Japanese Win Sweeteners in Morgan Stanley Rescue

Investment bank reprieved as Mitsubishi UFJ steps in to send share prices rocketing

Morgan Stanley won vital breathing space yesterday by closing a deal to secure $9bn (5.2bn) of funding from Japan’s largest bank, alleviating fears about the 73-year-old Wall Street firm’s financial position.

After a frantic weekend of negotiations, Morgan Stanley secured the cash injection in exchange for sweetened terms giving Mitsubishi UFJ a higher return, a boardroom seat and a stake of about 21%.

The closure of the deal sent Morgan Stanley’s shares rocketing by 52% to $14.78 during early trading in New York, ending a sell-off that caused the stock to plunge by almost 60% last week.

In a memo to the bank’s 48,000 staff, Morgan Stanley’s chief executive, John Mack, acknowledged the scale of the scare that has gripped the global financial services institution. “These are truly unprecedented times, and I know the past few weeks have been difficult for all of you,” said Mack. “Tough times like this test people, and the people of Morgan Stanley have risen to the challenge.”

The backing of Mitsubishi is likely to reassure investors after a swirl of rumors, denied by Morgan Stanley, that the US bank’s financial position was weakening.

Mitsubishi, which has some $1.1tn in deposits, decided to invest last month. But, weakened by a slide in market confidence, Morgan Stanley has agreed to give it extra preference shares with a dividend yield of 10% in place of common stock.

The US treasury secretary, Henry Paulson, has made it clear that he will not allow another major Wall Street firm to follow Lehman Brothers into bankruptcy.

Mitsubishi’s president, Nobuo Kuroyanagi, said: “Despite a very challenging environment, MUFG [Mitsubishi] and Morgan Stanley have demonstrated our mutual commitment to this strategic alliance and have revised the terms of our investment in the best interests of both companies and our shareholders.”

The US bank said the money would bring its ratio of core capital to risk-weighted assets to 15.5%, well above the 6% required by the Federal Reserve to be considered “well capitalized”. Morgan Stanley said it had $900bn of assets, down from $987bn at the end of August.

Insiders at Morgan Stanley said the bank would have no immediate need to tap the US treasury for funds under an expected government initiative to recapitalise the banking sector. Executives believe the bank has been caught in a back draft of unjustified panic among investors still reeling from the speed at which Lehman and Bear Stearns unraveled this year.

Sources close to Morgan Stanley insist there was no justification for the sell-off in its shares, which could have been aggravated by speculators after the lifting of a US ban on short-selling financial stocks.

The credit rating agency Moody’s fanned the fires of skepticism last week by putting Morgan Stanley on watch for a downgrade. The financier George Soros appealed to the US treasury to help, writing in the Financial Times that Morgan Stanley “urgently needs rescue”.

Investment Contests and Competitions

The growing popularity of advanced investing methods and instruments, so much more in-depth than the simple savings account of the past, has inevitably led to secondary activities and businesses related to investing. Among them are advisory services, newsletters, finance-related web sites, etc. But perhaps most popular among these derivative activities and businesses is the investing contest, by which individuals test their investing prowess against others with similar interests. Such contests allow participants to pit their skills at interpreting fundamental and technical data against one another in a competitive arena, with the winner typically receiving a cash award. Below are links to information about investment contests and competitions.

Technical Analysis & Investment Strategies

Technical analysis involves the use of both simple and complex mathematical and statistical concepts in determining the viability of an investment. While many academics feel that technical analysis and charting is useless, many brokers, money managers, and traders have begun using such analysis exclusively or in conjunction with fundamental analysis. Some of the most common technical indicators for stocks and other investment vehicles include Fibonacci numbers, moving average crossover divergence (MACD), Williams %R, stochastic oscillators, momentum, directional movement, on-balance volume (OBV), relative strength index (RSI), and moving averages. Below are links to information about technical analysis and investment strategies.

A Beginners Investment Property

Guide to real estate investing.

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When buying an investment property it is advised that you start small. Just like most aspects of life, it is good to get your feet wet before your dive right in. Before you buy a large apartment complex it is best try an investment property that will be easier to manage, such as a single family rental home.

The advantages of learning the tricks of the trade with a relatively inexpensive investment property are not always so obvious. To begin with, an investment property such as a small rental home offers a small financial footprint. The price of learning the business and potentially failing is therefore much smaller than it would be if you started out with a million dollar apartment complex. Even if the venture to manage a rental home doesn’t work out for you and you decide to exit your real estate investment strategy, more than likely you will recoup most of your money on the sale of the property. You stand to lose some money make no mistake, but it won’t be enough to break the bank.

On the other hand if you decided to dive right into the investment property business then you may have dug yourself a hole you will never be able to get out of. Should things go awry and you are forced to sell the million dollar property, even a small 5-10% loss on the investment could result in long term financial damages.

Starting off with a small investment property can also help you become a better property manager. It is easier to adequately address the needs of just one tenant than it is trying to solve the problems of several tenants at once. Part of making an investment property successful is adding value to the rental. If you can learn how to please one tenant, then you will be in a better position to extend what you have learned and please all the tenants in a larger complex. Indeed, experience is priceless.

When you invest in a single family dwelling your financial investment is relatively low. This financial investment directly relates to your commitment level to the venture. Somebody who has invested a large amount of money in an apartment complex will be all the more committed to seeing that the investment property turns a profit. There is no shame in working hard and seeing to it that things work out for the best, but if you are unable to walk away from the investment then you may stand to lose a whole lot more money than you should. Thus a lower commitment level allows you to more accurately reassess whether investing in real estate is right for you. If you decide it isn’t right it will be easier to walk away from a rental home investment property than a more expensive apartment complex.

Purchasing and turning a profit on an investment property is just like any game one might play in life. To be successful you must learn and completely understand the rules. Once you have the rules mastered then you may go ahead and play your hand aggressively, but until then it is in your best interest to take it slow and learn the ins and outs of the game. Starting out slow with a single, lower value investment property will help you stay alive in the real estate game longer and hopefully become a powerhouse down the line.

Adam Smith is an internet marketer specializing in affiliate program management for 10Xmarketing.com. More information on earning a positive cash flow on an investment property can be found at One Minute Millionare .