Thursday, October 30, 2008

Oh no.....

No, I'm not thinking about Barack Obama and how absolutely scary it is that he could be President shortly. My Sony bigscreen's picture went on the fritz yesterday morning and I now realize how crappy life is without a bigscreen. I am so spoiled. I am also turning 35 tomorrow, which doesn't seem to bother me nearly as much as the TV issue. More on the political statements this weekend, grasshoppers!

Friday, October 17, 2008

Investing 101

Let me know who made what money this week on my suggestion. Hopefully SOMEONE out there made a few bucks cause I made a killing this week....I bought QLD at 30 on Friday last week and sold it Tuesday at 42. Bought it back yesterday at 30.50 and sold it today at 36. Sure I got lucky this time, but with the way things have been in the market lately, I was way overdue for some good luck.

For those longer-term investors out there (which I normally am, by the way...this was a rare trading move that I usually don't have the balls to do), here is a great opinion piece that Warren Buffett wrote in today's New York Times...this is exactly the way you should be thinking right now if you are a long-term investor....

http://www.nytimes.com/2008/10/17/opinion/17buffett.html?_r=1&ref=opinion&oref=slogin

Monday, October 13, 2008

Take the Money and Run

So you thought I was crazy on Friday, huh? Man do I love it when I am right! Granted, it doesn't always happen, but it sure feels good when I pick it right and actually act on it. Yep...I followed my own advice on Friday and bought QLD at 30 and DDM at about 31. Now my fellow grasshoppers... here is another lesson in making money and it goes something like this...

Bulls make money, Bears make money, and pigs get slaughtered. Don't go out and be a big pig and try to double your money on these things...take some profits. In my case, I think there might be a little more upside follow through tomorrow morning, but I plan on selling at least half of my investment tomorrow. These types of rallies don't happen often, the economy still sucks, and if you can make a 25% or 30% return in 2 days that is 2 years of good work...sell and live to fight another day. Either that or sell half and set a downside stop on the rest at maybe 20 or 25% gain...you can always buy back in when it comes back down.

School is now out.....good luck Daniel-son....

Thursday, October 09, 2008

Time to Buy

Yeah...I know...are you friggin NUTS Todd? Why in the hell would I want to buy any stock right now? My response to that is...why not? The market is ridiculously oversold, pessimism is high, the future looks grim. All classic signs of at least a short term bottom in the market. This situation just screams for someone to crush all the shorts out there.

So, if you are a long-term investor (3 years or longer) and have extra cash laying around that you don't plan on needing in the near future, you need to back up the truck here and buy. I know this runs opposite to what the emotional part of your brain says, but your emotional brain gets you in trouble when you are trying to make a rational decision. Sure, you might lose money over the next day or two, but I am guessing you will make money in the next week when we get the huge oversold rally that is just waiting out there....I wouldn't be surprised to see a short term oversold 1000 point rally by next week.

So here is what you do grasshopper. Go buy some QLD between 32-33, DDM between 33-34 or SSO between 29-30 tomorrow morning and dont look at it for a week. Look at it next Friday and see how much money you have made. Could I be wrong...sure. But I am gonna bet I am right. I am even gonna write a reminder on my calendar for next Friday to see if I was right or wrong so I can say "I told you so". Even if I am wrong, does anyone out there really think the stock market won't be higher than it is now in 3 years? The clouds will part, the hurricane will wind down and life will go on. Time to step up to the plate people...

Some Political Humor

Thanks to my fellow stressed out Financial Advisor Kris for this one. No matter what side of the political fence you sit, this one is hilarious. Enjoy.

http://www.peteyandpetunia.com/VoteHere/VoteHere.htm

Saturday, October 04, 2008

Some Perspective on the Markets/ Economy

With all the crap that is going on these days in the financial markets, I figured I would post something to give you, my loyal readers, my perspective on things. As with anything, nobody is ever right 100% of the time on everything, but I think these assumptions are at least in the ballpark.

1) The bailout/rescue bill. I think this bill will help the economy down the road, but it isn't going to help in the near-term. While I applaud Paulson for the effort, this doesn't magically solve all our problems today. As much as we love instant gratification in our country, we will need some patience on this one. I don't see this thing up-and-running at full speed for a few months.....meaning early 2009. Until then, things will probably not be getting better.

2) The stock market. Short term(meaning Monday) I think we are going to see another really bad day. I think we will see the Dow Jones go under 10,000 in the next week or two. More companies will go under in the near future. But remember one thing on the stock market...the market always turns around before the economy does...ALWAYS!

3) Credit. If you live on credit, you better learn how to tighten your belt. The days of easy borrowing is gone for a while. While I am not sure how bad it will get, don't plan on borrowing except for the major ticket items like cars and houses. Everyone had a big credit party the last 5 years and the hangover is finally here....and it's looking like a bad hangover.

4) Investments. First of all, DO NOT panic and do something stupid like pull your money out of the bank and put it under the mattress. The world is not going to end tomorrow. The banking system isn't going to fail and we are not going to end up resembling a third world country. If you are young (meaning you have at least 10 year to retirement) do not pull all your money out of stocks and go into cash in your 401k right now. I know this seems like a smart thing to do, but it isn't. Here's what I mean....

If you move to cash, you are going to get what...2% per year on your cash? Lets say this is a bad slowdown and it takes two years for the market to turn around. You will get a 4% return in cash over two years. You might very well lose more money by leaving things as they are in stocks. BUT...when things turn around, it is not unusual to have a 20% move up in the stock market in a recovery. This up move gets you right back on track to your long-term goals. Plus...you are buying lots of shares of those mutual funds at cheap prices now. Remember...you don't need this money today...you need it later so chill out and let things go.

If you are closer to retirement, also do not panic. Just start adding your monthly 401k contributions into bond funds now instead of stock funds. This will weight you more conservatively as you approach retirement in the next few years. If you are already retired, you probably don't (or shouldn't) have all your money in stocks. Everyone is different, but a 50/50 mix of stock and bonds is a good starting point for someone entering retirement right now.

REMEMBER...the world is not going to end next week...have a cool head and just ride things out. If you feel like you need more security, add a little more you your savings account or money market just to have that extra cushion. If your 401k balance freaks you out, just don't look at it...put it right in the drawer when it shows up in the next few weeks, cause it's gonna be an ugly one.

DISCLAIMER: My posting wasn't meant to freak anyone out, I just want to make sure everyone realizes something...things aren't going to turn around immediately now that the rescue bill has passed. There will be some tough times coming for everyone, but things will improve and life will go on in the end. And (hopefully) people will learn from their mistakes and not repeat them...