Friday, July 31, 2009
Wrapping up a busy week, so I will be updating my blog today via Twitter. Scroll down and read the Twitter updates in the right-hand column below or follow me @scottjwheeler. Hope the bulls continue their winning ways today, but the early morning futures markets point to a lower open. Most discussion today will be centered around the latest GDP numbers and the Cash for Clunkers program that is apparently, already out of money!
Wednesday, July 29, 2009
In the fashion world, there are always new trends to note and follow. New trends typically emerge from New York, Paris, or Milan, and make their way to the west coast and creep slowly to middle America. People like to follow trends because they want to be in style and ahead of the curve. In investing there are trends also. Technical analysts note the 50 day and 200 day moving averages of the stock market indexes to see what direction the overall market is going. Trends can also be seen in the stock price performance of individual companies. The difficulty for most investors is what to do with the data. Will the trends support a buying decision? Do the trends say sell? Some investors hope that their favorite stocks will rebound from lows and move on to new highs. Recent buyers of GE have seen their stock price double in the past six months, although it is still down over 50% in the past year. Some stocks never recover. Kodak was one of the Nifty Fifty stocks in the 70's, but it couldn't keep up with the technology trends and lost favor with shareholders forever. Now people are asking about GM. Can they come back? Will they be able to climb out of bankruptcy and become an industry leader again? Sadly, their stock is now trading below 50 cents per share. Technology trends will always change and technology stocks are making a climb back this year. The Nasdaq index is the best performing index so far this year and is inching closer to 2000 every day. Of course, it is still well below the all time highs set in the year 2000. While the Dow and S&P 500 indexes recovered and set new highs, the Nasdaq did not. Will this trend continue? You make the call. One thing is certain. Technology will always change as new ideas are born and inventions discovered. Look for the trend and if you spot one you might be able to make some money too!
Monday, July 27, 2009
I have been out of town on vacation, visiting some old friends from high school at a reunion in Boston. We stayed in the Boston Financial District while we were there. A couple of observations. The recession does not seem to be hurting Boston. We saw plenty of tourists and the hotels, restaurants, and pubs in the area seemed to be doing some booming business. So while we hear that Ben Bernanke believes we are getting out of the recession and the economy will recovery, albeit at a slower pace, life moves on. The markets have responded well with the recent news of companies earnings for the most part being better than expected. There is a sense that with the markets doing better than some have hoped, that the bears may be heading back to their caves for a while as no one wants to miss out on the recovery. Of course, some pundits are now calling for a double-dip recession, but most expect better days ahead of us in the short term. Stay tuned on Twitter as I post updates during the day. Follow me @scottjwheeler and let's hope we see another good week in the markets!
Wednesday, July 22, 2009
Follow me on Twitter today @scottjwheeler, as we see if the stock market can keep the winning streak alive and post it's 8th up day in a row! The futures are down this morning, but anything can happen on Wall Street to change direction. More earnings reports are due out today and Bernanke's testimony yesterday will continue to be scrutinized.
Tuesday, July 21, 2009
Today I will take a time out from my usual discussions on money and finances, to state that I have now recorded 200 days of not drinking soda. While I have not lost as much weight as I anticipated, I feel good and I am sure my health is a little better for doing so. I do not feel any compulsion or need to ask for sodas when I go out for lunch or dinner, although I do have an ice tea occasionally.
My goal was and still is to make it through 2009 without drinking soda, but can now tell that since I do not miss it, I will probably continue on with water. One disturbing trend continues to be that more and more restaurants are beginning to charge for water as a way to make up for their lost soda revenue. If it were me, I would charge a little extra on the sandwich instead of making people pay up for their healthy habits!
Monday, July 20, 2009
While talking heads and pundits bicker and debate on whether or not we are seeing "green shoots" or "green weeds" and if the recession has ended or if the economy will continue to be dogged by rising unemployment, life goes on. The average investor has to decide what to buy and when to buy it. If you are saving for your child's college or your own retirement, you still need to save. If anything, you may need to save more. While inflation will always be a problem in the long term, it should not be your primary focus when choosing where to invest your money. Just Do It, is more than just a clever tag line by Nike, it is a simple solution to get people moving in the right direction. Some people get paralyzed by fear. Fear they are doing the wrong thing, fear they will lose money, fear they are paying too much. As most parents will tell you when reflecting on the life of their children: time flies! If you wait for the right time or the best moment to start saving and investing, that time will likely never come. But your kids will still grow up and want to go to college, and you still will someday quit working and hope you have enough savings to fund your retirement years. So turn off the TV and keep funding your kid's college savings account and your retirement plan. Don't like the Nike slogan? How about this old school pearl of wisdom: If you fail to plan, you plan to fail. Hey, Nike's stock isn't half bad either!
Thursday, July 16, 2009
So here's where we are right now. The stock market is having a great week thanks to earnings surprises from companies like Goldman Sachs, JPMorgan Chase, Google, and IBM. More good news is expected later from General Electric and others. This has kept bad news from CIT from ruining the fun. The market is trying to recover from 4 down weeks, after it's 40% run up from the March lows. Pundits are now seeing the Green Shoots and signs of recovery from this economic crisis and recession that has dogged the world for the past 19 months and counting. Inflation fears have been abated for now as there is a more short term concern of deflation. While inflation could come back, it is not expected to be a problem until 2011 or later. Still, some bears out there are not convinced and are predicting a retest of the March lows, one call for the S&P 500 to drop to 600 and so on. So what does all this mean for the small investor? Stick to your plan. Invest in the areas you need to be in. Monitor your investments and make changes as needed. A long term view is still better than a short term look out the back window. Stay diversified and keep saving. Putting your money under the mattress may make you feel better for a moment, but it will not help you reach your long term goals! You gotta make the call!
Wednesday, July 15, 2009
Another busy week in the markets with more companies reporting earnings and more analysts checking to see if they are better or worse than expected. So far the markets have had 2 up days this week and are trying to break out of this 4 week losing streak. Bank of America and Citibank will be reporting this week, but cannot expect to have the surprise earnings that Goldman Sachs did. I will be posting updates via Twitter as I head off to a sales meeting his morning. Follow me @scottjwheeler or check the Twitter updates on the lower right hand column of this page.
Monday, July 13, 2009
Over the weekend, I read two interesting stories by people who have put themselves on the line and said in all sincerity that the banking crisis is over! First it was the Chairman of Barclays Bank in London who said that the banking crisis is over, but the nasty global recession could go on a while longer. Next up, Donald Luskin, chief investment officer of Trend Macrolytics, who also said in an article posted on Smartmoney, that the banking crisis is over. Luskin goes on to say that while the Obama administration did a wonderful job ending the banking crisis, they did not do so well in other areas. Luskin also thinks that the recession and the bear market is over and investors will have to be skillful in their trades to make money in the markets going forward. Long term investing may be obsolete. Traders will have to buy on the dips and sell in the rallies, he says. Notice he didn't say get out of the market, he just said, be nimble and trade carefully. This has been the manta of investing for all time, buy low and sell high. Everyone has heard that before. The problem for most investors is they don't know when to sell. No one wants to sell a loser and admit they made a mistake. To win in investing you have to be right more times than you are wrong. Sometimes you need to sell to cut your losses and prevent further losses from occurring. Ask your self the question, would I buy this stock today? If not, then why do you want to keep it in your portfolio? What's your next move?
Thursday, July 9, 2009
In the strange world of investing, sometimes news that is bad, is really good news. Yesterday Alcoa posted their 2nd quarter earnings and analysts got to pour over the report and compare it to their forecast. Surprise! Despite posting their 3rd consecutive quarterly loss in a row, the company beat the forecasted loss of 38 cents per share, by 12 cents! In other words, even thought they reported a loss of 26 cents per share, that was not as bad as expected, which was good news for the company and the stock. Shares of the stock gained for the day and surged even higher in after-hours trading. So what does this all mean? Well, Alcoa is one of the companies represented in the Dow Jones Industrial Average. In addition, they are considered a bell weather stock and a barometer for how other companies might do in the coming weeks as more earning reports are published. The good news reported by Alcoa yesterday is that they see signs of recovery in the global economy. So all the bears out there thinking that we could retest the March lows, could be in for a surprise themselves. Who's camp are you in?
Wednesday, July 8, 2009
This week is a busy week. The beginning of earnings season, the G-8 Summit meetings, and so on.
I have a busy week also, so will be doing my updates via Twitter. Scroll down and view the Twitter updates on the right hand column below or follow me on Twitter @scottjwheeler. Stay invested!
Monday, July 6, 2009
I used to love the old Bugs Bunny cartoons with Elmer Fudd and Daffy Duck, when they would argue about whether it was rabbit season or duck season. As anyone who follows the stock market knows, it's now earnings season! This is when companies put out their most recent quarterly earnings for the analysts to review and comment. Generally there are surprises. When a company surprises the analysts with good news, it is good for the stock, and when they surprise with bad news, well, it can be bad. Most of the so-called, stock market gurus, are deciding whether we are currently in a "correction" phase, following a recent 40% upswing in the market since March, or whether we are in a more prolonged downward spiral which could test the lows from March, as speculation arises on the lack of strength in the current economy. Many people are questioning if the stimulus package is working and if another one is needed. Some suggest that the effects of the stimulus money are going to present itself in the coming months. Others, like even VP Joe Biden, are wondering if it was enough. The recent volatility in the stock markets suggest that one approach for long term investors might be sector rotation. That is looking at the strong sectors or asset classes in the stock market for possible buys, and selling the weak sectors. This can be a rewarding strategy for those ready to carefully monitor the market aggressively. Many people are pointing to technology as a key sector own right now. As always, if you need help, look for a good coach. Your portfolio should be customized for you. A magazine article or newspaper column can't design a proper strategy for all people, unless you like to follow the herd!
Friday, July 3, 2009
Unemployment is certainly bad for those people who have lost their jobs, but for those who look at the unemployment numbers for a direction of things to come in the stock market, it's a different story. Yesterday's jobs report sent the stock market reeling as the data showed that more jobs were lost in the month of June than previously expected. But if you look at the stock market history, enemployment usually peaks after a recession is over and the stock markets begin a new bull market period. The jobs report is a lagging market indicator and should not have caused a sell off like what happened yesterday. Strange things happen in short holiday weeks like this, when most traders are gone. One should expect a pullback after strong ralleys like we have recently seen, so don't let one bad day scare you back out of the market. Cash is still king when looking for opportunities. The need for diversification of assets is greater than ever, and tactical moves are needed to stay ahead of the herd. Get your game face on and get back in the playing field!
Thursday, July 2, 2009
One thing that trips up investors is not knowing what their investment time horizon is. Most people who are investing for retirement assume they are investing until age 65 or whatever age they think they want to retire. But is that when they stop investing? Only if you plan to put everything into cash and take it to the bank or put it under your mattress. Your investment time horizon actually ends when you die. A person who retires today at 65 has a very good chance of living another 20 or more years. It's not uncommon anymore for people to live into their 90's. Karl Malden just died yesterday at age 97. My grandmother just turned 95 and my other grandmother who has already passed away, lived to age 99! So you have to consider the fact that your retirement might last as long as 30 years! While last year's stock market crash put a lot more people back into cash and CD's and out of the stock market, a 30 year time horizon pretty much dictates that some of that money should be invested in the market in some fashion. That doesn't mean you should have all your money in the market, but then again, you should not have it all in CD's earning 3% or less either. Figure out how much you should have in various asset classes and rebalance and adjust periodically to make sure you are on track of your goals and objectives. Taxes and inflation are huge threats to your wealth, and stocks, while volatile on an annual basis, are the only way to stay ahead of the game over long periods of time.