My $10000 Dollars

Current YTD Performance: -$1880

Most of you already know what inflation is and some of the contributing factors behind it. Since I was once clueless as to what inflation truly was, I figured I’d write about it and its impact in today’s world.

What is it :
A concept in which your currency’s buying power decreases and results in value of your money declining as a result in the increase of the cost of general goods such as oil, food, and service. $1 today is worth much less than $1 in 5 yrs.

How does it happen :
1) Demand exceeding supply - If more money is chasing after the supply, the prices will generally increase as a result. Oil and agricultural goods are prime example of what’s been happening today.

2) Cost increase - If the cost of service/product providers increases, then the company has to pass the cost onto the consumers like us. Examples could be oil price increasing resulting in higher transportation cost for manufactured items like iPod and ice cream.

3) Fed’s monetary policies - The government can impose many policies throughout the year to keep the inflation rate under control. One way for them to accomplish this is interest rates. The lower the interest rates, the higher the inflation risks can be. When you have a lower interest rate, you can borrow money easier which then leads to more money….which equals inflation.

What does it mean to you?
1) Creditors lose and debtors gain if the fixed interest rate is less than the inflation rate. For those who borrow, this is similar to getting an interest-free loan.
2) People living off a fixed-income see a decline in their purchasing power and their standard of living.
3) If the inflation rate is greater than that of other countries, domestic products become less competitive.
4) Your wages will generally go up to adjust with inflation.
5) The price of your rice bowl increases at restaurants.
************************************************************************************
On a separate note, today was a good day for me. I FINALLY profited from the volatility of Dryships (DRYS). Looking at the charts and current market condition, I shorted 200 stocks and profited over $300 today. So glad I made some money today amid the craziness that kept its course throughout the last day of June. Believe it or not, Dow and S&P 500 saw the biggest losses for the month since the Great Depression. WOW. I knew it was bad considering how quickly I went from +$2300 to $-$2600 this month, but I didn’t know it was THAT bad.

Analysts are saying that July isn’t looking too good either…which means more opportunities for us to short the stocks??