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Federal Reserve Interest Rates Rallies The Stock M...

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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Stock Trading Insight

So far today in the morning trading hours, the markets are on a tear. The DOW has been up big since it opened and if things continue in this manner, we will have a great day and the DOW should close above 9000 today.
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Talks of the stimulus plan has caused some positive trading throughout this morning’s trading.
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With the moves that have happened this past week in the markets, many think about moving their capital out of the equities out of some of the less favorable sectors and look for the tried-and-true sectors during a recession period.
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We heard last week that we are officially in a recession, but the real question hasn’t been answered. That question is “how long have we been in a recession?”
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With that in mind, you have to take into consideration that the smart money have been positioning themselves in those sectors for sometime to protect their assets.
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An article that I found today talks about the fact that the time to get into some defensive plays, like consumer staples has past and you may want to do something else.

The article is from CNN Money.com, I hope you you find it interesting.

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GDP (Gross Domestic Product)

Today the GDP report was released and no one was surprised by the results. As a matter of fact the report shows that spending was pulled back the most in the last 28 years. A clear sign that a recession is close at hand if not here already.
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According to the Commerce Department on Tuesday, the GDP shrank at a 0.5% annual rate during the July-September quarter. The report shows that the economy had slowed due to the housing, credit as well as the financial issues that continue to intensify.
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GDP measures the value of all goods and services produced within the U.S. and is considered the best barometer of the country’s economic fitness. That is what we are lead to believe, but in all true intent and purpose, it doesn’t do that at all.
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The GDP (Gross Domestic Product) was not designed to be the indicator of this country’s growth. It was originally to gauge the country’s wartime production capacity. According to the GDP, no matter what the buying and selling is for it’s looked upon as something good for the economy. It does not matter it it’s for the well being of the people or not, it’s all lumped in together.
Let’s look at all the money that was spent after hurricane Katrina destroyed New Orleans. The $100+ billion that was spent was considered a good thing within the GDP report.
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It doesn’t matter what the money is spent on as long as it’s spent, that’s how the GDP looks upon it. Crime is also looked favorably when calculated into the report. What about social welfare and social issues? they too are considered a good thing for GDP. That’s right, all those lawsuit, divorces and car accidents, according to the GDP they are good things for the economy.
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That’s why a few years ago some people got together and came up with a new way to gauge our growth in the country. It’s called the GPI (Genuine Progress Indicator). I wrote a post called GDP Vs GPI a few months ago and seeing how the GDP report came out yesterday it just made me want to touch base on the article again for those who might have missed it.

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Capitalism

With all the talk about the state of our economy, Obama being more of a socialist-type leader and the out-of-control bailouts, one wonders what is the idea of capitalism that this country was built on.
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Wikipedia defines capitalism as,”Capitalism is an economic system and a form of society, in which resources are controlled by private power, as opposed to a state or public institution.” (to read the rest…)
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If we are to survive as a capitalist country and continue what our fore fathers started two hundred and thirty two years ago, we must stop saving companies that are not doing the right thing to make it in the market.
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The government should have never started with all this financial assistance to save companies that have been doing the wrong thing to make money. Things that could be considered morally wrong and legally questionable at best. If a board of directors want to give millions of dollars to a man that makes decisions that will eventually cause the company to lose billions of dollars, well then they get what they ask for, bankruptcy.
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The big three automakers are another set of companies that should face the music like all other smaller companies must face if they don’t do the right thing to preserve their future. Chrysler became a privately held company about a year ago. The company choose Bob (corporate raider) Nardelli to be the CEO. If you guys are not familiar with Mr. Nardelli let me give you some first hand insight.
In the six years that Nardelli was the CEO of The Home Depot he removed more associates from the floor as well as eliminating many of the employee benefits. In effect of his decisions he ruined the customer service that The Home Depot was known for and help them stand out amongst the competition. How do I know this? I worked for The Home Depot before he got there and was there after he left. As a matter of fact, they fired him to get rid of him knowing that they would still have to give him $209 million departing package.
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Let’s get back to capitalism. If this is the way the government is going to start defining the meaning of the word, well then I suggest that if you have a company the isn’t making the money that it needs to make payroll and pay your suppliers, go to Washington and ask for a bailout.
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I don’t know about you, but I go into business to make money and I have only two choices… to either make it or break it and if I break it, it’s my problem not anyone else’s.

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Financial Wellness Carnival

In these days of trying economic woes, we need to take care of our selves on many different levels.

In the Financial side of wellness I would like to give you another link to a carnival that was released last week, but I forgot to give the link back to the site to get my readers over to the blog to catch up on some great writings. Here is the link to Financial Wellness Project’s 22nd carnival. I know you will enjoy it.

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It’s A Great Time For Vacation

stock market
photo by Alaskan Dude

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This week has been a great week for vacation. My family and I didn’t go take a expensive trip to some where far, instead we’ve decided to stay nearby. Since we knew that we would be on vacation this week, I wrote some post ahead of time as well as submitting a few for blog carnivals.
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Check out the latest carnival to come hosted by On A Quest To Be Debt Free. There are some great articles as well some useful tools that can help you in your daily lives.

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Financial Insight At Money Hacks Carnival

This past week Money Hacks Carnival #38 came out. CreditCards.com hosted the carnival and released a great edition. I recommend everyone to check it out. Here is the link for this edition.
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Money Hacks Carnival #38

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Stock Market Scams


photo by azrainamn

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In these trouble times of the stock market no one is really sure what stock is going to break out and post some beautiful gains. Of course there are many out there that will offer you their services. I’m here to tell you, beware of wolves on sheep’s clothing.
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When you go ahead and type “stock market” or anything similar to that in Google search, you will get several million returned pages. The results are astounding as to the different types of sites you will find. many of them are site designed to get you to buy into their program or at least to leave your e-mail.
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The one and only purpose to these site are to make money off of you not to help you make money in the stock market. In some cases you will find that they offer you “tips” after you subscribe to their service. Sometimes it’s a monthly service, but mainly it’s by the year. The reason why many of them don’t do it by the month is because after the first or second month you would cancel once you see that you’re not making gains in your portfolio.
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The other way these sites will make money off of you is a little more shady that the other. These are the sites that will go ahead and say that they will send you daily notices for no charge. You only have to give them your e-mail. The way that they make money is that they will send you “tips” on stocks that they are already in or that they’ve just recently pumped up. Showing you graphs and charts showing that the stock is at the break out point. What they don’t tell you is that they are the ones pumping it.
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If enough people jump into the stock it will cause the price to rise, at which point they start dumping their position leaving you and others hold the bag.
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There is one stock right now that I’ve been watching because of one of these services. I learned about it through Twitter. I will not disclose the person or the stock for obvious reasons, but I will tell the rest. The person posts on Twitter the the particular stock has moved X amount on X amount of volume. This stock jumped 66% that day, the next day it jumped 125%. In the last week it dropped 95%. With these moves the stock now sit 56% below from where the person started hyping it.
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Just in case you were wondering what type of stock has movements that big in percentage. Penny stocks move like that all the time. That is why you shouldn’t invest more than 10% of your portfolio to penny stocks. You can lose all that you invest in these kinds of plays.
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To make matters worse, the Bid price never rose above the starting price until two days ago where it went to the height of the hype just long enough for one entity to dump several thousand shares. That is also why the stock is now down more than it was in the beginning.
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In the mist of all these types of people out there, there are those that are legitimate and very helpful. The only one that I would at this time recommend is Jim Cramer from TheStreet.com

Because of who he is and the influence that he has, he is not allowed to invest in the stock market himself. Instead he has a portfolio that the money goes to charity. We have an affiliate program with him that offers you a free
two week trial. I suggest that you give it a try. What the heck, it’s free.

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Patience And Timing Are Everything

Today the latest retail numbers were released and I’m sure most of you (if not all) weren’t surprised. Let’s be for real, the economy is in the crapper and to expect any retailer (except Walmart of course)to post good numbers in this quarter or even the next.
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The results were devastating and to make matters worse, the rumor out today was that there are more hedge funds redemptions. This is just a continued de-leveraging of the markets. Unfortunately no one really knows how many more hedge funds are going to drag down the stock market. This type of roller-coaster ride is far from over.
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Expect that each time the markets make up some good ground like they did in the last two weeks, hedge funds will take profits and dump their positions. So my advice to my readers are to do the same. In this type of volatility, anyone invested in the markets need to be more of a trader than a investor. Take caution and profit where you can and hold on to a good portion of capitol on the side for when days like this take place.
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There quite a few companies that their stocks have taken a beaten. If you are prepared with capitol, you can pick up some shares at a great discount. As a matter of fact there are too many that fall into this category. Too bad that it would take me about a month to list them.
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I’m sure many of my readers have their selection of stocks that they favor which have dropped in share price, so take your time and if you do get caught in the red, be patient and leave your emotions at the door.

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Let’s Get Ready To Rumble


photo by Walter rodriguez

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After last week’s roller coaster ride in the stock markets, I look forward to more of the same. The volatility was off the charts (well almost) as the VIX showed through the week. With this much movement in any given stock, the possible gains are amazing. On the other hand the loses could be too much for most of us to handle.
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Going into this week, we need to be aware that we have still not seen the bottom. As a matter of fact I heard some say on Friday that last week was the turning point, but I beg to differ. If any of my readers here follow me on Twitter, you would have seen that at around 1:30pm when the Dow was up about 300 points, I responded to another who said that the markets were doing great and would continue for the rest of the day. My response was to get ready or to start selling because the tide was about to turn. I had a feeling that the DOW as well as the other markets were about to go bad.
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Feelings??? I know I tell my readers all the time that you feelings have no place in the stock market. I wasn’t referring to my emotional feelings, instead I was talking about the vibe of the markets. After you spend enough time trading within the markets, you start to sense when the tide is turning. Add on top that my knowledge and experience tells me that there is a lack of confidence on Wall Street.
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As we go into this week of trading, you need to hope for the best, but expect the worse. Make any trade you do wisely and have your exit strategy ready. Watch the trend, keep an eye on the technicals and leave you emotions at the door. Get ready for another wild ride.
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So in the immortal words of the WWF (World Wrestling Federation)…”Let’s get ready to rumble”.

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