The New Year of Investments.

What does this year have in store for us? Who would have guessed that last year was a good year to invest? This year is a even better year to invest? The market has tested new trends back over the 10000 mark. Companies have thinned the work force to become leaner and more profitable. This year will be the beginning of a new looking economy. Financial institutions lending to borrowers who have the income and the equity to make good loans. Companies like Ford and GM paying employees more of what they are worth than what they think they are worth.
This year the fundamentals haven't changed though. We are still looking for investment for the future. It is always nice to make a quick buck. With the quick buck comes higher risk. Take the time to do your home work with your investments and this will be one of the largest yearly % return on your investment for some time to come.

Maximizing Your IRA In A Recession

Money is tight everywhere. The First thing people do is look to curb their budget. Were is the money going. Grocery bill, telephone bill maybe a house payment. The truth is everyone has bills. Where do we go to trim our budget? The reality is most people go to there IRA contributions to try and save money. Is this a good practice? Are you saving money? NO!! Maybe combine the number of trips to Menards or less trips to McDonalds for lunch but please don't take away from your IRA contributions. There is a rule - to maximize your earning potential your must invest in the good times and the bad times.
Why? Look how long the financial markets were in the tank before someone said "THE US ECONOMY IS IN A RECESSION" Over a year. The same is when the economy is out of a recession. You won't know until it's happened.
Lets say you invested $100 for 2 shares of mutual fund X in 2003. Each year since then you have invested $100 in mutual fund X. Over the years that $100 would only buy 1 1/2 shares. Now the market is down that yearly $100 will buy 4 shares of mutual fund X. We know mutual fund X is a four star mutual fund. We know that mutual fund X will go back up again. So why would we take away from a great investment opportunity like a recession. We can leave this recession with more shares and reap the rewards of dedication to our IRA and our retirements.
If it come down to the family eating or your IRA of course family comes first. If it comes down to a night out with the boys or a little early retirement. GOOD LUCK!

IT'S BEEN TO LONG

Sorry it's been so long, other business to attend to. What's going on with the market today? It's kind of funny, i haven't posted a article in some time. When I last did GM was the big thing in the news. What is the big headlines today? GM of course.
Well were not going to talk about them today. Today I'm going to tell you a little bit about the way the market is shaping up. If you have been keeping your eye on the news you probably noticed that the unemployment new claims has started to slow. The retail sales have had a little bit of a turn around. This recession seems to be slowing or has stalled. Why? Is it the ungodly amount of money the government is throwing around or are people starting to figure out that the news had nothing better to talk about and blew this recession out of proportion?
We should really ask ourselves how did we get in this recession. Is it the possibility that big business was driving themselves out of business by flooding the market with supply in hopes to drive smaller competitors out of business? Is it possible that we ourselves are to blame by spending beyond our means just because a bank was more than happy to keep giving us money? Maybe the government was to worried about party loyalty to worry about the state of the nations economy.
Well the answer is all of the above, and a whole lot more. These things though will help us see were the market is today. Regardless of what my opinion is on the governments blank checks they seem so happy to give out, it does have a trickle down effect. If it was me I would have let these automakers and financial institutions bite the bullet. It would have taken longer for the recession to turn around but the bale out money wouldn't have been coming out of everyones pockets.
The next thing is alot of businesses where building for comfort. What I mean by that is they put on more employees than were really needed to do the job. Now that businesses have started to trim the fat there bottom dollar is on the rise. When these companies started to trim the fat the unemployment numbers started to rise unemployed people have a hard time paying bills. This in turn ups the number of foreclosures. Which in turn digs into the pockets of the local government. Which in turn digs into the pockets of Washington. Which in turn digs into our pockets.
A big piece of the pie is the amount of house holds that were spending beyond there means. A house to big for their income and then they would tack on a few credit cards. What did they have? A life style they couldn't afford.
Now that we took a little look at what got us into the recession. We can see why we are coming out of it.The government did keep alot of people from being unemployed. These people to stay employed had to give up some of their wages.
Which helped their employer stay afloat. The fear of unemployment helped a nation look at their credit card spending. The government started to look at the credit card companies approval policy for new card applications. The credit card companies gave a brake to people who should have never have had a card in the first place.
I could go on and on and on and---Well you get the idea. This recession took years to develop and it will take years to fully recover. I'm just trying to say you can see light at the end of the tunnel.

GM? Is this the beginning of the end?

The recent news from GM leaves a person wondering if this is the beginning of the end. What if? What if GM restructures more will they be able to become profitable? What if the UAW gives up more concessions will this secure their jobs? What if GM goes into bankruptcy will this be a brighter future for GM? The truth of the matter is the only real future in the market today is that a company needs to be able to make changes fast to keep up with compitition. How does a company acheive this? Cost such as labor, material, electric, health care, pensions or 401k's are all subject to be trimmed. Companies can always hunt for cheaper materials and cheaper health care. They can also reduce additions to pensions and 401k's. Electric comes down to more energy savings and going more green for the tax deductions. That is just a rough draft of a companies finacials. I didn't get in to the advertising and compition from other companies but you get the idea. There is one thing I left out, labor. This is a touchy subject, but this is the largest cost to some companies. When all the benifits are figured in for GM employees, not just the working employees but also the retired employees. GM is the hiighest paying automotive employer in the world. Yes the world. GM still values it's employees, but at what cost? Well I guess it's time to get at the heart of this article. GM needs to go into bankruptcy just to get rid of the union. GM needs to get their employee pay and benifits in a relation closer to their non labor cost. The whole world was up in arms that the big three auto giants would go bankrupt but the truth of the matter is it's the best thing for them. For GM they would come out of bankruptcy a lean mean auto making machine. I know that would be a stock I would be adding to my portfolio.

The Man Of The People

The big news for the weekend is, GM's CEO Rick Wagner is stepping down, immediatly! This is because the White House requested it. When the goverment decides to give these companies billions of dollars I would think that it would be up to the government to decide who they want as CEO. The only reason I believe this is if the CEO that is there was being effective the company wouldn't need billions of dollors. Don't get me wrong I don't think the government should be running it, or they might need alot more than what they already got. Rick Wagner in a interview said "I'm the best thing for this company." That is the arrogance of alot of these big companies they are more than willing to go beg for money from tax payers but still think that the country needs them so bad that they can get away with what ever they want. Like the bonuses that have been given out to upper manegment so they can keep the talent there. What a bunch of bull. All of GM's problems can't be put on Rick Wagner's head. You can also include the UAW, and several suppliers who seen other suppliers going under and seen that as a perfect time to raise their production costs. Thus bleeding all the auto makers not just the big three. A final thought, GM employees said Rick wagner was a super nice guy. Being a super nice guy doesn't always get the work done.

What it Means to Buy Intelligently

There are alot of investors who want the big money right now. How do you get the big money right now? YOU DON'T. What you are saying you want is to gamble. Don't let your financial advisor or your pal from work tell you some thing is a sure thing. What will happen is you might make some money or you might lose some money. The only thing you can do to improve the winners you put in your portfolio is do the homework. You don't need a college education to be a good investor. Go down to your local library start reading some books. Try to start out with books that talk your language. A book that uses a ton of fancy terms isn't going to be any help at first. You need to get your feet wet, get comfortable with terms that are being used to describe the markets you want to start out with. I really don't like to toot any bodies horn but a author who I think is really down to earth is Wade Cook. He writes in our language, lays it out for you then works on some of the terminoligy. The nice thing is, if you are reading this, it means you have a coputer. There are thousands of sites that have free info on investing. What I've seen is the more common the idea or the more popular an action the probability of it work is more likely. Just start reading. The more you know the more ideas you have to work with. When the title of this article say "WHAT IT MEANS TO BUY INTELLIGENTLY" it means the more knowledge you have about the market, the more intelligently you can start to determine when a stock is a good buy or a mule that will give you nothing but problems. When you are ready to start using your new found knowledge and buy a stock use some of the free stock analyzing tools out there to help. You can go to google.com and type in "stock analysis+free" and that should help. Good skill not good luck.

FUNDAMENTALS

Today I want to just touch on the basics. First if we want to buy a stock for our portfolio we don't want to pay to much, right. How do we know if we are paying to much? In the market today there are alot of stocks that can be concidered bargains if wefollow a couple of steps.First we need to look at earmings. Earnings should be based on day to day business not one time sales like a sale of part of the company or something like that. You'll also want to know what past earnings have been. With past earnings it will let you see what direction the company is headed. Once we get this then we'll figure out the P/E of the stock witch is nothing more then taking the earnings divided by number of share to get earnings per share but most of this is already done so we don't have to do the math. Next we'll take the price of the stock and the earnings to find out what return we are getting from each stock. I'll pick up here tomorrow. It should be a busy week in the market this week. Lets see how it goes and maybe we can get some good buys and make ourselves some money.