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             News to Use - October 18th, 2000
               http://www.investopedia.com/
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Table of Contents
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1. Term of the week: Capitulation
2. Lesson of the week: What Takes Place at the FOMC Rate Meeting?
3. Feature article: Putting the Soul into Investing
4. New terms this Week
5. Site of the Week

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Term of the week - Capitulation
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Actually an old war term, referring to the act of surrendering or giving
up. In stocks it is associated with "giving up" any previous gains
in the stock price. True capitulation involves extremely high volume
and sharp declines (oversold stocks), it usually indicates panic selling.

The Investing Guys Say:
After this "capitulation selling" there is said to be great bargains
because everyone who wants to get out of the stock for any reason
(including forced selling due to margin calls), has gotten out of
the stock and the price should reverse or bounce off the lows. Shrewd
investors will wait for the capitulation to finish before buying
back in rather than trying to pick a bottom.

For related terms and links check out this link:
http://www.investopedia.com/terms/c/capitulation.asp


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Lesson of the Week - What Takes Place at the FOMC Rate Meeting?
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*This is an excerpt from the 6 page tutorial from the site on
The Fed's. Follow the link below for the complete tutorial.

Every 6-8 weeks we get to hear the latest decision on interest
rates. Ever wonder what happens at these meetings?

The FOMC has rotating group of 5 bank presidents, 7 Fed Governors,
and Alan Greenspan. This group of established policy makers review
the latest economic data, financial market conditions and future
expectations to decide whether monetary policy should be changed.

The FOMC begins its meetings at 9am and usually makes their decision
public around 2:15pm. For over 5 hours the FOMC discusses at great
length the factors that support a particular rate change. The members
then vote on appropriate levels for two credit rates: the federal
funds rate, and the discount rate, which the Fed charges banks for
emergency loans, usually short-term borrowing.

Besides keeping rates the same, the FOMC can take two actions:

Tighten Rates - when the Fed raises interest rates to restrict
the credit market. Higher interest rates make it less likely for you
to borrow.

Ease Rates - when the Fed lowers interest rates to help spur growth and
make it easier for individuals and companies to borrow money.

Sometimes the FOMC maintains rates at current levels but instead warns
that a possible policy change is in the near future. This warning is
referred to as the "bias." The Fed might think that rates are fine for
now but there is considerable threat that economic conditions
could warrant a rate change soon. The Fed will issue an easing bias if
it thinks lowering of rates is eminent, conversely it adopts a bias
towards tightening if they feel rates could rise. Keep in mind a rate move
doesn't always follow a bias shift, in many cases just warning the public
about future rate changes is enough to get a response from the financial
markets.

For the remainder please see our Federal Reserve tutorial:
http://www.investopedia.com/university/thefed/


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Featured Article - Putting the Soul into Investing
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Every once and a while I get dragged out to sing some karaoke with
friends. I try to avoid the microphone as much as possible as I
haven't been blessed with the most amazing vocal chords. Being a
terrible singer, it really amazes me how some artists manage to
churn out hit after hit. The money they make off of royalties must
be incredible.

What am I getting at? Does this have anything to do with investing?
If recent developments in the bond market are any indication, lots!

Click here for the full article:
http://www.investopedia.com/university/articles/101300.asp


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Recently Added Terms
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American Depository Share - ADS
http://www.investopedia.com/terms/a/ads.asp

Collateralized Mortgage Obligation - CMO
http://www.investopedia.com/terms/c/cmo.asp

Lead Time
http://www.investopedia.com/terms/l/leadtime.asp

Loan Syndication
http://www.investopedia.com/terms/l/loansyndication.asp

Philadelphia Semiconductor Index - SOX
http://www.investopedia.com/terms/s/sox.asp


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Useful Site of the Week
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CNNfn Tools

A great list of personal finance calculators and tools. There
are 19 different tools & calculators ranging from a tax planner,
stock tracker, and mutual fund directory.

http://www.cnnfn.com/markets/personalfinance/tipstools/

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Cheers and have a Great Week!

The Investing Guys
http://www.investopedia.com/

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