well-trained real estate agents (investment and exchange specialists such as CCIMs, SECs, and NCEs,) have understood that cash itself is not the answer to all real estate conveyances. As part of that equation, these astute folks realize that liquidity is ultimately the ability to readily convert assets into desired benefits.

Consequently, they focus on circumstances surrounding ownership of the property and uncover objectives (benefits) sought by the parties as the basis for making more successful transactions happen.

As the dark skies of the growing "liquidity crunch" continue to threaten the economic well-being of real estate professionals across the board, they also present a tremendously rewarding challenge for those who use the opportunity to improve their skill-set--to help people solve their financial problems and to be paid well for it in the process.

It is times like these when the most discerning and well-connected real estate investors find the world is their oyster!

Pipe cleaner?

Liquidity in its purest form is essentially barter--an exchange of goods, products, services, or even promises--in lieu of cash. Real estate transactions are a simple matter of trading benefits between principal parties. Yet most people are never able to relate this simple concept to buying and selling real estate?

Oddly enough, many real estate investors have failed to fully explore this concept. Unfortunately, many smaller real estate investors have limited horizons with regard to the full spectrum of time-proven alternatives for maximizing the benefits when buying (or selling) investment real estate!

And like many retail real estate customers, too many creative real estate investors fail to fully and carefully think through their objectives and how they might best achieve them. They fall back to thinking that cash is the only answer!

At the same time, most retail real estate agents, note brokers, and even note investors are not even familiar with many of the creative financing structures that have been transpiring for decades.

Astute creative real estate investors and private note investors recognize that there are over 160 methods for acquiring real estate--only THREE of which are all cash (cash, cash to the existing Loan, cash to a new loan).

They realize that knowing how and when to use even just a few of these techniques can often replace the need for cash, thus injecting liquidity into the marketplace to facilitate more transactions and generating desired benefits for the parties--benefits that might not have occurred otherwise.

The following are just a small sample of the more common techniques that experienced investors use to buy or sell property. And most of these will usually have private notes somewhere in the mix:

• Sell land only

• Sell building only

• Sale with option to buy back

• Sale with leaseback

• Sale-leaseback with option to buy back

• Installment Sales IRC 453

• Wrap-Around Mortgages

• Pyramid Financing

• Exchanges IRC 1031

• Exchange land only

• Exchange building only

• Using trusts, especially Land Trusts

Several of these, such as well-crafted Wraps and Pyramids, are particularly powerful when institutional financing is hard, and/or expensive to come by. There are also many techniques for successfully selling privately held owner carryback notes, to maximize the benefits necessary to meet the needs of the parties, including the basic Split Down and Partial Purchase

Let Genie out of the bottle with liquid paper!

The private cash flow industry is again becoming fertile ground for small investors to pick up more of the quality notes that were previously snapped up by the larger institutional note buyers.

Enlightened investors who use even just a few of the proven, practical real estate financing options available--including how to use other deal structures in lieu of financing--will profit handsomely by helping others solve their problems.

The use of real estate notes (by local and private investors) to buy, sell, and trade for accumulating equities inherently injects liquidity into the real estate markets, allowing transactions to again flow.

Real estate agents and note brokers who become familiar with at least some common alternative financing techniques, understand the basic fundamentals, and recognize how they can profit from making note holders, property sellers, and less astute investors aware of them will become rainmakers!

Learn to Invest Money: Why Information Technology has Revolutionized Successful Investment Strategies

Do you want to know how to consistently earn double digit and triple digit returns from stocks? The answer lies in information technology. Yes. Information technology.

Most of the stocks I’ve owned that have earned more than 50% returns in less than a year are not even on the radar screens of the analysts of major investment firms. How do I know? Because I’ve worked at two Fortune 500 financial services firms as a Private Banker and Private Wealth Manager and never was able to find any research at these firms on the stocks that interested me the most. Why?

Because the way to make money in investing has changed dramatically and the big investment firms have not kept up. One of the reasons big investment firms have not kept up is because most have ulterior motives as pure marketing machines.

Almost every manager at every large investment firm is compensated on how much fee income and profit their office makes for the firm, not how well their financial consultants have performed for their clients. There is a huge difference between these two goals. It’s the reason why former Merrill Lynch star internet analyst Henry Blodgett once stated in a comment that he never believed would be made public, that the stocks other Merrill analysts were praising on TV as top picks were “crap" and "junk” (Source: Fort Worth Star Telegram, May 26, 2002).

Even honest financial consultants at big investment firms find it difficult to find you great opportunities among the pool of stocks that their firm tracks. Why? Because many firms mandate older age and lots of experience as prerequisites for their star analysts. They believe that a head industry analyst with a couple of grey hairs is far more credible when appearing in front of their top clients and in front of the American public on television. Personally, if I ran an investment firm, every one of my analysts would probably be under 30 years of age. Why?

Well, information technology has revolutionized the ability of analysts to find stocks with spectacular growth prospects before the general public becomes aware of these stocks. Leads can be found through internet search engines by searching the right keywords, and also through other creative methods, including the utilization of blogs. Many times, the best stock opportunities can be uncovered through non-traditional sources of information, meaning NOT Reuters, NOT Bloomberg, and NOT any of the other financial information clearinghouses that big wall street firms pay thousands of dollars for every month. Many times, the best information is free and online, but the key is knowing how to uncover it.

Typically, when you have a problem you wish to solve related to the internet, whether it is a web design problem, a problem with obtaining better search engine rankings for your website, setting up a blog, being able to understand how to search online databases, and so on, would you turn to a fresh faced kid or someone with grey hair for help? A fresh faced kid, right? Because typically the younger generation is much more up-to-date on newer technology, including knowing how to manipulate and find data. See where I’m going with all this now?

The reason you’ll never hear about the companies that in five years will be the new Microsofts and the new Dells from the portfolio managers and financial consultants at large financial services firms is because huge financial institutions have yet to realize that understanding how to source information utilizing information technology is what has enabled the best stock pickers to be right so many times about stocks nobody else has ever heard of. And don’t be impressed if your financial consultant recommended IPO plays like Google that skyrocketed because the whole world knew about Google. Your financial consultant should be uncovering the tens and tens of other Googles out there that nobody else has ever heard of.

Frankly, I could care less about how many times the top portfolio managers of big investment houses visit the companies of stocks they recommend. I could care less if these top portfolio managers have “access” to the CEOs and CFOs of these companies because of their “reputation”. I could care less about the “global reach” of these investment firms that enables them to research overseas companies. None of this impresses me as a client.

I could care less because the majority of time, the big financial services firms are not researching the right companies. By this, I mean the small and micro cap stocks that nobody has ever heard of. The big firms will spend tens of thousands of dollars to set up these conferences at fancy hotels for their biggest clients and parade their impressive access to big time company CEOs, but still, I’d rather spend almost nothing continuing to discover stocks that will give me 50% returns in less than a year versus wasting my time listening to excessive information about a huge company that will never grow more than 8% a year. But then again, that’s just my opinion.

The Best Minds in International Investing

And while the Internet has made it easier than ever to conduct research on foreign stocks and economies, you still need expert guidance to turn that information into a profitable portfolio. The Forbes International Investment Report is your guide to navigating the exciting landscape of global investing.

Each month, you will receive our flagship “Global Core” portfolio of our 30 best investment ideas from all over the globe. You will also get 3 additional portfolios covering Europe, Asia-Pacific and Emerging Markets, along with insightful commentary on current developments in the global economy and stock markets.

Forbes International Investment Report is brought to you by Forbes and its editor is John H. Christy III, a veteran financial editor and analyst whose track record includes Forbes magazine and Bloomberg’s Asia Finance desk in Tokyo. John is also a Chartered Financial Analyst with experience working in a boutique global investment management firm. In international markets it is not only what you know, but who you know and John’s rolodex is a virtual international Who’s Who of the most important CEO’s, politicians and money managers around the globe.

In addition to John’s insightful commentary and detailed buy, sell and hold stock recommendations, each issue will feature exclusive Q&A features with top-ranked global fund managers, analysts, economists and top executives of international companies. You won't see these inteviews published anywhere else.

TO GAIN IMMEDIATE ACCESS TO THE FORBES INTERNATIONAL INVESTMENT REPORT AS WELL AS TO JOHN'S NEWEST SPECIAL REPORT,"6 MUST-OWN EMERGING MARKET STOCKS,"

BECOME A CHARTER SUBSCRIBER, TODAY!

Global Investing Made Easy

Investors who have embraced international stocks have been handsomely rewarded in recent years. In 2006, the international stocks delivered a 20% return, easily outpacing the S&P 500. Over the past three years, international stocks have returned nearly 10 percentage points more than U.S. stocks on an annual basis.
But these are just averages—the gains in individual markets and stocks have been even more spectacular. China rose more than 80% last year, Russia surged 55%, and Singapore was up nearly 50%. Believe it or not some stocks and ADRs did even better.
Is it risky to invest in overseas markets? To the contrary, it is even more risky to your long term financial wealth NOT to. Just listen to what legendary investor Sir John Templeton said about investing for beginners, “Investors should see the investment world as an ocean and buy where you get the most value for your money.” Investment sage Templeton's message is clear. Prudent investors must deploy their capital around the globe where the returns are the greatest.

Forex vs Other Investment Programs

1. Highest Return On Investment just than other invesment.
Is there any invesment that ready to offer return till unlimited? Forex can conduct it!

2. High Liquidition.
This means, you always can buy or sell currency that will operated and there is no term fails surender here. When you conduct action buys, always there is other party that will sell it to you and conversely. This happened because scope of forex invesment is world stock which linked each other. Differ from local stock where transaction only takes place at stock referred so it’s can happen event fails surender.

3. Required small capital.
Former capital that required can be very big (reach $ 10000). Now capital that required $ 500 only. Compare to other invesment for example share that require capital at least $ 2000 or real sector invesment that usually more than $ 5000

4. Hour trading 24 hours one day and 5 days a week.
There is no night word or daytime in the world of forex trading. Market takes place for 24 hours one day started from Asia market till Europe market and America. Compare to Saham that only open at office hours or commodity market that only open morning till daytime. If you white colars a worker, You can transact forex trading nocturnal and not bother your office hours.

5. Wherever, whenever, any time and whoever can join.
Correct, invesment do not know caste. Also with forex trading. Whoever you are, merchant, worker, household a mother or even a farmer once even also can join. And more excitement its next with progress of internet world, You can trade where just without having to go to pertinent stock or telephone your dealer directly. This clear economize yaour time and expense!

6. Investor acts active in its invesment.
No like other invesment where investor shall only entrust its fund is managed third party. Now your invesment bases on yourself by it self and is not to others.

7. Price real time that can be accessed all the times in free. We feel this already enough, needn’t explained [again]. Altogether free of charge.

8. Available demonstration account with free of charge. If you novice in the world of forex, this will very help you because price that gauged at demonstration account is equal to truthfully price happens in market.

9. Leverage that offered 1:100.
This that means with one part that you release, You can buy or sell 100 parts. This is excess from margin trading where that required is only just guarantee to buy or sell goods required. At this forex trading implemented with capital as big as $100 then you can buy Dollar counted $10.000 and also on the contrary for sell action. High Leverage and low margin basically can enlarge advantage or on the contrary your loss. That is you must consider your invesment risk and your invesment plan.

10. Online reporting and transaction.
Former forex trading are conducted by telephone and report of your transaction result will be sent pass by email or even post per month. But now by internet access, your transaction report can be accessed without having to await on one’s part tycoon report it to you.

11. Security and secretness are guaranteed.
Though transaction is conducted pass by internet is not means security and information secretness and your fund are not guaranteed.

Thus now we return to you to consider it objectively and accomodate it with a purpose to your invesment.

Sources of investment information

"Pssst, hey buddy," whispers the man in the battered trench coat and fedora, "Wanna tip on a hot stock?"

This is how people in the movies used to gather investment information. Now, we may hear from a friend or broker, see a news item on television, or read an article in the newspaper. How can we analyze investment information, and how can we make sure our sources are credible?

Your best source of  stock investments is your financial adviser. If you have developed an investment plan based on your financial situation, your capacity for risk, and your investment objectives, your advisor is the best person to help you execute your plan. But, to get the right answers, you have to ask the right questions, and that requires attention to several economic indicators.

Indicators of economic developments are usually reported by The Financial Post and The Globe & Mail. All major brokerage houses publish economic forecasts at least annually, and business publications produce economic reports. Mutual fund companies publish newsletters, quarterly and annual reports, and sometimes monthly reports from fund managers. Television programs include Public Television's Nightly Business Report and Wall Street Week. As well, radio programs such as Everett Banning's Moneyworks can be helpful.

Economic information is only as reliable as the raw data collected and the credibility of its interpretation. Pay attention to the time period upon which the data are based. After collection, sorting, analyzing, and reporting, some data are weeks or months old. Also, take special note of any corrections to reports previously issued. Coverage is usually greatest when data are first reported, accurate or not, and later corrections are often much closer to the true story.

Gross National Product (GNP) deserves watching. It is the total market value of all goods and services purchased for direct use, and which won't require any further production, distribution or processing. An increasing GNP indicates an increase in economic activity, usually more jobs, more energy required, and more factories in need of upgrading. If GNP has been low or negative for a time, an increase may precede a rise in consumer spending on small appliances or clothing. If the GNP continue to rise, more expensive items such as cars, large appliances, or houses may be in demand, as well as raw materials like steel and lumber to make them. But remember, GNP only signals a rise in activity, not that things are actually getting better. When someone is diagnosed with cancer and requires treatment, GNP goes up. When a major source of pollution has to be cleaned up, GNP rises.

The Consumer Price Index (CPI) gives an indication of the rate of inflation. It is based on a basket of goods and services that the average consumer might purchase. If the CPI rises quickly, investors may move to hedges against inflation such as natural resource stocks and precious metals. If the CPI is stagnant or decreasing, it may signal a reduction in interest rates which is good for fixed-income investments such as bonds.

Unemployment Rates measure the number of people registered as unemployed, but they don't cover those who have given up looking for work. We all have a sense of the level of unemployment from the news, so the trend is usually more important than the actual level. If unemployment is increasing, there is more worry about job security,and finding good job finding tips and consumers tend to spend less. Government deficits may increase as money is used for job creation or unemployment insurance payments. If unemployment is decreasing, worries about inflation may surface and it's sensible to watch the CPI.

Housing Starts and Car Sales are both related to consumer confidence and are fairly accurate because of the ease of collecting data. However, because building a house takes time, housing starts reported today reflect consumer confidence six to 12 months ago. Housing starts bode well for the construction industry, furnishings, large appliances, and plumbing as well as their suppliers and the raw materials to make the products. However, once the figures are published, the growth has already begun and smart investors will have bought their stock six to 12 months ago.

Money Supply and Interest Rates are usually related. Money supply is the amount of money in circulation, controlled by the Bank of Canada. Increasing the money supply lowers interest rates, supports economic expansion, and increases the possibility of employment and inflation. Decreasing the money supply does the opposite.

There are many other economic indicators that investors can watch but you can have too much information, too. The best strategy is to discuss changes in economic trends with your investment adviser in order to structure the investment portfolio that is best for you.

Make Easy Money With HYIPs

Did you know that you can earn various daily interest with High Yield Investment Programs? HYIPs are a very lucrative business opportunity that allows you to make huge HYIP profits from your home for a tiny bit of investment. But as it always is with big profits comes the ig risk. So before you trust your hard earned money to any high yield investment program be sure to read the articles on this site and check out the atest advices and scam reports on our forum.

High Yield Investment Programs (HYIP) pay varying daily percentage on your investments. You can earn as much as 1-2% daily with a reasonable amount of risk or a reliable 10-20% monthly.Real HYIPs invest your money in FOREX, offshore and arbitrage trading, commodities and and other high profit markets.

Before you start to make money with HYIPs, you need to know that this industry is full of paid survey scams. A lot of HYIP sites are simple ponzi schemes, which are closed only months or even weeks after they've been started.

Our goal is to list only those programs which will pay you! We study and review all HYIPs to predict their potential lifetime and we will only list a HYIP, if our expectation show that it won't close before you get your money back with profit. We check all programs frequently to ensure that they still qualify, and we remove any programs we have doubts in.

How to Find Information on Money Market Accounts

Investing in a money market account is relatively safe. It works like a savings account, usually with a higher minimum deposit. Money market accounts are like IOU's issued by the U.S. government or by large corporations. Because they are short-term investments, your money stays liquid. Follow these steps to learn more about them.

Steps for Finding Information On Money Markets

Step 1:
Calculate how much you can invest. Some money market accounts require a minimum deposit of $10,000.

Step 2:
Research money market rates online. Money-rates.com has a great comparison chart of money market rates, yields, minimum deposit and other information.

Step 3:
Identify which banks offer the best interest rates for the amount you can invest.

Step 4:
Research those banks online. Request information from those you're interested in investing in.

Step 5:
Read through the information on their money market programs. Note deposit and withdrawal limitations as well as minimum balances and fees. Compare the features of their accounts. Determine which one works best for you.

Money Market

Citigroup Inc. to Goldman Sachs Group Inc. said yesterday the Federal Reserve's plan to inject $200 billion into the
banking system may fail to break the freeze in money-market lending. Traders bet the Fed will cut its rate as much as 0.75
percentage point on March 18 to avert a recession. The likelihood of a reduction to 2.25 percent was 76 percent,
according to futures on the Chicago Board of Trade. The balance of bets is on a cut to 2.5 percent. Federal Reserve
officials are staking their credibility on a bet that the fastest interest-rate cuts in two decades won't endanger their forecast
for inflation to slow in the next two years. Investors have pushed gold, oil, wheat and corn prices to records since the Fed
lowered its benchmark rate by 1.25 percentage point in January and indicated it's ready to do more when policy makers
meet next week. Inflation-linked bonds also rallied as traders anticipated the Fed will ditch the ``rapid reversal'' of rate cuts
discussed at their Jan. 29-30 meeting.
USD/JPY fair 100.00 strg 99.70 fair
99.43 strg 99.30
The global credit squeeze has forced Chairman Ben S. Bernanke to break with his preference for a goal-based approach
that keeps policy trained on price stability. The Fed chief has attacked the crisis on two fronts, accelerating rate cuts and
finding new ways of adding liquidity, including this week's $200 billion plan to lend

Foreign Exchange

The dollar fell to the lowest since 1995 against the yen on speculation fund managers and central banks will cut holdings
of U.S. assets as reports add to evidence the economy is entering a recession. The currency also slid to a record low
against the euro as U.S. President George W. Bush said the dollar is ``adjusting'' and its decline isn't ``good tidings.'' The
yen's gains accelerated after Carlyle Group's mortgage-bond fund said it was unable to reach an agreement with lenders,
who will ``promptly'' take over all of its remaining assets. The Central Bank of Jordan is reducing the amount of dollars in
its foreign reserves because of the declining value of the U.S. currency and
the need to service debt. Deputy Governor in an interview in Amman, Jordan would not provide a break down of the
bank's reserves, totaling around $7 billion. A Qatar central bank official denied an Emirates Business 24/7 report that Gulfregion
policy makers will consider currency revaluation when they meet next week. China wants to invest more of its
reserves abroad, Minister of Commerce Chen Deming said yesterday. China's reserves are the world's largest at $1.5
trillion. The Dollar Index traded on ICE Futures in New York, which compares the currency to those of six trading
partners, declined to a record low of 71.99. Since hitting a 4 1/2-low on June 22, the yen has rallied 24 percent against the
dollar.

Glacier Money Market Fund

This fund is a domestic AAA-rated fund with best money market rates and a constant unit price of R1,00. According to the requirements of a zaAAAm rating, the fund may only invest in cash and money market instruments with maturity not exceeding 12 months and a weighted average duration not exceeding 60 days.

Please click here to view the Glacier Money Market Fund fact sheet.

Money Market Yield Information

The performance represents past performance. Past performance does not guarantee future results.
Current performance may be lower or higher than the performance data quoted.
1 Currently, the rate is set weekly. The rate shown will be effective for the Monday following
the AS OF date and continue through Sunday.
2 Minimum initial investment is $1,000,000
3 For use with Managed ERISA and Managed IRA accounts only
4 Average rate for the past seven days
5 Rate earned after the effects of compounding are considered
6 Average rate for the past thirty days
7 Certain investors may be subject to Federal Alternative Minimum Tax and to certain state and local taxes.
8 The Funds are distributed by Victory Capital Advisers Inc., which is not affiliated with KeyCorp or its subsidiaries.
Victory Capital Management Inc. is the investment advisor to the Funds and receives a fee from the Funds for performing
services for the Funds. This material must be preceded or accompanied by a prospectus.
9 The Fund is advised by Reich & Tang Asset management L.P. and distributed by Reich & Tang Distributors, Inc., neither o
is affiliated with KeyCorp or its subsidiaries. Reich & Tang Asset Management, L.P. receives a fee for its services.
The Fund is not affiliated with the Victory Funds. This material must be preceded or accompanied by a prospectus.
The FDIC Variable Rate Deposit is a bank deposit account. It is offered through Key Investment Services LLC (KIS)
and is held at KeyBank National Association in the name of Pershing LLC as agent for its Customers. Pershing LLC is a subsidiary
of the Bank of New York Mellon Corporation.
The annual percentageyields (APY) are accurate as of the dates listed above and are subject to change without notice. The APY
is variable and may change at any time after the account is opened. Fees may reduce the earnings on this account.
*An investment in a money market fund is not insured or guaranteed by the FDIC or any other government agency. Subject to investmen
including possible loss of the principal amount invested. Although the money market funds seek to preserve the value of your investment
per share, it is possible to lose money by investing in these funds.
Investment products are offered through KeyBanc Capital Markets Inc. (KBCM),
member FINRA/NYSE/SIPC or Key Investment Services LLC (KIS), member FINRA/SIPC.
Investments made available through KBCM and KIS are:
NOT FDIC INSURED • NOT BANK GUARANTEED • MAY LOSE VALUE • NOT A DEPOSIT
NOT INSURED BY ANY FEDERAL OR STATE GOVERNMENT AGENCY
KBCM, KIS and KeyBank are separate entities, and when you buy or sell securities
you are doing business with KBCM and/or KIS and not KeyBank.

How do money market accounts work?

A money market account is a type of savings account offered by banks and credit unions just like regular savings accounts. The difference is that they usually pay higher interest, have higher minimum balance requirements (sometimes $1000-$2500), and only allow three to six withdrawals per month. Another difference is that, similar to a checking account, many money market accounts will let you write up to three checks each month.

With bank accounts, the money in a money market account is insured by the Federal Deposit Insurance Corporation (FDIC), which means that even if the bank or credit union goes out of business (which is very rare) your money will still be there. The FDIC is an independent agency of the federal government that was created in 1933 because thousands of banks had failed in the 1920s and early 1930s. Not a single person has lost money in a bank or credit union that was insured by the FDIC since it began. With credit unions, the money in a money market account is insured by the National Credit Union Administration (NCUA), a federal agency.

Money earning even more money!
When you put your money into a money market savings account it earns interest just like in a regular savings account. Interest is money the bank pays you so that they can use your money to fund loans to other people. That doesn't mean you can't have your money whenever you want it, though. That's just how banks make money -- by selling money! Basically, it works like this:

• You open a money market account at the bank.
• The bank pays you interest on the money that you deposit and leave in that account.
• The bank then loans that money out to other people, only they charge a slightly higher interest for the loan than what they pay you for your account.

The difference in interest they pay you verses the interest they charge others is part of how they stay in business. We'll take a look at how the interest on money market accounts work in the next section.

Money Market Mutual Funds and Market Efficiency:

The US securities markets, especially the equities market, are commonly characterized as informationally efficient. This important notion of market efficiency is labeled the Efficient Market Hypothesis (EMH). (See Levy, Ch. 12, 1995.) This hypothesis has several important implications for the individual investor. One is that under-priced stocks are difficult to identify. The most often cited evidence that this is true is that professional money managers usually fail to achieve risk-adjusted returns equal to that of index funds. The most obvious implication for investors who, with reason, agree with the EMH is that they should follow a passive investment strategy that focuses on minimization of time, taxes and transaction costs. For those that don't agree, there is usually some degree of doubt about the extra expenses resulting from an active investment strategy.

The market efficiency concept should also apply to interest-rate-sensitive instruments, such as bonds and money market instruments. If the market for these instruments is informationally efficient, all existing information should already be accounted for in the price and yields of the assets, and market participants should be unable to anticipate any changes in interest rates on a predictable basis. But, contrary to the massive scrutiny afforded the capital markets by investors and academics in an attempt to support/refute the EMH, the one market that has received scant attention is the money market. For the typical individual investor, participation in the money market is epitomized by money market mutual funds (MMMFs). From an origin as recent as the early 70's, MMMFs now comprise a market of 1200 taxable and nontaxable funds that had assets of more than $1.1 trillion as of early 1998.

One of the central tenets of the EMH is competition. Yield data on MMMFs is readily available for all the world to see and may easily influence investors' selection of particular funds. MMMF managers can attempt to differentiate their yields by changing risk classes via shifting funds into usually higher yield certificates of deposit (CDs) and, especially, commercial paper (CP) and away from lower yield Treasury securities. This choice is largely guided by each fund's investment policy. However, the greatest opportunity for money fund managers to differentiate their funds' returns from others in the same risk class is to forecast short-term interest rates and alter fund maturity in response to the forecast. [Stigum, 1978]

The rationale is that MMMF managers, in the aggregate, can alter the average maturity of MMMF assets to benefit from impending interest rate changes. If rates are expected to increase, then the average maturity will be shortened so that funds' yields will increase quicker. If rates are headed down, then an increased maturity will slow the yield decline.

Investors should be curious about whether or not the MMMF average maturity index (AMI), and changes in that average maturity provide useful information in terms of impending short-term interest rate changes. Simultaneously, an analysis of the relationship between average maturity and short-term interest rates should provide additional evidence that supports or contradicts the concept of market efficiency as it applies to MMMFs.

This study examines joint questions of the usefulness of aggregate maturity MMMF data and the concept of market efficiency. Similar to Domian (1992), we utilize Granger-causality to determine if a short-term relationship exists between the AMI of the MMMF market (measured in days) and short-term interest rates (proxied by 3-month T-bill rates). In addition, cointegration analysis is used to test for a possible long-term relationship between the same variables. It is not the authors' intention to determine specifically how MMMF managers forecast the movement of interest rates, just that they may be successful in doing so. Study results would have obvious practical implications from several different aspects.

First, the analysis examines the EMH by focusing on professional money managers. Intuitively, MMMF managers are expected to outperform the market and may exhibit superior timing ability. Investors want to know if professional money managers are indeed successful in anticipating changes in short-term interest rates and are, therefore, worthy of attention. Just what is the future short-term direction of interest rates?

Second, borrowers want the same kind of guidance from the opposite perspective. Should needed loans be negotiated now, or should such an action be postponed in anticipation of declining rates? The third aspect is from the standpoint of policymakers/regulators. A primary component of current interest rates is expected inflation. Scrutiny of a changing AMI may provide evidence of interest rate expectations (including expected inflation) from a policy point of view. And, finally, financial institutions, such as banks, brokerage firms, and even MMMF managers, want to see what others are thinking. These differing perspectives comprise the clientele for the present study.

Money market average daily turnovers

The Czech National Bank surveys average daily turnovers on the money market twice a year, in April and October, for its own purposes and also for international financial institutions - the European Central Bank (ECB) and the Bank for International Settlements (BIS). The survey always lasts one week. Banks and branches of foreign banks having a banking licence in the Czech Republic and operating on the Czech money market take part in the survey. In addition to total money market turnover, the CNB monitors the shares of individual instruments by type and maturity. All categories include interbank transactions only (i.e. excluding transactions with clients, the Czech Ministry of Finance and the Czech National Bank).

The CNB discloses information on average daily turnovers in aggregated form. The aggregated values are a simple sum of the data from each bank, except for transactions with residents, where each transaction is reported simultaneously by two survey participants and the total sum in this category is therefore divided by two.

Money Market Information

A Reuters guide to Money Market Information

Find out about how Reuters can help you

The money market is a wholesale market for the buying and selling of money. Money markets trade in short-term debt instruments, maturing in one year or less, issued by governments, financial institutions and corporations. They differ from the fixed income or bond markets which trade in longer-term debt instruments. Money forms part of the overall treasury market which includes foreign exchange and fixed income.

To operate effectively, money market professionals need access to real-time data and information on short-term debt instruments. The information they require ranges from information on US treasury bills and other government short-term money securities to information on money instruments such as certificates of deposit, commercial paper, bills of exchange, bankers' acceptances and repurchase agreements known as repos. They also look for information on derivative instruments such as interest rate swaps and options.

Money market traders, investors and borrowers need to keep abreast of all the significant factors that move their markets. So in addition to real-time price data and information on rates and yield curves, they require breaking news and in-depth coverage and analysis of key rate, economic and fiscal policy decisions.

Money market professionals also need sophisticated analysis tools to examine a broad range of scenarios and secure, reliable electronic trading systems that provide immediate access to liquidity and enable them to deal easily and with speed.

Retail investors access the market principally through investing in mutual funds which specialise in short-term money instruments. They need information on the performance of these funds as well as price and yield information to help them make investment decisions. Information on mutual funds is available in the print media and on financial information websites.

Reuters has a long history of helping trading communities in the foreign exchange and money markets. In addition to its treasury news and information services, Reuters provides secure trading networks. Today the largest and most established community of foreign exchange and money market traders use Reuters Dealing Direct, an electronic conversational application that allows them to access information, communicate with their counterparties and trade. Reuters also provides an electronic matching service for interest rate derivatives which enables money market traders to match bids and offers anonymously and automatically.