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What Are Bull Markets And Bear Markets?

Just in case you are new to stock market investing, there will be two terms that you will hear thrown around quite regularly.   These are “bull market’ and “bear market”. These two terms will remain in your thoughts once you have survived a day in the stock market world. These two terms are important, that is why you need to familiarize yourself with them.


Here is a brief overview of the two terms, the “bull market” and the “bear market”. Let’s start with the bull market. The bull market is when most traders feel that they have felt something positive about a certain stock market and they want to buy stocks. This will usually happen during a long bull markets period that the stock market would keep going up and up.


As for the bear market, the bear market is actually the opposite of the bull market and it is when the stock market is constantly going down no matter what a trader would do. This will usually happen during the times that a trader loses sleep and if they continually wonder whether they should be selling their stocks.


However, most of the time the market is placed somewhere in between the bull and the bear market. Normally, the better stocks would go up over time and then the stocks of the companies doing poorly would go down. It is always considered wise to always try to pick a stock of company that is doing well or will do well when the time comes.


Now that you know the difference between a bull and a bear market, what does it mean for you.  Many times an investor has no control over what is happening in the world that affects the stock market.  If the market is experience a downward turn, it is a good idea to invest in defensive stocks.  Find those stocks that experience little volatility.  Another idea, is to go the sidelines and wait it out.  The problem with this trading technique is, you may miss the rally.

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High Yields: How to Invest in a High-Yield ETF

If you are like most people, then you like the idea of having your money work for you. One way in which it does this is when it is invested. When your money is invested, it grows as the companies you are invested in grow. Thus, you make money off of the work of others.


However, all too often people are afraid to put their money to work in the stock market because it seems like a confusing place. Many worry that their money might evaporate away if a stock goes under. For example, if you invest in a gold ETF fund, and the price of gold collapses, then you’re busted — you lose your investment. The same goes for Oil ETFs, the natural gas ETF and others. While this fear is legitimate if you are invested in only one stock, there are ways to diversify your money and to grow it without having to learn the complexities of the market. This way is by investing in a high yield ETF.


A high yield ETF (Exchange Traded Fund) is an investment vehicle in which your money is given to a professional who manages the money for you by placing it into a number of high yielding stocks. A high yield stock means a stock that pays a high dividend relative to it’s share price. By investing in this kind of ETF you are allowing compound interest to work in your favor in order to significantly grow your money over time.


Conservative style investors might be particularly drawn to high yield ETF’s because of the glamor of the high dividend. Investors have the option of receiving their dividend (share of the company’s earnings) in the form of a check every three months, or in the form of reinvestment in the stock. Reinvestment in the stock gives you a bigger share each time and is generally thought of as the smarter move financially, unless you are using the money as income.


While ETF’s are a relatively new product of Wall Street, they are in many ways similar to mutual funds. They allow you to not have to worry about studying the stock market before investing. You may simply place your money into these funds on a set schedule (i.e. monthly, weekly, etc.) and allow it to grow over time for you. This makes your investing automatic, rather than focusing on random ETF news and sound bites. Naturally you should never jump into an investment halfheartedly. If you want your money to work for you and compound over time, then you are going to need to stick to your investment plan.

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Investing In The Financial Sector

There’s no doubt about it, the stock market can be a fantastic way to make money. Historical analysis shows that the rate of return on money invested in the stock market is, on average, better than that of money invested in government bonds, certificates of deposit, and most other investment options. However, it can also be a fantastic way to lose money if you are not careful, so that’s why it is absolutely vital that you know what you are doing before you go out and drop down some money for what is, in fact, nothing more than a few bits of information stored in a computer somewhere on Wall Street.


The stock market can be broken down into sectors based on the types of stocks for sale, such as blue chip stocks, industrial stocks, technology stocks, or financial stocks. The financial sector is a popular area for investment, but as with all stock market investments, and indeed all of life, it is important to know what your are buying before you buy it. What that means for you is that you need to research the companies that you are interested in.


All companies in the United States are required to send financial information to the Securities and Exchange Commission (SEC), which posts this information on its web site. By looking through the financial filings of companies, you find out a lot about them. Some things to look at are: how much the company owes, how much it makes per year, and how much it has paid out to investors in the past in the form of dividends. You can find out more about what to look for in these financial filings by going to your local library and checking out any book on the stock market.


There’s more to the stock market than just this, however. One thing that is hammered into the heads of all business school graduates is this: diversify, diversify, diversify. Think about it: if all of your money is tied up in one company, and that company goes belly-up, you have no hope. But if you have spread out your investments over many different companies, then you will take only a small loss. Something else to watch out for is becoming too attached to your stocks. We all have our favorite companies, but if your pet stock is showing losses quarter after quarter, it may be time to bail. It’s better to take a small loss now than to wait until that favorite company is selling for pennies per share.


There is much more to playing the stock market than just this, of course, but if you follow these few simple tricks, you’ll be well on your way to success.

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Contest: Win “12 Steps To A Worry Free Retir...

We’re having our very first (but not our last) contest here at Beating The Stock Market! 🙂

The contest starts right NOW and ends on Sunday, September 30 at 12:00 noon EST.

First, the prize….one winner will receive a copy of Kiplinger’s: 12 Steps To A Worry Free Retirement. 🙂

Actual customer review:
“This book lays out what you need to know about planning your retirement using easy to understand text and charts.”

Here’s how to enter:
All you need to do to enter is post about the contest and link to this post. Leave the link to where you posted about it in a comment here so we can keep track of the entries.

Good luck!

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Stock Market Game

I’ve said it many times, and I stand by it; Stock Trading Is Not A Game. It doesn’t matter if you’re a trader or an investor, you must do your homework by researching every stock you plan to invest in or trade But what if you could play a game and practice investing without risk? You could have fun “playing”, while learning and understanding the stock market even more.
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I stumbled upon a free website where you can trade stocks on a virtual Wall Street. UpDown.com is a free fantasy investing site. People join UpDown to practice investing and can earn money for winning contests. Start with a $1,000,000 cash reserve and start trading stocks immediately after registering and creating a profile. With up-to-date news information along with an active forum for members to share ideas and investment strategies.
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The UpDown is a community for people interested in investing in the stock market. If you’re new to the stock market or have a few year under your belt, this site will give you the chance to try different strategies without any actual loss of money.
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UpDown.com provides a platform where investors can view, share, and rate high-quality stock analysis and investment ideas. They then filter, aggregate, rank, and present the community’s investment recommendations for the benefit of all UpDown members looking for valuable investment advice.
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Click the banner below, or the one in our sidebar to join. I just joined myself and it looks like a good place for me to test out new strategies that I normally wouldn’t, with my own money.



Free Stock Market Game

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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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Bear Market Rally

What a week this has been for some great gains. Just more to add to the already increasing portfolio since the DOW hit the 6500 range. On March 9th the DOW was at 6547.05. In less than three weeks the market now sits at 7924.56 going into Friday morning trading. I don’t know about you, but if you haven’t taken your profits and locking in those gains, you are just being greedy.
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Everything points to this movement to be nothing but a bear market rally. In the last three weeks the Dow increased 18% while the S&P 500 and the NASDAQ jumped 20% during the same period.
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We are not out of the woods yet. The economy is still in disarray and current Administration doesn’t have all the answers. Whatever the reason for the stock market performance, it’s not going to last or even to be able to sustain these levels. Just because Jim Cramer has stop screaming “the sky is falling”, because he says the “Great Depression II” is off the table. Remember that after the initial crash in 1929 to the actual “bottom” in the stock market, there were quite a few bear market rallies.
Yes, the prices of stocks fell over the long three years, but in between those years there were times when the market experienced a nice 10% to 20% gains in relatively short periods of time, only to drop back down to it’s bottom or even lower levels.
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I’m quite happy with the 22% gains I’ve made this month. I started scaling back my position and taking profits on Monday. The prices of the stocks have continued to climb after I sold many of the shares. I’m not going to get greedy and think about if I didn’t sell any of the shares I would have had more profits than just 22%.
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No one can ever predict a “bottom in the market or in any one stock, the same goes for trying to do the same at the “top”. The whole idea to never buying all your shares at once is to lower your dollar cost average. The idea of scaling out of a position is to secure your profits.
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Be ready for the pull back in the stock market as it’s exactly what I’m expecting to happen in the next three weeks. I’ll pick up the same shares I sold, but at a lower prices.

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Pork Barrel Spending Stimulus Package

stimulus package

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The stimulus package was passed last week and Wall Street is letting Washington know that they are not happy. Since the package was passed, the DOW has dropped nearly 500 basis points, reaching a twelve year low of 7077.35 and closing at 7114 on Monday.
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The current stimulus package will cost American tax payers $778 billion. That’s after they’ve cut out all the unnecessary spending that was originally in the plan. Unfortunately, the Democrats that control the House are now in the process of passing another bill that will add up to about $410 billion in what they are calling “needed to fill the gaps that the first stimulus package left out”.
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This administration has only been in office for one month and they have already passed bills that will spend more money than the previous one did in it’s last year. Something that this administration campaigned on not doing.
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All this spending is going to have to be covered by some sort of tax increase and the one that will be hit first will be the capitol gains tax. It presently sits at 15%, but as President Obama stated on the campaign trail is that he feels that it needs to be raised to 25%-30%. If that is to happen, then expect the stock market to drop well below the 7000 mark.
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As this administration start to show their true agenda for this country, Wall Street will have no choice but to pull out their money to avoid unnecessary tax burdens.
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As for the economy, it won’t be any better. How can a company increase their profits, as well as their work force, if they become more tax burdened. If a business can not make a good profit, it will not attract stock holders. It all ties into one another.
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For the last couple of months, I’ve only been trading stocks that have taken a beaten because of the market as a whole has dropped. I don’t have the confidence in the stock market any longer and will do what I can to pull out the capitol that I have out of it. I stated before that I don’t typically short stocks and in times like this it too doesn’t sound like a great idea, but in bad economies, it’s much easier to make a profit shorting stocks than it is to go long.
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Whatever you decide to do with your trades, be aware that this economic turmoil is far from over.

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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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The Sign Of Things To Come

Now that the election is over we can get back to what is really important, getting the economy back on track. From the looks of things that went on in the first half hour, it doesn’t look like the markets took the news very well.
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As it turned out in California yesterday, the clean energy bill didn’t get the support it needed to get passed. Which in my eyes doesn’t look too good since California is usually the leading state when it comes to clean and green type technologies for their environment. The alternative energy sector is getting driven downward in the morning trading hours. As I stated yesterday in my post, It does look good for wind, solar, and other alternative/renewable energies with Obama winning the Presidency, but for right now the sector is taking a little dip. This just be the time to get into the stocks of you choice in this sector. Buy your positions in increments and on the dips.
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As for nuclear power, McCain was for it, but at the moment Obama stated that he would have alot to look at in regards to nuclear power being used in the U.S.
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What does the future for the financial sector? It’s believe that stability will be brought back to the financial industry, but remember that could be just a false sense of security. It was announced today that the Federal Reserve has appointed a new risk manager and if their choice doesn’t put a little worry in your head, then I don’t know what would. Their choice is Michael Alix, the former chief risk officer from Bear Stearns, that’s right the man who made the decision to have Bear Stearns take on all that risk that eventually destroyed them. The only thing that I could think of is that they hired him to tell them what not to do.
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Hnag in there and take profits where you can. Happy trading.

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