Cyber Monday

Today, retailers get a second chance to improve their bottom line, by enticing people at home and at work to shop online, by offering special deals and incentives for Christmas shoppers and discount hounds around the world. Results from Black Friday indicate that while shoppers were out, most spent less than last year. That's not surprising given the recession and economic downturn over the past 12 months, not to mention the fact that more Americans have lost their jobs during the same time period. While online shopping is convenient and offers another avenue for retailers to sell goods, it doesn't necessarily help those looking for hot toys and gadgets. The Zhu Zhu Pet for example is sold out on the Toys R US website and appears to be available only for those willing to pay triple the price on eBay. It seems to me that stores should limit the number of items sold to prevent the practice of resellers who snap up all the hot toys each year to make a quick buck on eBay at the expense of parents trying to surprise their children on Christmas morning. Either the people at Toys R US do a terrible job of forecasting sales or the vendors can't keep up with demand. Apple seems to be the only store that tries to match product with demanding consumers and keep their items off the eBay black market.

Black Friday Backfire

While the official sales numbers aren't in yet, early reports from store managers seem to indicate that shoppers have now become smarter than the stores. Black Friday got it's name from the date that retail businesses crossed over into "the black" for the year, meaning they finally made money. Holiday sales are extremely important to retail stores, so much so, that the final outcome can make or break their annual sales goals. The basic premise is to get shoppers to come into their stores by offering extremely competitive prices on a few select items, often at razor thin margins, to entice buyers to choose their store over the competition. For the plan to work, however, shoppers must also purchase other goods and items at regular or more profitable prices. This is what the industry calls a "lost leader". What's happening now, is that shoppers have become more knowledgeable about pricing from other stores because of the internet and iPhone apps that make comparison shopping easier. Now consumers can go to each store, buy the "door buster" deal and move on, thus leaving the retail store without the extra profit from their other goods and services. Advertising executives and retail executives might have to re-think the "Black Friday" strategy in the future, or else see their profits dwindle even further into "the red"!

Happy Thanksgiving!

I want to take a moment and stop and share what I am thankful for in my life, this Thanksgiving Day: My God, my wife, my children, my family, my friends, my job, my business, my health, my hobbies, and my freedom! Thanks to all who read, share, and comment on my blog!

Stop orders

Back in the bull market of the late 1990's, many people saw the prices of their stock go up almost exponentially to heights never imagined. Rather than sell at the highs, some thought that stocks would continue to advance. Those that did not see the internet bubble coming and sell out in time, saw their stock position tumble back to earth. In effect, they lost all or most of their gains because they did not sell in time. What could they have done differently? Lock in gains! Let's say you bought shares of stock ABC at $10/share and watched it climb to $20. Rather than hope that it continues to climb higher, you can put in a stop-loss order to sell your shares if the prices drops below $15/share. If the stock climbs to $25, then change your stop-loss order to $20. But if the stock falls from $20 to $15, your sell order will kick in and you will sell out around $15 and book a 50% profit. If you still like the stock, buy it again later. But don't be in a position where you kick yourself for not selling at $20 or $15, when the stock drops down to $8. Don't be greedy! When you buy a stock, have a price in mind that you would like to get out at, and stick with it. You can also use stop-loss orders to limit your losses when you first buy into a new stock position. If you book profits and limit your losses, you will make money in the long run. You can always make adjustments to your plan, but you need to have a plan in the first place.

Twitter Thursday

I've been posting market updates on Twitter, with a special emphasis on Harley Davidson stock ("HOG") and gold ("GLD"). Both are having a great year and deserve a look in your portfolio. Of course, if you've been following me for long, you know that I actually like silver ("SLV") better than gold! Follow me on Twitter @scottjwheeler or go to: http://twitter.com/scottjwheeler and keep up with my tweets! As usual, my last five tweets are posted below if you scroll down and look in the right-hand column.

Fools Gold?

The biggest asset class in the news lately has got to be gold. As the dollar continues to weaken, gold has surged in price over the last several weeks to all time highs in price. Thursday's close had gold priced at a never before seen value of $1123/oz. Year to date, gold is up over 26% and has gained over 78% in value in the past 3 years. So is it too late to buy gold? Some pundits expect gold to continue to climb to $1200, $1500, and some even predict $2000 in the not to distant future. Of course, like anything else, it all depends on your goals and objectives. Are you in it for the long haul or just for a short term play? If the US Dollar strengthens from actions from the Fed or Treasury Dept. moves, then the price of gold may come down a bit. Long term, these predictions could play out. Just remember, had you bought gold in the early 80's at the going price of $800 per oz., you would have watched it go down below $300 and back up to today's values. If you really want to get in on a piece of the action, the safest way to play is by buying the Gold Trust ETF, "GLD" or the Market Vectors Gold Miners ETF, "GDX". You can hold in your brokerage account and not worry about the cost of storage fees and safety issues that gold bars and coins entail. Think gold is too expensive? Try silver. It usually follows to path of gold, and is a fraction of the cost. The Silver Trust ETF, "SLV" can be had for $17.15/share at Friday's close, and silver has actually outperformed gold this year. It's up over 53%! Happy mining!

Veteran's Day

Happy Veteran's Day! This day is set aside to honor our veteran's of world war, and rightly so. Formerly known as Armistice Day, which was started in 1919 to honor the veteran's of the "great war", World War I. Over the years, it changed to include veteran's of all world wars, and in 1954, President Eisenhower changed the name of the holiday, officially, to Veteran's Day. While many people honor those currently serving in any branch of the armed forces, the holiday is traditionally set aside to honor those veteran's who served in any past world war. Thank you to all veteran's who served and put your life on the line for my freedom and the freedom of all Americans!

A long time...

This week, the Federal Reserve Open Market committee met to discuss possible changes to their current policy of holding interest rates in the ultra low range of 0.0-0.25% where it is currently. As expected, they decided to keep rates unchanged. More importantly, were their much anticipated comments afterwards, which traders and analysts try to decipher to detect trends in the future. Fed Chairman Ben Bernanke stated in part, that even though there are positive signs of growth in GDP and the end of the current recession is at hand, the current unemployment situation is a problem that will take a while to see improvement. Because of this, the FMOC sees themselves holding interest rates at this very low level, for "an extended period of time". Meaning, it could be a couple of years before they see the need to begin raising interest rates again. Economists are not predicting the unemployment rate to decline to "normal" levels until sometime in 2012. So for people looking for rates to go back up on CD's, money market accounts, and other savings accounts, you might have a long wait on your hands. What does this mean for savers and investors? It might be time to begin looking at alternate options for higher yield. Longer maturity CD's (5 years or more), Bonds, and dividend paying stocks and/or ETF's, might be in order for people needing higher income. Some folks will have to move into some higher risk investments to make their long term plans work out. But everything has a risk. Staying in short, low yield, CD's carries interest rate risk, and inflation risk. Where do you need to be?

The risk of bonds

The recent news on the pre-packaged bankruptcy plan of CIT, is a real life example of the benefits and perils of investing in bonds. Up until the news of CIT's filing on Sunday night CIT bondholders were getting a 7.75% yield on their bonds. Stockholders had already seen their stock price plummet from a high as late as 2007 from over $60 per share to around $1. The news of the bankruptcy sealed the fate of the stockholders and even preferred stockholders, they will end up with nothing for their investment. But bondholders, will end up with 70 cents on the dollar, or a 30% loss on their principal. Nothing to really cheer about, but at least they walk away with most of their original investment returned. Works out to about the same kind of loss many people experienced in the stock market collapse of 2008. Had CIT not filed bankruptcy, these bondholders would have continued to collect their 7.75% coupons until maturity and then get their original investment returned, at least that is the way it was supposed to work. CIT's failure will be the 5th largest bankruptcy filing in history. While these types of events are bad news for investors of all types, it shows the benefits of being a bondholder over a stockholder. I would much rather try to make up a 30% loss than a 100% loss!

One Year Anniversary

I have now been writing this blog for one year. I originally started this blog as a way to capture my thoughts on various topics and share my insights with others, hence the name, Thoughts from Scott. Over time, this blog has morphed into a blog primarily about investing and saving. My posts are designed to give some useful and basic information to people who are or might be struggling in this area. Like an old, but popular and very funny TV commercial for Countrywide Mortgages a few years back, many people are "in debt to their eyeballs"! My thoughts and ideas on ways some people could help themselves by learning from my experience in working in a bank, I thought, might be beneficial. This blog is a way for me to comment on current events in the financial world, and also give back to the community.