What a difference a year makes. Last year at this time the stock market was on a tear, it just came off it all time high of 14,136 and looked like it was taking a healthy pull back, waiting to go up again. Then all of a sudden all the walls started to fall from the house of cards that had been built over the last few years. Signs of trouble from the sub-prime mortgage were starting to show.
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Fast-forward back to November 2008. The stock markets have lost nearly 50% from where they were last year and everyone is running for some sort of safe place to hide their money until the storm has passed. Jim Cramer from TheStreet.com
has been suggesting hiding out in strong companies that have some great dividends.
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What are dividends? Dividends are what some companies give to their shareholders. Basically dividends are cash that the company distributes from their cash reserves because they don’t have anything else to do with the profits that they make every year.
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Dividend payouts are figured on a percentage basis of what the share is worth at the time. When stocks drop in value, the yield on those dividends rises. Let’s say that a company’s stock is valued at $100 and they give a $5 dividend payout for the year (typically broken up in four payments), the yield of those dividends are 5%. Now if the company is now trading at $40 per share, the yield would be calculated at 12.5%. That would be some great returns on your investment. You can’t get that in any other type of investments.
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The problem comes in where the yield is too high for the company to keep paying out that dividend. So the company will cut the dividend to help the company keep some cash flow. So what is considered the “sweet-spot” yield for dividends? It’s hard to really pinpoint it. Typically look for those strong companies that give any where in the 3%-7% yield, but anything that is over 10% is considered too high to really expect it to stay there.
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Don’t get me wrong there are some that continue to give double digit yields, but they’re few and far between. The only one that I can say that kept their dividend payout the same this past month was Atlas Pipeline Partners (NYSE:APL). The stock was trading at $18 per share and their quarterly payout was $0.96 per share. That was a 5% yield just for the quarter, if you calculate it for the year it comes out to a 20% yield. I don’t expect it to be the same when they pay out their next dividend in February 2009. The company is in trouble now that oil has come down so much, so my advice is to stay away from Atlas.

Tags: Commodities, Getting Started In The Stock Market, Stock investments, Stock market for beginners

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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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As we see with the way the stock market performed today, the sell-off kicks back into high gear. Investors are still concerned about the condition of the economy no matter who won the election.
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The rally that took place over the last week in alternative energy was erased today with the sell off. First Solar Inc. (NASDAQ:FSLR) which was up $70 in the past week gave back $24 (-13%) in today’s trading.
The rest of the sector did just as bad with Suntech Power Holdings (NYSE: STP) taking the biggest hit of almost 21%. Suntech was trading last week at $11 and gained almost 90% before today’s beat-down. The one stock in the sector that escaped the abuse of today was Biofuel Energy Corp (NASDAQ:BIOF) which gained just over 28%, take in mind though that this stock is a penny stock and gains like that are quite common.
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In the financial area of the stock market, the sector was another wash-out with nearly if not all of the stocks lost ground. Out of the ones that I really keep an eye on, the best performers still lost over 5%.
Federal Agricultural Mortgage Corp. (NYSE:AGM), a stock that I’ve talked about before here on this blog took the biggest hit, losing over 25%. Last week the stock traded as low as $2.85 (where I picked up 200 shares) and yesterday hit an intraday high of $8.40, a gain of almost 200% in just a few days.
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I’ve been saying it for some time now, but you need to be ready for when the stock market will turn (good or bad). If I didn’t sell out of AGM when I did, I would have lost some great gains. Don’t get me wrong, I did keep some shares (since I’m now trading with their money). When you get big gains like the one I just spoke about, you need to remember not to be greedy and SELL.
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*DISCLAIMER* At the time of this post Billy is long AGM and has no position in FSLR, BIOF and STP

Tags: Alternative energy, Buying penny stocks, Financials, Getting Started In The Stock Market, How to make fast money, Investments, NASDAQ, NYSE, Stock investments, Stock market for beginners, Stock trading

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