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Wall Street Loses All Of It’s Gains For 2011

What a ride it’s been on Wall Street this week. Traders and investors alike pulled out a lot of money from the stock markets on the lack of confidence in the government. With all the hype about raising the debt ceiling to save the country from defaulting, Wall Street still feels that the United States is not out of the woods yet. As it is, concerns about the credit rating agencies Standard and Poors, Fitch and Moody’s may downgrade the U.S. on the grounds of having too much debt as it is.

The DOW, S&P 500 and the NASDAQ are down after the week of doubt did it’s thing. All three of the indexes are down 10% from their recent highs and any gains they had for the year 2011 is all but erased. Equities are not the place you want to be in when the economy is in turmoil, the dollar is losing it’s worth on a daily basis and the Federal Reserve is thinking about QE3 and printing more money.

For those of you that have been following me for some time (and for those who are new, can read past articles) know that I’ve been calling for this to happen since before the New Year. I have no confidence in the markets or in our government. Since the beginning of 2011, I’ve been buying commodities such as gold and silver. No matter what the federal Reserve does about printing money, it can’t create more gold and silver than what is in the world. For that reason alone, I’ve been buying what I can for some time now.

Here’s a video that was posted today by GoldMoneyNews. The video is how silver is now expected (by analysts) to be the big mover in the near future. Typically gold trades at 16 times the price of silver. With that in mind, then silver should be trading at $100 per oz instead of it’s current price of $38 per oz.

So don’t expect good things from the markets in the near future. Our economy is still in shambles, jobs are not coming back quick enough and it’s not just in America that this is going on. Buy precious metals now and hedge yourself from the mayhem that may ensue.
Check out our affiliate sponsor StraightSilver to get the best price for your investment.

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The End Of QE2-Quantitative Easing

Today, marks the end of quantitative easing part two. Quantitative easing (QE) is an unconventional monetary policy tool used by the Federal Reserve to stimulate the national economy when conventional monetary policy has become ineffective. Of course that doesn’t mean the there won’t be a QE3 and QE4. The policies of the Obama Administration have damaged our economy and I’m not surprised at the Federal Reserve for having to step in to try to save it. We’re in dire straits with the current economic situation, it’s hard to believe that we can turn things around in the next few years.

Watching the stock market in this past week would have others believe that we’re out of the woods and on the road to recovery. Instead what we’ve seen in the last four trading days is the smart money getting back into buying equities since the recent healthy pull back on the DOW. I’ve spoken about this before in detail of how when the markets or even good solid stocks pull back 8% from their recent high, you must “back up the truck” and load up for a strong rally that will be happening soon. Eight percent is a benchmark that I use to make decisions on when to jump into a stock or the overall market. Time and time again it has been useful and profitable for traders to follow this method.

If you’re new to investing in the stock market or have been around awhile, this is something you need to keep in your trading playbook. something else to keep in mind is when stocks or the markets move up 8%-10% in a short period, it’s time to unload some of your shares to keep the gains you just made. So far in the last four trading days, the DOW has gain nearly 4% from it recent low. Remember, pigs get slaughtered, so don’t be a pig and try to ride out the wave a little longer. Be happy with the gains you’ve made. Since emotions are not welcomed when trading stocks, don’t be mad or angry if you miss out on some profits because you jumped out too early. Stocks will always have a pull back and with the gains you made, you’ll have capital to trade another day.

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Commodities: A Gift To My Children

If you’ve been reading this blog for any length of time, you know that I’m expecting to see the stock market take another plunge. So where are we to invest? Commodities, that’s where. Commodities like gold, silver other precious metals, oil, natural gas corn and sugar can not be printed in a few minutes or hours. It can not be manipulated as easily as any government currency. The Federal Reserve is printing money like they’re Kinko’s or something.

I’ve been building up a nest egg of commodities for sometime. It’s not something I’m doing because of the current situation of the U.S. economy (actually I’m am buying more than I’ve done in the past), I’m doing it for my children. My daughters are teenagers and soon enough they’ll be on their own looking to make it in this world. who knows what the world currency is going to look like in just a few short years. If the United States doesn’t do something now to solidify their financial sovereignty, who knows how things will be. Right now oil is traded in U.S. dollars and China and the United Emirates are discussing reducing their holdings in U.S. dollars and not using the dollar has a the way to trade oil.

So what should you be buying? Gold and silver are the best things at this moment that average investors could and should be investing in. Gold is trading this morning at $1,518 an ounce and silver is trading at $34.74 an ounce. I know you’ve heard the advertisments, seen the ads and listened to the stock news programs stating that we should be buying gold and silver. So have you been buying gold and silver? If you haven’t, remove your head from your butt and do so. Yes gold was trading at less than $1200 on ounce last year and silver was going for about $12 an ounce, but they’re going to be much higher next year so don’t waste time.

There’s a new book out from a man who retired at the age of 37 after making his money the old fashion way…he earned it. Jim Rogers worked as a young kid and a teenager, to investing his money in the markets. His new book, ‘A Gift to My Children A Father’s Lessons for Life and Investing’ helps us prepare our children for the trouble times that are coming in the near and the distant future. Jim discusses the troubled times ahead for the U.S. dollar, he actually believes it’s “doomed”. The book is a great source for teaching our children about investing and other life lessons they’ll need to survive in this world.

Click the book to view or purchase.





I’ve been showing my girls how to trade stocks, look into real estate investments and investing in precious metals. This book helps to bring the message home about how important it is for parents to teach their children how to prepare for the future. I feel that too many of the younger generation is not aware of how to be financially savvy. Especially since the public school system doesn’t have time to teach the students how to balance a checkbook, nevermind invest in themselves.

So pick up Jim Rogers’ book ‘A Gift to My Children A Father’s Lessons for Life and Investing’ at Amazon or any bookstore. You won’t be disappointed.

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Federal Reserve Realizes The Condition

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 in 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.

What happened to the stock market today?

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Economic Recovery?

The Federal Reserve Chairman Ben Bernanke stated today that the economic recovery is sustainable. Along with the news of retail sales are up in the last month, one would think that this is the time to get in on the stock market. Well before you do, you need to be aware of a few things first.

The stock market (Dow Jones Industrial Average) has reached a new twelve month high after climbing 12% over the last two months and over 40 % year-to-date. Those are some great impressive gains, but does that mean that the markets will continue on this upward path? Well that’s anyone’s guess.

The last time the Dow was at these levels along with the S&P sitting at 1200, was in September of 2008. You have to ask yourself, “What was the condition of the economy in September 2008?” I did some research into this issue and found that this might not be the time to invest in the stock market.

In Sept., 2008, unemployment was at 6.2%. The foreclosure rate hasn’t slowed down. It’s estimated that 1 in every 538 homes are in foreclosure as of march 2010. The Federal reserve has printed so much more U.S. currency that it’s not even funny.

My point being that you should be waiting for a healthy pull back (8%-10%) before investing any capital.
You also have to look into the future of the economy too. Economics believe that the unemployment rate will still be at 8.4% at the end of 2011. Home prices will remain at near flat levels for the next two years. They also expect the economy to only grow 3% in 2010.

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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.
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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.
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Of course with me doing that, I just may miss out on some great moves, but when in doubt, sit it out.
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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.
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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.

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Finance, Energy And Politics, Oh My

It seems that the stock market doesn’t react the way it should when important economic news is released. Over the last two months there has been negative news reports released that would normally cause the indicies to drop, but instead they have responded in the opposite manner.

The same goes for the good news that is also released. Look at how the news came out yesterday about the billions of dollars that will be paid back by ten of the major banks. You would think that the news would make investors and traders want to invest in these companies, making the price rise, well it’s wasn’t the case. As a sidebar comment, It amazes me that the money isn’t being returned to the Fed’s, instead it will be held by the Treasury Department just in case it will be needed again. My opinion is that the money will be used in the department’s slush fund and never returned to the tax payer.

The talk is out again about drilling in the Gulf of Mexico. The talks should have never halted. How are we to ever take control of our economy if we are depending on foreign countries to supply us with our energy needs? Oil is abundant in the gulf and we are not taking advantage of it, but I guess it’s OK since Russia is working with Cuba to drill in the gulf. That’s real good that they are doing so, this way they can also sell oil to us and we won’t be dependent on the Middle East. If you’re not sure, that last comment was a sarcastic one. Keep an eye on the alternative energy sector for some good gains. When oil gets above $70-$80 per barrel, solar and wind energy becomes more feasible and profitable as an investment.

The politicians are not doing the job that they were sent to Washington to do. The spending in this country is way out of control and needs to be pulled back. The private sector has to take charge of their future. We can not expect the government to come to their rescue. If the company can’t make a profit, then it needs to close no matter how many people it will affect. In the long run, having the Federal government get involved will only hurt more than it would have originally.

Keep your eyes on the stock market and be ready to raise capital (cash). I expect a pull back soon enough.

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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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Bankruptcy In America

In America, if a company can’t make a profit and loses money, they have one choice and that’s to file for bankruptcy.  Just because a company is big doesn’t mean that the government has to lend them taxpayer’s money to save it.
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It’s amazing to see how the CEO’s of these big corporations have destroyed the company so much that they need the assistance of the U.S. government and the American taxpayer to save their skin. How can these men with such education be so stupid to take on the extreme risks that they did?
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What I really want to know is how stupid is Congress to keep on bailing out these companies that shouldn’t even be allowed to operate as a business after losing that much capital. Using the excuse that they’re such big business’ within the United States is a lame one at that. Yes, many people will lose their jobs and the unemployment rate will jump into the double digits, but what other choice do we have? Do we keep giving them money until the Federal Reserve runs out of paper to print more? The airline industry went through bankruptcy years ago and they’re still in business (except for Eastern of course).
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Do you really think that if the big three automakers go into bankruptcy that they (or we) won’t survive? We as American people have to not fall for the hype that the CEO’s, Congress and the mainstream media are trying to feed us. Look at all the money that’s was given to the financial industry and now it turns out it wasn’t used for what it was meant to be used for.
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What about the banking system mess? These companies along with Congress have also done the wrong thing to the American people. If it wasn’t for Congress passing all those bills in the 1990’s that allowed the financial sector to lend money out in sub-prime mortgages, we wouldn’t be in this mess.
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What has me really PO’d is that none of the people who are actually at fault, are being held accountable. Hank Paulson, Dick Fuld, Christopher Cox, Frank Dodd, Barney Frank and the President-elect are all to blame for the financial mess. Dick Wagoner, Alan Mulally and the UAW are to be blamed for the failure of the auto industry. I would like to blame Bob Nardelli from Chrysler too, but he just got there (I will blame him for the fall of The Home Depot).
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Capitalism is what this country was built on, if we are to continue as a capitalistic country we need to let companies fall when they fail to make a profit.
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When the decision was made to let Lehman Brothers filed bankruptcy, the company had no other choice but to restructure everything and sell of the assets that they had to clear their debt. If the American automakers are forced to do the same, they too will do what they have to to make the company survive. If they need to sell off assets, I’m sure that there’s an entrepreneur some where in this country that is willing to make profitable business out of the ashes. He could name the first model Phoenix.

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Henry Paulson And The Recession

Henry “Hank” Paulson was the CEO of Goldman Sachs for many years. He has too many friends in the financial sector as well as on Wall Street. The man should never have been selected by President G.W. Bush, but he was and at the time everyone thought it was a great idea.
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Why was it a great idea? Because at the time the markets were recovering from the tech bubble collapse in the Stock market. He was also one of the guys who help redesign the hedge funds (another reason we have this financial meltdown) as well as pushing the idea of sub-prime mortgages. The Democrats loved him because he was full-filling the “American Dream”, getting everyone into the house they wanted, no matter what.
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It’s now come to a point that he’s out-lived his usefulness in the Treasury Department. He’s been having press conference after conference in just the last couple of weeks that shows that he doesn’t even know what to do for the economy while still trying to help his cronies within the financial sector.
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I’m counting down the days until Paulson will be out of the position. The job will now fall on Obama’s choice for Secretary of Treasury. Timothy Geithner will fill that position next month. The man has a long history with the economy and the Treasury department as well as being in charge of the New York Federal Reserve. Timothy Geithner has made a name for himself on Wall Street and some of the rallying in the markets last week was most likely due to the decision.
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Unfortunately the rally the only last so long in what is now “officially” a recession. That’s right the news was released Monday. The economic advisors and experts have now made it official. Like anyone with a half a brain couldn’t see that two months ago.
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The markets typically show the signs of a recession before it actually is made official. With that in mind, it’s nice to think that a recession is usually 8-12 months long. Looking back the markets have been showing signs of it for at least four months, which means that we can be half way through this mess already.
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As I’ve been saying for the last to months, build up some capital (40%-60% of your portfolio) and wait for the right time to buy to build a new position in the stock market. That time is just about upon us, so I say when the DOW reaches 7500 points again, start putting your money to work behind all that research that you’ve been doing.

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