Post Election Stock Market

Now that Barack Obama has been sworn into office as the 44th President, it’s time for him to get down to business and start doing the job that he’s been running for for the last two years. Who know if he’s really going to turn this economy around, but time will tell.
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On the day he took office, the stock market had it’s worse inaugural day of trading in history. The DOW fell 332 points. It started off bad right after Nancy Pelosi made statements about putting certain taxes in place. It did come back a little bit, but never was able to break even at any point of the day.
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Obama was sworn in at 12:00pm eastern standard time and then proceeded to make a speech that didn’t give any confidence to the markets. Unfortunately I don’t think his first week in office will do any good for the markets. I expect the market to drop quite a bit more before it has a turn for the better. The DOW closed below 8000 points on this historic day (in more way than one).
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Be cautious with any trades this week until we see some strength in the markets.
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We will have to wait and see what happens to the rest of the TARP money. It looks like there will be a lot of bickering in Washington before the money will be put to use. So like I said, be careful with your trades. If things go south over the next week, we’ll be able to pick up some beaten stocks at some great prices.
Happy Trading.

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Federal Reserve Interest Rates Rallies The Stock Market

Finally after a year of looking like he knows nothing, Ben Bernanke takes drastic measures to get the economy back on track. The Federal Reserve interest rates have been lowered to it’s lowest in history. The benchmark interest rate has been lowered to zero to 0.25%, making it easier and cheaper to borrow money and pay their mortgages.
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With the Fed’s actions, the stock market rallied like it had no sign of a lack of confidence. The DOW gained 4.2%, and the NASDAQ and the S&P 500 over 5%. It’s a clear sign that they (Federal Reserve) is willing to do anything and everything to avoid a depression. Investors pumped capital into the markets right after the announcement was made shortly after 2:00pm Tuesday.
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Several banks have lowered their prime lending rates to 3.25% and it look like more will follow in the coming days. It’s now a matter of people (who still have fears of the economy), are willing to borrow money and take on more debt.
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The only bad thing about the rate being lowered to these levels is that there is no where else to go. The Federal Reserve has always had the power of cutting the interest rate as a tool against economic troubles. At this point though I would think that unless World War III was to break out, the worst of the problems are behind us.
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I’ve felt that Ben Bernanke has always been behind the curve when it came to putting stability in the economy, but this move has shown that he’s finally up to speed with what needs to be done.
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This has been the sign I’ve been waiting for for me to get back in the stock market a lot more aggressively and I started doing that this week when many buying opportunities were available on Monday. If you were the many that have been doing your research and waiting on the sidelines, I suggest you start taking positions in those companies that you found attractive. I don’t recommend you going all in yet since there is that margin of the unexpected still there, but putting about 50% of your capital to work just might be the thing to do right now.
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Be patient and happy trading.

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Tags: Economy, Federal Reserve, Investments, Stock market for beginners, Stock trading

Posted in Getting Started In The Stock Market, Government Involvement, Stock Market News | Leave A Comment »

Perferred Stock

When the average trader buys and sells stock, it’s typically the common shares that are traded. As in the importance of the different types of ways of being a shareholder, Owners of common stocks are at the bottom of the ladder. In cases of bankruptcy, common stocks are the last to “get paid”. First is the bondholders, perferred shareholder and any other debt holders.
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With the preferred shares, it works a little different. They don’t call it preferred for nothing. The share is almost like a bond in regards to having a fixed dividend. It preforms as a fixed income security, but it’s not necessarily guaranteed.
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The reason I bring this up to you is because I’ve been looking at the stocks of two companies that have been in the news lately, you have heard of them. The two stocks I speak of is General Motors and Ford Motor company. I will break each one down separately.
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General Motors (NYSE:GM), the common shares were recently as low as $1.70 a couple of weeks ago and now it sits at $4.70 per share (a gain of almost 280%). That would have been a great payday for you if you were willing to take a chance and gamble on the stock. I didn’t take advantage of it because I don’t consider stock trading a form of gambling. The dividend for the common shares will be history once the “bailout” is approved. In regards to the preferred, it will continue to pay out it’s 37% yield per share at it’s current price of $4.25 per share. The payout will be on January 15th, 2009 for shareholders on record on December 26th, 2008. The symbol for General Motors preferred is (NYSE:GPM)
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Ford Motors company (NYSE:F) is also another company that has had their common shares beaten up to their low of $1.01 just a couple of weeks ago too. It now trades at $3.23 per share ( a gain of over 300%). Again another beautiful gain for anyone willing to take that chance too. As for the preferred shares of this company, it’s trading at $9.20 per share and returns a 35% yield per share. The symbol for Ford’s preferred is (NYSE:FPS). I do know that the payout is due within the next month.
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The reason I bring this up is for my readers who are willing to take on the risk of trading the common shares, then let me recommend that you sell now and move into the preferred stocks. After doing the research on these stocks I will also pick up some shares this week. In this coming payout, it will be a 17% yield or better, depending on my cost basis.
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I just hope that I’m not too late since it’s expected that Congress will approve the rescue plan and I’ll miss the jump in the price (however big it may be), which is something else I’ll be banking on for this trade to be ideal.
Do your research and happy trading.