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Fears Over The Economy Hit Wall Street

I’ve been saying for some time that the strength on Wall Street is only temporary. With the political game that Washington has been playing, our economy has not yet started to recover or in some cases, hold on to their current levels. The debt ceiling has been an issue for months and in the eleventh hour Congress finally gets their act together to pass an extension. What’s good about an extension for the long term? Nothing.

Standard & Poors along with Fitch and Moody’s are concerned about the true condition of America’s deficit and the ability to function within a budget. It’s been over 800 days since Congress has passed a budget and that’s because they’ve been spending money and if they had a budget in place, they wouldn’t be able to do as they’re doing for the last few years.

As you can see on Wall Street, investors are moving their money out of equities and moving them to saver havens like bonds, precious metals and in some cases, overseas. The DOW lost 266 points earlier this week and claimed back only 30 point the next day. As of this morning at 10:45am, the DOW is down another 208 points and who knows where it’s going to close at the bell. Since Monday morning the DOW has lost nearly 5%.

As for the NASDAQ, it too has taken a hit during this week thanks to the uncertainty of the actions going on in the Beltway. NASDAQ is down (so far) this week over 5% along with the S&P 500 dropping 6% during the same period. A sign of things to come in the near (and possibly long term) future.

Do what they smart money has been doing for quite some time and that is buying gold, silver and other precious metals. Gold has gained 10% since June and 4% in just the last few days. How can you sit by and watch as others, who have a better idea of the markets, as they move assets to other sectors to hedge against the inevitable pullback on Wall Street? I suggest you really look at your portfolio to see how diversified you are and make the appropriate moves to balance it. Remember to not put more than 20% into any one sector or individual stock. Doing so may cause you to lose more than you would have if you diversified.

As for me, I’ve moved out of most of my positions in equities. I’ve been building up positions in the commodity sector, mainly gold and silver, to get ahead of the currency issue plaguing our country as well as the world. You might want to do the same.

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Investments

I’ve been looking at the different industries and investment vehicles that are out there for the average investors. Depending on which types of investments out there, it may or may not be the time to invest. How can one know if an investment is right? Taking your time and doing the research to find out if it will be a profitable one or not. The housing market, the stock market or any other investment you have to choose from can be profitable, but unless you look at the real numbers and study everything there is to know about the investment prior to putting your money into it, you can lose most (if not all) of your capitol.

Yes housing prices are way down from their peak in 2006-2007, but that doesn’t mean that all housing prices are right for the picking. You need to look at the condition as well as the area the house is in. In some part of the country, housing prices may never reach the prices of just a few years ago.

What about the stock market? I don’t trust the stock market at this time since there is no reason for the DOW to be at where it is at the moment. Every month poor reports are being released (consumer confidence, unemployment and retail sales) and the stock market seem to either gains or holds it’s ground. We are in a terrible economic time and to think that the stock market will continue to hold is risky. The economic current events look pretty scary. If you’re looking to invest in the stock market, make sure you do your research into the company before you buy any shares. It’s the only way to know what stocks to buy now.

In my opinion, gold is the answer right now. I don’t mean stocks that trade off of stocks, I’m referring to actual gold. Gold as always retained it’s value or has gone up during trouble times like these. So when you invest, invest wisely.

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Finding The Best-Suited Funds For Your IRA

Investing hard-earned money in Individual Retirement Funds can be risky, but there are IRA funds that have been performing very well and would definitely be wise to consider. Dodge and Cox Stock has proven to be a reliable fund since its start in 1965. Sometimes going with an older fund is a good idea. The strong performance of Dodge and Cox makes it a good choice for those who are interested in dividend-oriented portfolios and strong risk-adjusted returns.


Vanguard REIT Index Fund has proven to be another fund with good performance. Even though real estate has been risky of late, this fund has been doing very well, especially considering that REITs must distribute 90% of earnings to shareholders every year. Real estate allows for a more diversified portfolio and is a good choice for an IRA fund.


Roth IRAs have always been a good option for IRA investing. After age 59 and 1/2, withdrawals are not taxed, and the rules for withdrawal are more flexible to work with. And since contributions can be withdrawn without the risk of penalty or taxes, Roth IRAs are a good choice if money may be needed sooner rather than later.


Another good choice would be the Vanguard Total Bond Market Index Fund. Half of its portfolio deals in agency and Treasury bonds and the other half in corporate bonds. This fund is expected to perform well in years to come.


Third Avenue Value has been performing reasonably well in the last ten years. Considering the state of the economy, this fund is still doing better than others. It might be worth checking into as an IRA investment. The funds listed here are options to consider when looking for the best IRA funds. Retirement should be relaxing and worry-free, and good investing today can contribute towards a happier tomorrow.

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Stock Market Technicals

market technicals

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I’ve been warning many of my readers that the stock market will take a dive very soon and from the looks of the last few days, that time has come. If you look at stock market technicals, you are aware that the DOW at a level of 7550.00 is a level that would cause many sell-offs to happen.
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Today’s lows of the DOW was 7551.01, which came very close, but not to the point where the sell off would have occurred.
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I said it before and I’ll say it again, you need to keep plenty of money on the sidelines for times like these when the prices for stocks in good companies are at a great “sale” price. These companies are not damaged, just the stock prices are. You need to be ready to take advantage of these buying opportunities to help grow your portfolio during a bad economic down-turn.
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For those of you that have had patience over the last month or so, this just might be the time for you to jump in and build a good solid position in the companies that you’ve been watching. I’ve been holding back in jumping in with both feet and with the stock market down at these levels, it’s hard not to just dive in head first. Of course I won’t involve my emotions in the markets.
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Who knows where the markets will be in a month or two from now. Especially with the fact that Obama’s stimulus plan hasn’t really been accepted by Wall Street and Main Street. On the news of the plan being approved, the Dow has dropped quite a bit. The markets can hit that crucial level of 7550 and all bets will be off, the sell off will begin and it won’t stop until it get to about 7300 basis points. Then again it may just take back off to the 9000 level just like it did not too long ago.
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No matter what, the rest of 2009 is going to be a total washout and the only way to get your portfolio to grow is to make trades when the time is right and then get out while the getting is good. Either way the market may go either way over the next couple of days, you should keep an old saying in mind, ” hope for the best, but prepare for the worst”. This way you’ll be ready without being disappointed.

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Investing Mistakes To Watch In 2009

Hello everyone. Are you ready for 2009? Now that we can put 2008 behind us and hopefully all the issues that went along with it, let’s get to some good trading for the new year. Like last year we want to limit the investing mistakes that can easily happen if you’re not careful. So let’s look at what we can avoid to help us in the new year.

The number one mistake that people make and if you were one of the millions that lost money last year, you just might be thinking of doing this. The biggest mistake that you can do is to not invest at all. Sitting on the sidelines watching it happen while no investing is number one mistake. Even if you can invest $20 a week, it’s better than nothing at all.

The longer you put off investing, the less you’ll have when it’s time to retire. Of course you have to have your current financial situation in order, but once that’s done, you have no excuse not to be investing.

Another mistake that people make when investing is they try to get rich quick. Let’s get one thing straight, trying to get rich quick is not investing, it’s gambling. If you want to gamble, go to Vegas. Investing is a long time strategy not a quick fix approach to financial security.

Mistake number three is putting all of your eggs in one basket. If you want to invest, you need to spread the capital around in different areas of the markets as well as different vehicles (i.e. stocks, bonds, CDs etc.). Doing so will help keep you from losing any of you money in one big sweep. Stocks and other types of investment vehicles will go up and down, but not all of them will go in the same direction at once.

Collectibles are not investments. Yes, the first issue of Spiderman is worth a lot of money, but it won’t grow all that much in the future. Don’t expect to sell it to help your kids through college.

I hope that these tips will help you in the coming year. Be patient and happy trading.

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Safe Investments

Now a days it’s really hard to find any decent safe investments. The old buy and hold routine doesn’t work in these trouble times, and as for trying to day trade, you’re taking your hard earned money in your own hands.
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A safe Investment right now seems to be in CD’s, bonds and Treasury bonds, but the problem there is that the return is quite low. After having your portfolio, need it be a discretionary one or your 401K/IRA, beaten up as bad as it has in the last year. Some may not want to deal with a 3% return on their money and have it tied up for nine months or longer to get it.
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High yield safe investments like junk bonds aren’t any better. They involve alot of risk and again after what we’ve gone through, do you really need more risk?
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The only safe investment advice that I would be comfortable giving you is to do your research into strong companies (of course you won’t know they’re strong until after the research) that have been beaten up because of the market as a whole brought the price down.
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One company that has taken a beaten because of the hedge fund redemption is Quanta Services Inc. (NYSE:PWR). The company has a great balance sheet and has orders out until 2010. They are expecting great numbers in this quarter. Thursday the stock hit a new 52-week low at $12.27. A level that hasn’t been seen since February of 2006.
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I don’t consider too many stocks to be a safe investment the way the markets have been moving. Monday morning the DOW opened at 9,141.01 and the intra-day low on Thursday was 7,979.60, but then closed Thursday at 8,835.25.
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The safest investment right now might be not investing.

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What A Wild Ride In The Stock Market Today

stock market
photo by Hagerman

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No matter what good news may be out there to trade on, someone else will sell on that same message. The Markets again for the second day trades lower. The Dow closes down almost 6% with most of that lose happening in the morning hours, but at one point it was down nearly 700 points.
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In after market trading Amazon fails to beat the street with their earnings report, while Amgen beats what was expected from them today. Amgen has actually raised guidance for next year. What are you to do with this news? Nothing. For one by the time you’re able to get into Amgen the news will be priced into the stock. As of right now in after market trading Amgen is up $3 per share and the news just came out Secondly in this volatile market that we’ve been seeing, in the next couple off days we could see another major down day and see the stock drop below it $49.73 close price of today.
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Freeport McMoran Inc (NYSE:FCX) Has taken a beating in the last few weeks or so that has the price down to a new five year low. If you have five years to wait before you need you money, this might be the stock for you. In regards to the basic material sector, these stocks have been dealt a blow that will take some time before they really come back to the level that they were at this time last year. If you’re a veteran trader I’m sure that the UltraShort Basic Materials ProShares (AMEX:SMN) is something that you’ve been following if not trading . The stock was at $66 just two days ago and hit an intra-day high of $92.97 in the last 20 minutes of open trading today.
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If you’re going to trade in this volatile market, you need to know how to play both sides of the trading floor. You need to diversify your portfolio and understand what shorting can do for you. It something that I recommend for average traders to do until you fully look into how it’s done.
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In the last two days the Dow has lost nearly 700 point (almost 8%), but because of how I trade and hedge myself, I’ve increased my portfolio over 15% during the same period. Do your homework, double check your research and follow through with your due diligence.

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I’m Glad That This Week In The Stock Market ...

What a week we had in the stock market. On Monday the DOW fell 733 points to start off the week and dropped another 127 points on Friday to end the week. The good news is that the the Dow is up over 4% for the week. Go figure.
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That’s right, some how the markets were up even with all that going on. This past week has shown us the intensity of volatility in the markets. I have to say that this was a great week for people who rode out this roller-coaster ride in one of two ways.
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If you were one of the many that didn’t know what you should do with all the “The Sky is falling” news and figured that you don’t need any of your investment money. You decided to just let your money sit where it was at and ride it out. If you were properly diversified you most likely did pretty good. Most of the sector and different markets came out ahead for the week (Friday to Friday). Being diversified is what it’s all about if you want to stay afloat for the rough times so you can maximize your return over the long haul. I commend those of you that are prepared.
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The other way is if you knew what you were doing throughout this period of six trading days and saw the writing on the wall each of those days and at different times of the day. You most likely made a killing. The volatility was off the scale. With days that had over 500 point swings, it was easy to be able to pick up some broken stocks (of not-broken companies) and watch as the investors got back into them after they were oversold. Waiting for those quick returns of 5-10% gains. In some cases, there were returns of 30% a better.
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Throughout the week there was a lot of news as well as action to keep one busier more than one would care to be, but I found it very educational. I do have to say that I’m glad that it’s over.

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It Happened Again In The Stock Market

stock market
photo by ken ratcliff

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That’s right, again the markets dropped even more today. At this rate we’re going to be down to the market levels of 1995 in no time at all. As a matter of fact it’s been more like a roller coaster ride all day long. The day ended 191 points down for the day.
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The markets opened flat and within the first minute of open trading it fell nearly 200 points. From there it turned around and worked it’s way being up 170 points. All that happened in the first thirty minutes.
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This morning the Federal Reserve along with several other central banks from five other countries lowered their fund rate by fifty basis points. This is something that has never happened before and you will most likely see again in your lifetime. One would think that this would stimulate the markets to rally and help the economy. Unfortunately that wasn’t the case, instead the market are showing that they don’t know what to make of it. Part of the reason may be because of the banks don’t trust each other. They don’t want to lend money to one another at this time. I understand why they do this, I wouldn’t be lending money to anyone who has shown irresponsibility with their finances. Ive heard of creative financing, but what these entities have done recently is ridiculous.
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The markets have been going up and down in today’s trading that shows the uncertainty in the economy. The swings have been big, moving as much as 400+ at several times throughout the day. The DOW crossed yesterday’s closing threshold six times going from positive to negative and back again.
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The only silver ling that is out there is the Powershares UltraShorts. Most of them have climbed more than 50% in the last five days. I not sure if there will be any more gains from these stocks that I would want to put money in at this time. If you’re a day trader and have the ability to jump in and out of the stocks within the same trading day then you could make a killing in the volatility that has been going on today.
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The DOW Drops Below 10,000

It was only a matter of time that the Dow would drop below 10,000 points. Shortly after 10:00 this morning the DOW officially fell below 10,000 level. To make matters worse, it’s getting to the point that traders on the floor aren’t even trader between each other. By the afternoon trading, the only participants are the sellers. The confidence in the markets are non-existent.
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The markets have entered the same levels that we were at in 1998-1999. If you were in a IRA or 401K for the last ten years, you’ve gained nothing for all that time (please don’t shoot the messenger).
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Hedge funds are selling their interest to save any capitol they can. I’m sure there will be a lot of hedge funds that will close their doors after this horrible week. They are running around trying to save whatever assets they can. The markets are oversold and doesn’t seem like many people are jumping back in, which tells me that it just going to get worse. The short-selling ban is suppose to be lifted this week, but it’s still may be extended. If it expires, the markets will drop much more.
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No one is safe from this recession that we’re entering and I don’t see an end to it soon. Every sector has taken the hit today, there are a few winning today but they are far from being big. If anything is to be the silver lining, it’s oil that finally fell below $90. Who knows where it will go from here, but I won’t even try to guess.
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I will say that we need to continue to sell into any rally and preserve capitol as best as possible. if you hedge your investments with shorting then you obviously know what you’re doing. I’m going to wait a little and see what will happens.

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