Investing In The Energy Sector

Broadly speaking, the energy sector refers to that sector of the economy that is comprised of a wide variety of stocks (public shares in companies) that have energy production as their essential business. Examples, of these energy stocks include oil companies like Conoco Phillips or Exxon, coal companies, and even “green” energy companies like First Solar which attempts to capitalize on solar energy. As these examples show, some of these stocks may be foreign (for example, Conoco Phillips is Canadian), or U.S. companies (for example, First Solar).

Of course, some U.S. companies do business overseas (for example, Exxon). Thus, an investment in the energy sector may involve the purchase of these different kinds of stocks and many others that fit this description, and it sometimes wise for an investor to consider what element(s) of the business sector is most appealing, given that investor’s beliefs about what types of energy are apt to be particularly fast growing enterprises or what areas of the world are most apt to need and have the ability to expand energy production. An investor can purchase individual energy stocks or a stock fund in which the fund manager has assembled a group of stocks that all share in common a primary involvement in energy production.

This too becomes a consideration, since an investor may have more confidence that a single company will do well in the future than a group of related but different companies or may dislike the idea of investing entirely in a single company and prefer a wider bet that the energy sector will do well, whether a given company does or not. If the intent is to invest in the energy sector, it is generally best to purchase a mutual fund run by a good fund manager with low overhead costs in order to place a wide bet on this sector of the economy generally.

With this decision made, the next step is to research various mutual funds, perhaps through a fund rating company like Morning Star,in order to determine which mutual fund might be purchasing those energy stocks the investor most likes, in the region of the world that the investor believes to be most ripe for fast growth, managed by a fund manager with a good track record, and set up to minimize the overhead costs (for example, the management fees and the commission costs at purchase and sale of the mutual fund). In my judgment, the new investor should always look first at the Vanguard mutual funds.

Tags: business sector, coal companies, conoco phillips, Economy, energy companies, Energy Sector, energy stocks, green energy, investor, morning star, mutual fund, oil companies, public shares, solar energy, stock, stocks

Posted in Energy Sector, Getting Started In The Stock Market | Leave A Comment »

New Home Sales Report For July

Yesterday the news came out that new home sales jumped 9.6% for the month of July. It was the fourth straight increase in sales. Sales rose to an annual rate of 433,000, up from June’s rate of 395,000. Many are saying that the bottom is definitely in and now is the time to buy, but is that really the case.
.
Yes, sales are up more than 30% from the bottom in January, but nowhere near the peak of four years ago. Of course that’s was because of the inflated bubble that was created by the Fannie Mae and Freddie Mac sub-prime loans.
.
So does this really mean that the bottom is in and we can expect the economy to turn around? I doubt it. Why I think that is because of the fact that the numbers are (I feel) are mis-leading. Many of the new home sales that have been happening in the last month or so were first-time home buyers. That’s because of the government’s incentive plan for first-time homeowners who qualify for an $8000 tax credit. That in itself is misleading on the fact of it’s a tax credit, not a rebate. Which means of you don’t have enough of tax liability, you won’t be able to write off all of the $8000.
.
What does that mean for the industry? Well, home builders saw a jump in their stock price today, but will it be able to maintain those levels? I doubt that too. mainly because when the program will be terminated at the end of November. I believe the market will dry up again with sales. As it is, some builders have already seen a dip in home sales. In Arizona, A.F. Sterling Homes stated that sales in July stalled because the builder couldn’t guarantee the homes would be completed in time to qualify. The industry (real estate agents and builders) are really leaning on Congress to extend the the credit on the grounds of the sales could reverse from their current trend. As a matter of fact, Randy Agron, the vice president of A.F. Sterling Homes was quoted as saying “The real estate market is really a fragile thing. It’s not the right time to take (the tax credit) away”.
.
With that in mind, do you really think the bottom is in? It has been proven in the past that when the government gets involved with trying to “save” the economy, it actually extends it by not letting the free market follow it’s natural course. With this program as well as the financial bailouts and “Cash For Clunkers”, we have three major industries being manipulated within the American economy.
.
All I can say is…hang on, it’s going to be a bumpy ride.

Tags: Economy, Financials, Foreclosure, Government spending, Investment property, Stock market news

Posted in Stock Market News | 1 Comment »

The Dow At 9000, Where Do We Go From Here?

Who would have thought that this could have happened so soon? Either way, it was reached. The DOW close above 9000 (9069.29 to be exact). The S&P 500 has been on a tear, closing at 976.29. Lets not forget that the NASDAQ is now at 1973.60. The past two weeks of trading have been great for the markets.
.
With that being said, what are we to expect in the coming weeks? If you’ve been listening to the talk on the street, you’ve heard both sides of the possibilities. “It’s only going to get higher” or “the markets are going to correct themselves”. Those are the only two choices.
.
After listening to all the opinions that where flying today, I would have to agree that the markets are due for a correction. How can it not? I don’t know about you, but I don’t really see a reason to be all optimistic about the stock market. Add on to the fact that many traders and investors have made a lot of money in the last four months. There will be some profit taking very soon.
.
With all the talk about health care and the Cap and Trade bill, if these two bills pass, corporations are going to find it hard to keep making the earnings that the investors want to see. The taxes that will be imposed onto these industries are going to break them as well as the country’s GDP.
.
In the last few months I’ve made some great gains in the markets and I’m not willing to give them back anytime soon. At this time I’m sitting more than half my portfolio on the sidelines, while I wait for the other shoe to drop (and it will). Don’t get me wrong, I do believe that there will be some gains to be made in many other sectors and that’s why I’m watching the tech sector. They (tech sector) don’t have the government issues to deal with, like most of the others ones.
.
Which ever way you plan on playing the markets in the coming weeks, do your due diligence.

Tags: Economy, Government spending, Investments, NASDAQ, Stock market news, Stock trading

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

Great Gains So Far For This Week

I’ve been busy this week with many things, so keeping an eye on the stock market hasn’t been easy for me. Well this afternoon I’ve had the time to see the progress for the past few days and I’m amazed at the gains that have been made this week by the major indicies.
.
I told you in a recent post that I jumped out of basically everything until the markets correct themselves again. We’ve had too much of a run up and I’m skeptical. Looking back on the past few days that I missed, I noticed that there were good opportunities to make money on stocks that I sold and they went on a roller coaster ride afterward.
.
The one I want to talk about is Agnico-Eagle Mines Ltd. (NYSE:AEM), a stock that was as high as $62 only five weeks ago. I made the right choice to sell off my position. After it corrected by 10% I bought a small position back. I let it just sit there not bothering to pick up more as it continued to drop. Unknown to me, I wasn’t paying attention to what the stock did this week as it dropped down to below $47.50. If I was aware of the situation, I would have back the truck up so fast to grab shares at that price. That was Monday morning and now the price per share is $55 (as of 3:45pm). A 16% gain in just three trading days.
.
In all the times that I’ve traded AEM, I’ve always made money. This would have been great to profit from, but I’m not going to drive myself crazy because I didn’t get into this play. There will always be more opportunities to make money, but if you want to stay sane while trading stocks, you can’t sit there and think of the “what if’s”.
.
Agnico Eagle has been trading within a range of $45 to $60 (which is a nice swing gap) this entire calendar year. When the price drops below $50 I buy quite a bit, as it goes above $55 I prepare to sell. This week was a good opportunity to do exactly that and I’m OK with the fact that I missed it.
.
Try to keep that in mind as you go through your portfolio.

Tags: Economy, Getting Started In The Stock Market, How to make fast money, Investments, NYSE, Stock market for beginners, Stock trading

Posted in Fun With Investments, Getting Started In The Stock Market | Leave A Comment »

Second Quarter Earnings Report Season

It’s that time of year again that comes every three months. That’s right, it’s time for earnings reports. Alcoa (NYSE:AA) is the first company to come out with their results for the second quarter for 2009 (actually it’s just that they are the biggest company to report). Alcoa will release their report after the closing bell on Wednesday July 8th.
.
After last week’s debauchery, who really know what to expect. I not expecting anything good from any one company, so I will be watching the companies that I favor to buy on the dips. I’ve again back out of a lot of the positions I had in the past couple of weeks, so I’m in a good position to pick up some of the companies I was in at a lower price. Unfortunately, I’m not all that comfortable with the way the government and the Federal Reserve are handling things right now, that I just might sit out for the next month or so.
.
Of course with me doing that, I just may miss out on some great moves, but when in doubt, sit it out.
.
On Thursday the DOW lost 223 points. It started off bad in the morning and was pretty much steady all day until the end when the rest of it fell out. The whole week was trading on light volume, which makes it hard to really see which way the markets could have gone. It’s not easy to get a feel for the markets during a holiday week.
.
I will wait until tuesday to get a feel for the market tread, but the way the markets have been lately, it’s doesn’t stay one way or the other for long. Take your time and do your research carefully, like you should do all the time.