If you know me, I am a believer in stocks and mutual funds. However, I have learned over the past several years that the “Buy & Hold” strategy is not really the best way to manage your portfolio. Just because you buy an stock or mutual fund, there is no guarantee that if you “hold” it, it will appreciate over time. As my buddy Jim Cramer has said time and time again, “Buy and Homework!”
Just holding onto a position is an excuse for not doing your homework and making decisions. If you don’t want to make decisions because you feel you don’t have the interest or expertise, then hire a fee-based financial planner. OK – enough on this and on to my real point.
- Stock Market Crash of 2008
It’s time folks. Time to move your 401k and other investments into cash. I did this 6 months ago. And recently, I placed my non-retirement assets in an online bank yielding 3.5%. Nothing to get too excited about, except I’m not getting killed like so many others! Even the Money Market is a scary place now. Some funds have fallen below the $1.00 per share price and people have begun to lose money! Even worse, some mutual fund providers have been exercising their right to freeze account liquidations by 7 days!
It is so unpredictable right now. I’ve been saying that this was coming. This fiat money system combined with a war that we can’t afford, plus horrible horrible monetary policy and globalism have caused this (among other things). I would say to sit on the sidelines now. I wouldn’t even buy gold right now. It has gone up too fast too quick, just like oil.
In the end, all bubbles burst and line the pockets of the super rich:
- The dot com bubble
- The real estate bubble
- The steel bubble (look at the prices of steel over the past 2 years!)
- The credit bubble
- The oil bubble (went from a high near $150 / barrel to $97 in 2 months!)
Right now, it’s the small guy that’s getting screwed. The market is all over the place and any middle or upper-middle class people that are getting in and out based on the trends are going to get screwed royally in the end. Play it very safe now and go to a strong FDIC insured bank. (Did I just say that???) You should be able to make at least 3% using an online bank. There are many good ones. (Research at bankrate.com).
The name of the game now is capital preservation, not appreciation. We never know where exactly the market is going, but our country’s economics are horrible now. Don’t bet your life’s savings on the fellows in Washington.
Posted September 17th, 2008. 3 comments
Here’s a nifty little spreadsheet that I ran across. This spreadsheet calculates the best strategy for you to pay off your credit cards. It’s simple. Enter your credit card balances, minimums, interest rate and available money to use to pay towards your credit cards. Then you can select which “Strategy” to use:
- Snowball – Lowest balance first
- Highest Interest First
- and others
You can use this to easily see which strategy results in the lowest interest charge and/or fastest payoff time. Jen and I used a manual system of the snowball strategy many years ago to achieve the same thing. But this spreadsheet helps you visualize the plan.
Note that this spreadsheet will not work for fixed-term loans like auto loans. The calculations apply to revolving credit only.
Download
On Friday, I had a chance to visit the set of CNBC’s Mad Money and meet the crazy man himself, Jim Cramer. My friend Pat is a producer for the show and he invited me to come and watch the show taping and meet Jim Cramer. So last friday, I grabbed my father-in-law and headed to Englewood Cliffs, NJ to get some booyah action. There was no studio audience. Just the show’s producers, cameramen, makeup artist and other executives. I met most of them – they all were very nice people who had a lot of enthusiasm about the show. Someone brought us “director’s chairs” and bottled water to make us feel comfortable. I have to say that the staff made us feel welcome and glad that we were fans of the show.Watching the show from behind the scenes definately gave me a different perspective. The show is already a little wacky and entertaining, but it’s even more entertaining in person. I watched Cramer put on his Viking hat and talk about the Four Horsemen of Tech. For those of you who don’t know what that means, the Four Horsemen of Tech is the name that Jim Cramer has given to Apple, Google, RIM and Amazon.
We toured the control room and saw other CNBC sets including Fast Money and Kudlow & Company. Jim Cramer seemed to be a really likeable guy and was more than happy to take the time with me to take a few photos. I even got to press the Mad Money soundboard buttons! What a great end to a wonderful stock market day! (Friday was a great day for the market)
See all of the photos here.
Posted October 7th, 2007. 3 comments
If you are familiar with stock trading, then you already know what a short sale is. If you don’t, here’s my definition in layman’s terms:
It’s the opposite of buying a stock. When you buy a stock, you hope that the value goes up (Also called a long position). When it goes up, you make money. When it goes down, you lose money. Shorting is exactly the opposite. When you take a short position, you hope for the stock to go down to make money. Basically, you are borrowing shares at a particular price, and when the price of the stock goes down, you buy it for the lower price. The difference is your profit, less margin fees. More info here.
Rule 10a-1 of the SEC 1934 Act mandates that a stock may only be shorted when the stock price is on an “uptick”. This prevents a stock’s price from being driven down hard when a stock is falling. Yes, when many people take a short position in a stock, it drives the price of a stock down even faster. Many people consider shorting stocks “Un-American” because you are hoping for the demise of a company. I don’t really feel that way. Shorting is a way that traders can make money in both up and down markets. That’s another discussion altogether. Anyway, On July 2, 2007, the SEC (Security Exchange Commission) abolished that rule, allowing short orders to be placed on a downtick. Very very bad in my opinion. I 100% guarantee that this will add to the already volitile market conditions out there. As a matter of fact, this could certainly help explain the current exaggerated swings.
Continue Reading…
I have said this over and over again. This stock can make you rich! Look at the chart, look at the future direction of the company. Make all of your arguments about the stock being too expensive… It’s not. Start averaging in now, especially before the release of the iPhone. You will probably not be able to buy in at these levels much longer.
