Archive for January, 2008

Feeling the stock market pain

Well, they say that you are supposed to buy when there is blood in the streets.  They seem pretty bloody today.  I am looking for an opportunity to put more money in.  I have been severely kicked in the teeth.  I guess I will have to invest a little more.  It is interesting how the market has responded to the up days over seas. 

I still think that people should be looking at the long term.  The stocks that make you money are going to continue to make you money. 

One interesting part of the energy story is that as fossil fuels become more expensive, our dependence on electricity is going ot continue ot move up.  This will increase the demand for copper.  Apparently, mexico is still in the middle of a big housing boom, where they will be using huge amounts of copper. 

The Chinese are probably getting ready to consume a bit of the accumulated resources that they have. 

Today was painful, but to me it would be irrational to get out now.   The finances of the world do not support that story.

Good luck

A little taste of the Economic Trouble we are in

Well, this morning was pretty interesting.  I was surprised to read that Bernie cut the feds rates this morning by a whopping 75 points.   People are getting nervous and starting to shake things around.

I have been saying for a while that the economy is going to be caught between the twin anvils of recession and inflation.  We have chosen inflation and we will get recession.  It will just hold off for a few more months.  Anyway, try to get your assets in something that isn’t US dollars.

 I read a book recently called Crash Proof (Thanks In-Laws).  It was pretty good over all, and talked about the coming economic problems.  They guy points to three ways to get yourself protected against the coming issues. 

One is to invest in foreign stocks, and he recommended his company, E.  This was a little frustrating, because it felt like the last third of the book was a plug for investing through him.  I checked on the Internet and found that you could also buy foreign stocks through Etrade as a discount broker.  I am going to check if scottrade will do anything like this anytime soon

2nd was to get into precious metals, as they traditionally hold value well.  He also recommended doing this through his company.  If you watch feedback, I have found Ebay is a very effective way of getting precious metals at prices that are very close to melt value. 

The last thing he recommended was keeping some  money in cash.  But not dollars, they will not do so hot.  He recommends buying foreign currencies.

 One thing he did dwell on with the stocks is that you want a company that pays out dividends.  That way if the market goes down, who cares, you get your dividend each quarter anyway.  I tend to agree with him here.  A company should have a plan on how it will return money to you.  Even if the dividends are small, as long as it increases them consistently, you are doing well.

Reinvesting all the earnings can be nice at the beginning, but the company is supposed to exist to make you money, not simply to grow.  Many American companies seem to have lost this concept. 

I am still big on the commodities.  These rising countries need more electrical infrastructure and they now have the saving to purchase it.    I have been getting my butt handed to me on  a platter the past few days though.  I have increased my position, and home to see it go up as earnings come in tomorrow. 

 On the election, everybody through out the stimulus package where we send out free money to everyone. This is retarded, and I will talk more about it tomorrow.  Romney had the plan that I liked best.  Making a more favorable business economy in the USA.  The average citizen would rather have a steady job than a handout.

Stagflation is right around the corner

Well, it looks like the stars of recession are beginning to align.  I remember about a year ago, when our trustworthy, impartial friends over at the National association of Realtors said that the housing slowdown would be over by the end of 07, and that it was a great time to buy (isn’t it always?).  The market has shown otherwise.  Most economists say that a recession is now nearly guaranteed.  I remember the creepy fat guy on disney’s Pinochio, telling the little jackasses, “You’ve had your fun, now pay for it!”  Well, we certainly had ours. 

I sometimes wonder how we didn’t see what was coming.  Is our society now so advanced that even the laws of math don’t apply?  Many otherwise intelligent people just can’t put off the gratification that comes from buying right now. 

I recently talked with a friend about lasic.  His first thought was to transfer the cost to a payment plan over 4 years.   No wonder Americans are in such poor financial shape.  The idea of paying for things up front has completelty disappeared.  I teach for a living, and am continually amazed by the amount of people that want me to shove infromation down their throats without them exerting any substantial mental effort.  You have to pay the price if you want the benefits. 

We are the sailor who went out and had a fantastic time, disregarding the advice of the old fogies that advised us to use moderation.  We are waking up the next morning with a hangover, an empty wallet, and a yet unnamed venereal disease.   The question is, what’s the cure?

I guess that individuals have made good decisions and are finding themselves in a precarious situation as far as investments.  If you are not extremely interested in the stock market, you should do what the old fogies recommend.  Cost average though the downturn, because no one knows when we will finally get the upswing.  Your financial solvency will yield big dividends.  I remember hearing about some economist in california that sold his house and planned on buying back after the market regained sanity. 

These environments can be tricky to navigate.  You want to keep your money is non dollars as much as possible, but it would be nice to be able to keep the cash around to swoop up bargains (anyone have any good theories on how to do this, other than foreign currencies?).  I am staying with companies that produce commodities.  They will be braced against the inflation.  The recessionary environment will hit them, but they should hold up, given the Asian situation.  Other areas might me European stocks, or your “Proctor and Gamble” companies of the world.  Make sure you are going for basic goods that meet basic needs.  One are that should be taking a hit fairly soon is consumer electronics and car stocks.  Anything that produces durable or semi durable goods will take a dip, such as apple.  People will have trouble forking over $300 for the latest ipod when they aren’t sure their job will be there at the end of the month. 

 Any comments are welcome, and good luck to all