Here we go again. It looks like we’re in for another ride this week on Wall Street. The stock market lost over 500 points last week and on Monday, it gained 103 points. So what going on so far for this morning? Well the DOW opened flat, but was dropping fast as the opening minutes clicked by. Within twenty five minutes the DOW was down 180 points and since then has climbed it’s way back to only being down 36 points during it’s first forty five minutes into the trading day.
Either way you look at it, it’s going to be a wild ride for the rest of the year. I’m not confident on the condition of the stock markets and because of that, I’m sitting a lot of my money off to the side until the second dip happens sometime this year. We are not out of the woods yet and we are still in a lot of economic dangers in the near future.
Last night while watching Jim Cramer on Mad Money, I noticed that he is confident in the markets and sees some great things coming in the near future. The only thing I agree with him on is his opinion on investing in gold. Of course he didn’t say if you should own stocks in gold producing companies or in actually gold itself. My thoughts on that is that you should own gold coins and other gold items. Like I said, I don’t trust the condition of Wall Street and owning stocks in gold is not the same thing. Whatever you do, do your research into anything you’re going to invest in.
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After all this time that I’ve been saying that there is no good reason for the DOW and the rest of the markets to be as high as it is, we can see from the comments from the Federal Reserve, we are not bouncing back from the recovery as they and the Obama Administration have been trying to feed us for the last year. The Federal Reserve states that the economy is not growing as fast as they once thought. To make matters worse, the dollar is at a fifteen year low against the Yen.
In the first forty five minutes of trading today, the DOW is down 200 points. A sign that that investors and brokers are waking up to the realization of the fact that we are not out of the woods yet. NASDAQ is also down 54 points in the same amount of time. All together, each of the three idicies have lost roughly 2% in less than one hour.
Of course I expect the markets to jump back up, but that will be from the market makers trying to make some more profits on this sell off. The DOW has moved up to 10,700 i the last week and there should be some profit taking, but this drop is not going to end with a few people taking their profits. I feel that some will start weening out of the stock market in preparation of the correction we’ll see in the second half of this year.
If you are still looking for some trading action, because you love the game of the markets, I suggest that you learn and start shorting stocks and the overall market.
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If you are new to the investing world, there are people out there who will try and scam you. This is true with every aspect of life, and the world of investing is no exception. If there is money to be made or stolen you can rest assure there are crooks out there trying to find a way to steal yours.
There is no safer place than to keep your money in a savings account at the local bank. As long as the bank is FDIC insured your money will be protected by the government. A limit of $250,000 does apply to these types of accounts. So if you have over that amount you should not place all of it in the same account. A savings account is a type of investment because your money is earning interest as it sits there. The bank will use it to make loans and give you a specified percentage rate in return for letting them use it. At the moment rates are not that favorable and many are considering other investment options.
Placing your money with a stock broker is another alternative. There are many online brokers that will allow you to direct your funds into a variety of different asset classes. When looking at a broker make sure that they too offer insurance from SIPC. Brokers who will not insure your accounts can potentially be scams that will take your money and run. Using a broker based in your own country is also advised. If the broker asks for money to be transferred to an overseas account, red flags should go off in your head. There are many reputable brokers here in the U.S. that are available to the retail investor. Going online and researching the various brokers that are available is a good idea. Many will have both full service financial advisors, to help you out, or let you choose the stocks you would like to buy yourself. Your investment experience and knowledge will help you make the decision as to how much help you require form your stock broker.
Like stock brokers, currency brokers will offer you as an investor the opportunity to invest in the currency markets. There are many online foreign currency scams on the internet, mostly revolving around computer programs that will make you money. Please do not trust these money making systems, as they will not make you the money as promised. The same basic principles hold true when trying to find a good currency broker. Do your research online and read the many forex broker reviews that are available. These reviews will help you to see the pros and cons that other investors had with the brokers that are available to the retail investor. Make sure your broker, either stock or currency, has representative available for you to speak with by telephone. Making sure that there office has a building headquarters is one way of making sure that the broker is legitimate. As mentioned before many of the scams revolve around brokers that work from third world countries and offer no brokerage service at all.
Giving your money away to someone who claims to be an investment advisor can also lead you to lose money. Besides the various brokers that are available to the retail investor there are other types of investments, such as hedge funds. Hedge fund can promise to offer greater returns, however they do not always do this in reality. These funds are the riskiest types of investments when it comes to fraud. Make sure you know of other investors who have money with the fund before you invest any of your own. The fund manager can be gone the next day with your cash never to be seen again, it has happened before and will most likely happen again. If you take your time and do the appropriate research there should be no issue on how reputable your local bank, broker or fund manager is. If as an investor you do not feel confident or comfortable giving your money to a particular institution then do not do it. Ask as many questions as you need answered for them to earn your business
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