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Posted by Martin November 12, 2008
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What can we do to save our economy?


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dollarbills As the president-elect Barack Obama said; “It will not be any quick easy fix…” he was very right about it. [tag]FED[/tag] took some not easy, but wrong steps at the beginning of this crisis, which prolonged this agony and started the drop-down spiral, the exact same way as what Japan did in 90’s.

This is exactly what Jim Jubak was saying in his paragraph Is US entering Japan’s nightmare? in January 2008. At that time everybody believed that the FED’s effort would help to fix the problem quickly. I was wrong too. I believed the [tag]economy[/tag] is strong enough to overcome troubles and get back on track. In January 2008 it has been about 12 months since the [tag]crisis[/tag] started. Books say that the average [tag]bear market[/tag] takes 14 to 18 months. Now it is obvious that we are not in an [tag]average bear market[/tag]. So why would I be so pessimistic as Jim in his article, right?

What can we do as common citizens of this country to help fix it? Some say stop purchasing products from abroad, stop buying products made of [tag]crude oil[/tag] we have to buy from countries which do not like us. These people mean stop burning oil in cars and use [tag]alternative fuels[/tag] such as [tag]ethanol[/tag]. This segment of the economy is not the majority which would save the it. If we want to stop buying products which uses crude oil, it is not only our fuels in our cars and heating our homes. All plastics – computers, keyboards, cosmetic products – almost everything from soap to even lipsticks, outfit and clothing products – all synthetic fibers and many, many other products are made from crude oil. It is nice to be patriot, but this is not the way we want to go.

What can we do to fix our economy? This economy stands on [tag]consumers’ spending[/tag], so we should start spending again to boost the economy. Easy said, difficult to even think about it. A lot of people are scared to spend money in these bad times. You never know when you loose your job so everybody is trying to save instead of spend money.

We cannot do much about this situation except pushing our congressmen to help. When you take a look at the [tag]interest rate[/tag], do you think that everything is alright? How many of you could get a [tag]loan[/tag] recently with an interest rate at 3% or even 2%? How many credit card companies decreased their interest rates from 14% – 22% to 5% – 11% for example? I haven’t seen any. My recent fixed mortgage rate was at 6.1% or so. Financial system gets money from FED at 1% rate, so except on some loans “interest only”, I haven’t noticed any changes in banks’ behavior, have you? Banks are reluctant to lend you a penny these days. So what can we do about it?

We live in capitalism and it is not a hippie paradise of love. We cannot expect banks and other financial sharks to change themselves and start doing something different from making a lot of money. You don’t even want to change their behavior either, because on the other hand you may be a small stock holder and you want “your company” making you money. There shall be some equilibrium however. If the banks are taking federal money, these shall be used not to fix their own balance sheets by buying bonds, but providing more loans to support consumers’ spending and start the market turning again. Unfortunately the Government is now the only authority which can set those rules and enforce them. I am not a big fan of a strong Government involved in economy regulating it too much (just one step to socialism and communism or dictatorship), but in this occasion I must agree that temporary regulation (until taxpayers money are used) needs to be enforced.

Unfortunately Americans mostly do the right opposite from what they should do: save money in good times and spend them in bad times to support economy. There are many other aspects in this mess and I am not an economist able to tell you the right way. The issue is not just black and white and it will not be an easy quick fix.


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Posted by MartZee November 11, 2008
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Market under pressure, will the rally attempt survive?

Market under pressure, will the rally attempt survive?
This is a post from Hello Suckers
Today the [tag]market[/tag] dropped significantly down. It seems like it had lost steam of last week power to override all bad news and we will head down again. The market is under pressure. It is still hard to say, which direction it will go.
Dow
-176.58 -1.99% 8,693.96
Nasdaq
-35.84 -2.22% 1,580.90
S&P
-20.26 -2.20% 898.95

When looking at the [tag]chart[/tag], the market is going to test its support line for the second time. If it goes down, the rally will be over:

[tag]Dow Jones Index[/tag]

I read a [tag]market review[/tag] “In the market” by [tag]IBD[/tag] every day and it is frustrating and depressive to read that the market slipped on [tag]economic woes[/tag], surprises, [tag]crisis[/tag] and other bad news. I wonder who is still wowed or surprised? We all know that the economy is in bad shape, but honestly it still is doing well enough, better than in 1987 or in 1929. I know, it still can get worse, but why so much pessimism? Big corporations and [tag]banks[/tag] who primarily made this mess shall work with people not to let them down, negotiate new conditions to keep the [tag]mortgage[/tag] and [tag]loans[/tag] markets working. In previous years bankers were greedy and today they are scared to lend a penny. What extremes! [tag]Small investors[/tag] such myself need to wait when the [tag]panic[/tag] stops driving the market so we can start [tag]investing[/tag] again.

Tip: [tag]Save your money[/tag], do not invest into any new positions, build a [tag]watch list[/tag] and wait for the market to tell when it is the best time to start buying stocks. This beginning rally still may fail.


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Posted by Martin November 07, 2008
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Investor’s checklist I.


This is a post from Hello Suckers

Are you [tag]new to investing[/tag]? Were you thinking you would [tag]start investing[/tag] some [tag]money[/tag] in the [tag]stock market[/tag] to make some [tag]additional income[/tag], but you have no idea how to start? Don’t worry, we all were beginners once, so do I. This article shall give you an “implementation & operational” manual on [tag]how to start investing[/tag]. I would guess you want to start from the beginning so let me start from scratch.

1. Start saving money

For investing in the stock market you would need some [tag]initial capital[/tag] to start. Ideally you want to start with at least 10,000 dollars account, however you can start with 5,000 or even 2,000 account will work. If you do not have such sum, I would recommend opening a savings account and transferring some amount of money until you save your initial capital. Do not open your investing account and save on it, since this account will earn no or very small interest and investing is not only about [tag]buying and selling stocks[/tag], saving money is part of the entire game.

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Posted by Martin November 07, 2008
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Picks 11/03 – 11/07


No new picks.

There is nothing to buy out there.

Existing holdings:

Symbol Qty Last Gain($) Gain(%)
AFAM 10 51.47 100.24 24.19

Contribution this week: $0

Starting account value = $1,920.05

Account value = $1,953.16 (without margin)

Buying power = $1,438.46

Portfolio Gain/loss this week = 1.72%

Portfolio Gain/Loss for NOVEMBER 2008 = 1.72%

Portfolio Gain/loss since inception = -12.79%

Annual Return (CAGR): -12.79%


Are you interested in Reverse Scale Strategy and see how it works when implemented to even a small account?

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Posted by Martin November 05, 2008
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AFAM filed positive 3Q results today, 63% better than expected

AFAM filed positive 3Q results today, 63% better than expected

AFAM, the provider of home nursing care services filled its Q3 earnings today 63% up over the expectations and it rallied back to $49.51 a share from its yesteday sell off. Sales rised up 84% which is quite a good result in todays economy. Volume is raising as well and even though the stock’s rally is slowing down it still may be the new winner making another 100% run. Let’s see what would happen in couple more days.

AFAM


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Posted by Martin November 05, 2008
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Is Dow heading to 4000 points?

Is Dow heading to 4000 points?

Today I have read Jon Markman’s commentary on a crisis. In his paragraph “A Credit crater too big to fill?” he writes that Dow Jones can easily sink down to 4000 points level, because of the weak economy which can not be fixed by election itself. Wow. Is he serious? He provides calculations why he thinks he is right.

If he is right, we are heading to a huge and deep drop. Also when looking at the market, it is still hard to say, which direction it will go, see chart:

Dow Jones

It may continue growing along its support line, or it can end recent rally again. Today, the market responded to bad news of economy negatively, the only good news could be the low volume. So let’s see what would happen next couple days or week.

Tip: Save your money, do not invest into any new positions, build a watch list and wait for the market to tell when it is the best time to start buying stocks. This beginning rally still may fail.


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Posted by Martin November 04, 2008
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King is dead! God save the King!


Pre-election rally which has started last Tuesday brought impressive gains today:

Dow
+305.45 +3.28% 9,625.28
Nasdaq
+53.79 +3.12% 1,780.12
S&P
+39.45 +4.08% 1,005.75

However some leading stocks declined today (AFAM is among those stocks) and this makes this rally a bit weak. Will it survive or is it just another attempt to fail?

Tomorrow we may expect weak open and weak trading, however this post-election period will be crucial. The economy is still showing bad data and bad news. Will the market respond to the bad news or are we really consolidating?

Tip: Save your money, do not invest into any new positions, build a watch list and wait for the market to tell when it is the best time to start buying stocks. This beginning rally still may fail.


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Posted by Martin November 02, 2008
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Are we at the bottom?


It seems like the market is bottoming. Even an unexperienced investor can feel that there is a resistance line and the market is not willing to go down any more. It can be misleading however. Take a look at the chart showing  recent moves in the stock market.

Dow Jones

The first red resistance line was what I considered a bottom line in July 2008. Since then the market was growing as well. Then it failed in rally, when in September it tested this line twice and at the end of the month it failed and dropped down like a rock. This all can happen again.

However the market doesn’t respond to bad news about weak economy, losing consumer confidence, bad retail and factory results, decreasing GDP, and unemployment negatively with another drops. It tends to grow as the chart shows. Last three days the market was growing and if the trend remains we may get into new rally.

I consider this development as a “Rally Attempt” and I am changing the market status into a Rally Attempt status.

What does it mean for RSS investors? I still strongly recommend NOT buying any new positions. Even if the screener shows new stocks, I add them to a watch list as potential stock to buy and if the screener shows those stocks again when the market will be ready I will buy. Until then I am sitting tight, saving money and wait.


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Posted by Martin October 31, 2008
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Picks 10/27 – 10/31


No new picks.

Existing holdings:

Symbol Qty Last Gain($) Gain(%)
AFAM 10 48.16 67.14 16.20

Contribution this week: $0

Starting account value = $1,852.81

Account value = $1,920.05 (without margin)

Buying power = $1,438.45

Portfolio Gain/loss this week = 3.63%

Portfolio Gain/Loss for OCTOBER 2008 = -7.91%

Portfolio Gain/loss since inception = -14.27%

Annual Return (CAGR): -14.27%




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