Friday, February 27, 2009

Why You Need To Invest Now

The stock market has really scared people away as of late. People are sitting on the sidelines with cash, too afraid to invest it in anything because they are afraid to lose it. However, though it is scary, you still need to invest.

Before you start investing, you should understand the economy, why people invest and why you need money in your life.

You need money in order to be happy. Money may not be able to buy happiness, but if you don’t have any, you certainly aren’t going to be happy. You should understand what your financial needs are. You want a car and a house; you want to be able to spend money to go out with your friends and family, to have a good time. Maybe you want to be able to donate back to the less fortunate. You want enough to live a comfortable life. All of these things take money.

Most people won’t earn the amount of money they need to cover everything they would like to have during their lifetime. A person does not EARN (as in, from a job) enough money to sustain their way of life. Hence, the need to invest, to earn more money than you can simply by working. Ultimately you are going to decide you have to invest your money because you want more than you make.

So what do I mean by invest? Well there are people out there who have jobs and earn income. At the end of every month, they have a certain amount of money. There are also people who need money, such as businesses, entrepreneurs, the government, etc. To put it simply, investing is giving money from the person who has money to the person who needs money. In return for giving them the money right now, you are going to charge them interest. One thing you have to understand is that everyone would prefer to have money now. So in order to give away your money and not have it until later, you must have some form of compensation.

The difficult part for many people is how they are going to give that money to those people who need it. Especially, how can you give it to them in a trustworthy way? People want to guarantee that if they lend out their money, they’ll be getting it back. Otherwise they are just giving money away, which isn’t the goal of most people. You could just go to the people who need money and say here’s some money, pay me back later. However, there is no law saying they have to pay you back in a timely manner, or that they have to pay you back at all! So you’re taking a risk by lending your money. A lot of people would lose money this way and hardly anyone would want to invest because the risk would be so high.

To avoid this risk there are institutions in place: banks, financial markets, etc. All these institutions have set up different ways for you to lend your money. The choice you need to make is the way you want to give your money away, whether you want to put your money in a CD, a savings account, bonds, stocks, etc. Every form of investment has it’s own pros and cons, namely the reward you’ll get and the risk you’ll accept. In most cases, the more risk there is, the higher your reward will be. The only time this isn’t true is in the stock market. There you can get high rewards with little risk. HOWEVER, with stocks you have to be intelligent about your choices or you will lose money.

Depending on what your investment goals are, you’ll have to choose an investment option. For some people who make a lot of money, started investing early and put away a lot of money every year towards retirement, investing in CDs may be the way to go. Most of us don’t make a ton of money and don’t want to reduce our lifestyles by putting away the bulk of our money every pay period. Here, stocks would be the best option due to their high return IF they are invested in correctly. And by correctly I mean that you need to educate yourself in finance and the ways corporations work in order to pick a secure firm to invest in.

With stocks you are investing your money in a corporation in hopes that the corporation will grow. If it grows, your share of ownership will be worth more. You need to understand how the economy works, how finance, debt, credit, accounting, management, borrowing, lending, financial markets, equity, marketing, and credit ratings. This may sound like a lot, but you need to know a lot in order to make educated decisions regarding the stock market. This is your hard earned money that you are investing in stocks; you don’t want to throw it away because you didn’t know what you were doing.

The market is doing terribly right now... which is why it is the perfect time to get in. As long as your are making smart investments that is. Sure the market may go lower in the short term, but ultimately, in the long term it WILL go higher. No one can predict how the market will do in the short term, its based on news that comes out and how investors feel that day, and you simply cannot predict that. Market crashes like the one we are going through right now are perfect opportunities to invest because you can find great companies at low prices. As the economy gets better, which it is bound to do, these great  companies will return to their glory, giving you a great investment. If you are going to invest in stocks, pick stocks that represent companies that will be able to get through this downturn. Do your homework, you don't want to make a stupid investment in some no name company that loses  all your money.

The decision of what to invest in and how to do it may sound complicated. However, the reason why you should do so is simple: to be happy, you want to live a nice lifestyle that costs more than you can make.

Fourth Edition of the Carnival of Investing Strategies

Welcome to the 4th edition of the Carnival of Investing Strategies. This is a carnival focused on different strategies of investing your money. If your article was included, please be sure to link back to this carnival. If you want to make a submission for the next edition, the form is here.

Ella Moss presents New Economy, or Buy American, Stupid! « Zodiac Times posted at Zodiac Times, saying, "So, the new stimulus package is passed, hopes are up, markets are down, and recession deepens. Everyone is blaming the housing market, unscrupulous bankers and inept previous administration.
But very few seem to understand the true roots of our woes, and how deep our economic problems go."

David presents Want to Know How to Succeed at Investing? posted at Pimp Your Finances, saying, "Too many people are overactive, try to time the market, or pick the next stock. Instead of focusing on things that are out of their control, investors should worry about the things they can: asset allocation, minimizing expenses, and minimizing taxes."

Darwin presents Is Now a Good Time to Start Investing in Stocks? posted at Darwin's Finance, saying, "With many prospective investors considering dipping their toe into the market at these levels, this article highlights considerable pros and cons to consider, as well as some hedging strategies if you do start to invest now."

Silicon Valley Blogger presents Free Stock Charting Tool To Check Stocks, Chart Market Trends posted at The Digerati Life, saying, "Here are some investing strategies which involve the use of stock charting tools, trend analysis tools and the use of technical analysis to track stock price movements."

The Smarter Wallet presents A Stock Trading System For Shorting Stocks: How To Short Estee Lauder posted at The Smarter Wallet.

Nickel presents CD Ladders in a Low Interest Rate Environment posted at

PicktheBrain presents The First Investment a Beginner Should Make posted at Beginner Investing.

Insurance Toolbox presents Why Tax Free Municipal Bonds are Great Investments in Obama’s America posted at Fine-Tuned Finances.

Brian McKay presents Best CD Rates posted at, saying, "The current economic crunch is changing the savings habits of the average American. Certificate of deposit rates have been coming down, but the U.S. savings rate has been going up. The savings rate is now 3.6%, up from 2.8% in November last year."

Pinyo presents Warren Buffett Versus Modern Portfolio Theory posted at Moolanomy.

Michael Cintolo presents How to Invest During a Recession posted at The Iconoclast Investor.

Sam presents ETF Exchange Traded Funds Are a Great Investment Strategy. Buy and Sell easily. posted at Surfer Sam and Friends, saying, "ETFs give the investor a way to "own" all the stocks in a broad group, like the Dow Jones Industrials or all the stocks in the Standard & Poors 500 Index. Better yet, ETFs are easy to buy and sell because they trade on the stock exchange just like stocks."

Investing School presents Brokerages with Free Stock Trading posted at Investing School, saying, "Want to trade stocks for free? Here are a whole bunch of ways to do so."

Carrie presents Money Notes from Schwab's On Investing Spring 2009 posted at Less is More.

Thanks to everyone who submitted! It was a great turnout. Check back next week for the next edition.

Tuesday, February 24, 2009

Some Defense for GE

Here are a couple of articles worth reading. Both are about GE.

General Electric (nyse: GE - news - people ) remains confident on its 2009 earnings target for its infrastructure division, even if it means more job cuts at units where revenue is falling behind its prior expectations, a top executive said on Tuesday.

The company said it continued to evaluate whether to keep its annual dividend beyond the second quarter.

Shares of GE, a Dow component, rose 1.1 percent to $8.95.

This article is slightly longer, but it definitely deserves a read.
Investors have deserted GE’s stock over the last week like draft dodgers fleeing to Canada. The firm’s shares fell more than 20% over the five trading days, and now sit near a multi-year low of just below $9, 25% of its 52-week high. Even though GE’s financial services operation is only one of many parts of the company, its shares have done much worse over the last year than JPMorgan (JPM) or Goldman Sachs (GS). It is as if GE’s large and healthy infrastructure business did not even exist.

The abridged description of the case against GE is simple. The assets of its financial unit, GECS, will suffer from high default rates as the recession undermines the ability of its business and consumer customers to pay their bills. A Deutsche Bank analyst recently wrote that GE Capital has zero value in contributing to the value of the company’s stock. His argument is that the unrealized losses on the financial unit’s balance sheet are greater than most investors understand. On top of the analyst’s report, The Wall Street Journal reported that GE has significant exposure to the failing commercial real estate market.

The company’s attempt to improve the fortunes of its financial unit will not be without cost. As Morningstar says, “GE’s decisions to wind down its non-U.S. portfolio and shift to higher-quality asset classes is welcome even though these decisions will likely pressure earnings going forward.” GE makes the risks of its exposure to the real estate, tight credit markets, other financial firms clear in all of its public filings and readily admits that it may not be able to keep its “Triple-A” credit rating which would drive up its borrowing costs.

But, GE has stuck to its case that it has been careful to tell investors exactly what is going on inside the financial unit. Yesterday, the firm said, “We made $8.6B in financial services in 2008, and we have an excellent franchise that we are restructuring to perform in the current environment. Also, we have an “originate to hold “model that is highly collateralized, so we have a more conservative approach than the U.S. consumer banks. “

It is valuable to look at the shares of GE through the eyes of common sense. The company has lost $300 billion of market capitalization in about a year. During the same period, Citigroup has lost $130 billion in market cap. Bank of America has lost $200 billion. Since GE’s financial services business is not the majority of its revenue, the destruction of it market value seems extreme. Balance sheet jockeys would say that the trouble the market fears is hidden within GE’s asset base and will jump out to eviscerate earnings soon. So far there is no sign that GE will implode because of the state of its financial services receivables or its debt.

GE still has a number of remarkable businesses. The sales at it energy infrastructure business has gone from $19.8 billion in 2004 to $38.5 billion last year. Revenue at GE’s technology infrastructure business has gone from $30 billion to $46.3 billion over the same period. The profits at both these segments of GE have gone up at similar rates.

One of the easy knocks against GE is that it board has not kept CEO Jeff Immelt on a shorter leash. He should have been forced out of many of the company’s consumer and industrial businesses more quickly. That criticism seems reasonable. Immelt has also hung on to NBCU, the company’s entertainment unit. While it does not belong with the rest of GE’s businesses, it performance has not harmed the parent. At its worst, it can be viewed as an expensive way to get good seats at the Olympics. Looked at in a better light it bought in $3.1 billion in segment profits in 2008.

GE is not the monstrosity that the stock market has made it out to be. It may cut its dividend or lose its precious credit rating. Its financial service businesses may post large loses. But, it should not trade like a money center bank that the federal government is about to nationalize.

24/7 Wall St.

Thank You Benjamin!

Today we saw the power detailed and precise plans have. In a semi-annual meeting with the Senate, Ben Bernanke gave the public a timeline on when he expects the recession to end, how the government plans on ending it and the steps they are taking to do so. He instilled confidence back into the government by saying that the Stimulus Plan will work, the measures taken to help housing will work and that the government is taking the right course of action with regards to helping the financial sector. He reassured investors today that an all-out bank nationalization is not in the government's plan at all. He shed light on the bank stress test. He stated that he believes the banks are still valuable franchises and he believes they will be able to recover. He reiterated that since the banks are still valuable franchises, the government is not going to let them fail. 

Tomorrow Geithner is going to reveal further details about the bank stress test and will begin conducting it. As more details come out about stabilizing the financial sector, I believe we will see a rally in the markets. Now that we are finally going to start the recovery program for banks that Geithner has planned, hopefully we will learn what liabilities the banks have and how much additional capital they may or may not need as well as the overall health of the financial institutions. Once investors have this information it will take away from the speculation there is right now about the state of the financial sector, putting an end to the recent sell-offs. 

Bernanke did a good job today of re-instilling confidence in investors - something they have been lacking recently. His statement that he believes the recession will come to an end this year gives investors an idea of when they can expect a recovery. 

Monday, February 23, 2009

Third Edition of the Carnival of Everything Money

Welcome to the third edition of the Carnival of Everything Money. I wanted to give my thanks to everyone who is contributing to making this carnival a success! I would appreciate it if anyone who is featured in the carnival links back to this post. If you want to submit an article for next week's edition, the submission form is here. Onto the carnival!

Editor's Choice: These are just some articles that I found really interesting/informative, I hope you enjoy them as well

Dan Cote presents Investing in Companies With A Lot of Cash and Little Debt posted at Earnings Per Share.

Raj Patel presents Understand Your Credit Score posted at DebtGoal.

David presents Consumers Cut Back, but Have They Changed Their Ways? posted at Pimp Your Finances, saying, "An examination of whether or not the economic crunch is forcing consumers to change their ways."


Silicon Valley Blogger presents YNAB (You Need A Budget) Personal Budget Software Is 10% Off posted at The Digerati Life, saying, "Here's a review of a great desktop budgeting tool that beats Quicken in ratings!"

Keevisr presents Unsecured Loans: Asset-Free Opportunity For Those In Need posted at Loan Info Central, saying, "The people who face cash issues in their lives know the actual ups and downs that happen in life. Such a situation occurs in everyone’s life. Also, everybody may not have an asset to act as a shield for bad times."


Julie Guarnizo presents Don't Swear Off Plastic Completely posted at Beef Up Your Piggy.

Mr Credit Card presents Should One Spouse Have All The Credit Cards? posted at Ask Mr Credit Card.

Steve Faber presents - Mortgage Questions to Ask – Make Sure You Get the Right Mortgage posted at DebtBlog, saying, "If you're getting a mortgage, do your homework, and please ask at least these questions, or it could be your undoing."


Heather Levin presents The Benefits of Paying Off Your Mortgage Early posted at The Greenest Dollar.

David presents Create Your Dream Home And Put Money In Your Pocket posted at Personal Finance Ology, saying, "Turning your dream into a reality is becoming more feasible as home prices fall and affordability increases!"

DebtLite presents What Are the Root Causes of Debt? posted at Debt Advice.


Barry presents Tug Of War Between Retailers And Frugal Consumers posted at Associate Money.

Abigail Perry presents Their math vs your math posted at i pick up pennies, saying, "A piece about remembering that salesmen's pitches are designed to be in the best possible terms. Always check their math with your own."

Nancy Muller presents French Toast Club posted at Recession Depression Therapy, saying, "The step by step method to get financially ahead through a change in grocery shopping habits."


Frank Curmudgeon presents House Prices: The Long View posted at Bad Money Advice.

Darwin presents Deal of a Lifetime in Muni Bond Investments? posted at Darwin's Finance, saying, "Given the unprecented risk/benefit provided by various muni bond instruments, it's worth considering investing in any of the various instruments covered here."

The Smarter Wallet presents A Stock Trading System For Shorting Stocks: How To Short Estee Lauder posted at The Smarter Wallet.

Mr. ToughMoneyLove presents Investing in Corporate Bonds for Retirement posted at Go To Retirement, saying, "Select investment grade corporate bonds are making a come back and looking attractive in a down economy."


Aryn presents 7 Books, 1 Movie, and 1 Blog to Help You Deal with the Economic Crisis posted at Sound Money Matters.

Ella Moss presents New Economy, or Buy American, Stupid! « Zodiac Times posted at Zodiac Times, saying, "So, the new stimulus package is passed, hopes are up, markets are down, and recession deepens. Everyone is blaming the housing market, unscrupulous bankers and inept previous administration. But very few seem to understand the true roots of our woes, and how deep our economic problems go."

The Investor presents The recession is not a lifestyle choice posted at, saying, "In a strange echo of the frivolous attitude that stoked up the debt bubble in the first place, much of the media seems to see the recession as a new ’story’, just as they’d salute skirts going back above the knee or the return of cashmere."


Jim presents Best Money Market Account (MMA) Rates posted at Blueprint for Financial Prosperity.


C Richey presents First Time Home Buyer Tax Credit posted at Las Vegas Real Estate News, saying, "Explanation of the tax credit in the new stimulus bill."

ChristianPF presents How long does it take to get your tax refund? posted at Money in the Bible | Christian Personal Finance Blog, saying, "I found out some more info about how long it takes for us to get our refund checks from the IRS"

Thanks again to everyone who participated! Please remember to link back to this post. Check back next week for a new edition.

And Down and Down We Go

Geithner has dropped one of the biggest bombshells in the market that I've seen in a long time. Ever since his speech a little over a week ago, the market has been dropping like there's no tomorrow. We seem to be getting a little detail everyday about what this bank plan will include, but until Geithner finally comes out and gives us a full detailed picture, the market is going to keep going down. The problem was, is and will be that we don't know the liabilities that some of these financial institutions have. Without knowing what the liabilities are, it has become too risky to invest in these stocks. But at last, a little bit of optimism, at least we know eventually he has to come out and give us the full plan. When he does, stock prices will go back up. 

I know I recommended GE and as of late and it hasn't been preforming well, but I still maintain that the company is in an excellent position to preform well in the long run. The recent downturn in GE has been due to a lack of knowledge on what liabilities GE's capital has and what actions the government will take to value the liabilities. 

Keep your heads up folks, let's hope Geithner can get his act together. 

*As a side note, I added Altria to my portfolio today. *

Saturday, February 21, 2009

The Penny Daily's Weekly Must Reads

Here are some of my favorite articles from around the blogosphere this week. I recommend you check them all out, if you haven't seen them already.

6 Stocks That Might Interest Value Investors
I like this articles because it points out some great companies which earn solid profits and have great businesses. You can buy shares of the firms at discounted prices right now.

A Really Long Term Dow Jones Chart to Put Things in Perspective
For everyone freaking out right now over the market crash and thinking that you will only lose money in the market, this article give you a historical perspective of how the market performs.

Safeguard #4: Buy Investments That Trend Upward
For everyone flocking to gold right now, this is just a reminder that over time it does not make a good investment.

The Present and Future Value of Money
An excellent concept about the present and future value that everyone should understand if they want to manage their money well.

Investing Tips For The Beginning Stock Picker
Low prices in the stock market may attract first time investors, before you dive into stocks, read this article.

Investment Clubs
An interesting idea, investment clubs give you an opportunity to hang out with friends while learning new investment ideas.

Friday, February 20, 2009

Carnival of Investing Strategies: #3!

Welcome to the third edition of the Carnival of Investing Strategies. This is a carnival focused on different strategies of investing your money. If your article was included, please be sure to link back to this carnival. If you want to make a submission for the next edition, the form is here.

Lisa Spinelli presents Global 100: Most Sustainable Corporations - Should Companies be Evaluated Within Their Business Sectors? posted at Greener Pastures.

Jim presents Highest Short-Term CD (Certificate of Deposit) Rates posted at Blueprint for Financial Prosperity.

Pinyo presents Lost Money In The Stock Market, What Should I Do? posted at Moolanomy.

Mr. Banker presents High Interest Money Market Accounts (MMA) posted at Best Interest Rate Banks.

Retirehappy presents 2009 Roth IRA Contribution Limits posted at My Retirement Blog.

Silicon Valley Blogger presents Free Stock Charting Tool To Check Stocks, Chart Market Trends posted at The Digerati Life.

Nickel presents How to Choose an Online Savings Account posted at

The Smarter Wallet presents Retirement Investments Hit By The Economic Crisis? Financial Options For Seniors posted at The Smarter Wallet.

Manshu presents Gold Funds - Expense Ratios and Minimum Investments posted at OneMint, saying, "This article lists down various gold mutual funds and ETFs along with their min investments, expense ratios in order to help investors evaluate choices."

Jmaloney2711 presents Gold Investing | Chihuaha Investing posted at Gold Investing, saying, "In difficult times like these, people are turning to gold. What are the pros and cons of gold investing?"

Sam presents Best Stock Picks of the Decade !! posted at Surfer Sam and Friends, saying, "What do the best stock picks of the decade have in common? With the exception of Apple, they were very small companies at the start."

Investing School presents Beta and Alpha Returns for Us Sane Investors posted at Investing School, saying, "Beta and alpha calculations might be just the ticket for you to succeed in investing."

Ricky presents Self-Directed IRA posted at Stock Tips, saying, "Self-directed IRA investing gives you much more freedom as to the different types of investments that you can make. By using your own self-directed IRA, you can invest in areas other than the standard stocks, bonds, and mutual funds."

Brian McKay presents CD Rates posted at, saying, "Finding a decent rate on a certificate of deposit account these days isn’t an easy thing to do. CD rates have been coming down so fast recently the average 12 month CD rate is nearing just 2.00%."

Carrie presents Asset Allocation posted at Less is More.

Thanks to everyone who submitted! It was a great turnout. Check back next week for the next edition.

Thursday, February 19, 2009

Why the Market is a Mess

Well, the stock market had another bad day... the Dow Jones broke its previous low. However, don't worry about the Dow Jones, instead focus on the S&P 500. The Dow Jones is a broken index. The stocks in it are supposed to represent the US economy, but battered stocks like GM and Alcoa don't represent the type of economy we have right now. For instance, the United States is moving away from being a major car manufacturer. Therefore, a stock like GM shouldn't be in an index that is supposed to be representative of the major industries in the US economy.  The S&P 500 does a much better job of taking into account America's largest industries and thus is much more representative of the United States economy. Uninformed investors follow the Dow Jones while informed investors follow the S&P 500. It hasn't dipped below its lows yet; it's still testing them. 

So why is the market doing so badly right now? The market is fearful that recent government action won't effective enough to fix the problems in the economy. The biggest drag on the market today, as usual, was the banks, including an over 10 percent drop for Bank of America. Obama's mortgage plan received mixed reviews. Investors were pleased with the details, they just aren't sure how well it is going to work; hence, we saw a flat trading day. Before we can see any sustained rally, we need to see a planned solution for the financial sector. The major problem with the banks right now is that we don't know how much their toxic assets are worth. Tim Geithner is working on a plan to get this issue resolved. Once we have the details of his plan, I think we'll see a positive move in the market. Until there is a solution for the banks, don't expect any sustained rally - get used to the market testing the lows.

If you have investments at the moment, don't panic. Be patient. Government action will have an effect; we just have to wait until we have all the details on how the banking sector will be fixed. For now, don't be surprised when we keep having these negative moves in the market. It's just investors who are fearful of the government's action.

The Ultimate Stock For A Recession

Altria Group Inc. is one the biggest producers of cigarettes in America. Now I know some people simply won't buy Atlria because it is a tobacco stock, but if you can get over the guilt of owning a tobacco company, Altria is an excellent company to invest in for 2009. For those of you who don't know, Altria Group is the parent company of Phillip Morris USA, Phillip Morris Capital Corporation, John Middleton, Ste. Michelle Wine Estates, U.S Smokeless Tobacco Company, and has a 28.5% stake in SABMiller (manufactures beer). 

Altira has excellent cash flow, and is the ultimate recession proof stock. During a recession, I am looking for a company that is going to maintain if not grow its earnings and provide a nice dividend. Altria does that. At its current price it has an over 8% yield, putting a good amount of cash into your pocket ever quarter. I say Altria is a recession proof stock because their business, cigarettes and beer, is one thing Americans won't cut down on when they are trying to cutback spending. If anything, people will become stressed out and smoke more. SABMiller has many cheap beers that are still selling in a tough economic time. People won't cut back on beer, they might cut back on expensive beer and buy cheaper ones, which SABMiller offers.

Altria's management and CEO are excellent. They begun a cost cutting measure in 2007, having cut down costs already by $640 Million, and they are planning to cut an additional $860 Million dollars in the coming year. Altria has built a hoard of cash to help it weather the economic storm. Management knows the upcoming year is going to be tough, including higher taxes on tobacco products and has adjusted to face the challenges. Altria has strong brands including Marlboro Black & Mild, Skoal, and Copenhagen, which are all the amongst the most popular tobacco products and have loyal customers.  Altria recently met its earnings expectations and announced that it is expecting higher revenue growth than previously thought for 2009.

Altria has shown its desire to grow as well. Altria recently finished purchasing UST, clearing a lot of debt and giving it a nice balance sheet, that has expanded its business in the tobacco industry. Altria dominates the U.S tobacco industry and will continue to do so. Altria is attractive because it offers an outstanding dividend along, management that has a plan to get through the recession, has recession proof products, and lots of cash. If you are looking for a stock that can give you returns during a down economy, Altria might be it.

Wednesday, February 18, 2009

Is Hewlett Packard A Buy?

After the bell Hewlett Packard announced its earnings number for the previous quarter. They were worse than  expected and the stock is down after hours. Now Hewlett Packard has been doing ok the past couple months and has been creating some investor stir. Jim Cramer from CNBC's Mad Money came on television earlier this year and announced Hewlett Packard as one of his favorite stocks for 2009. If you are blindly buying HPQ cause of his recommendation, I want to give you a few words of caution.

Mark Hurd, who has been a great CEO since he was given the position, said that he expects the poor economy to impact Hewlett Packard's business in 2009. HPQ cut its earnings estimates for the next quarter and for the rest of the 2009. Hurd warned that the upcoming quarter was going to be especially difficult for HPQ. During a tough economy, investments should be made on management that feels they can steer the company and adjust its business in order to grow. Hurd does not see that happening this quarter and probably not this year.

I am recommending that investors stay away from Hewlett Packard at least for now. If you want to invest in HPQ, don't do so until the 2nd half of 2009.  Hewlett Packard isn't going anywhere this quarter. You can revisit the idea of investing in HPQ if the economy suddenly picks up later on this year, but don't invest it in now. 

Tuesday, February 17, 2009

Some Optimism In This Mess

Talk about a close call, the Dow Jones literally closed tenths of a point off its 52 week low. But more importantly, a better index to value the market,  the S&P 500 closed about 40 points higher than its low. Even though it was a horrible day in the market, I find some happiness that we did not break the lows. I also find optimism for Obama's speech tomorrow. On Wednesday, Obama is scheduled to release his plan for fixing the housing market. The housing market is the basis of this whole economic mess and so I am anxious to see how the government plans on fixing it. Fixing it is the most important thing we can do right now to help the economy, so tomorrow's plan is critical - even more so than the stimulus package. Now let's hope President Obama gives some details. I'd be shocked if his administration has not yet learned the consequences of coming out and giving a broad outlook on a plan, offering absolutely no details. It only causes panic in the markets. If he comes out with a good report, expect a rally, if not, we will break the lows tomorrow for sure. 

The market has crashed many times because the government has failed to tell investors how they plan on dealing the mortgage crisis. Investors believe the most important thing to fix the economy is housing, this is what they have been waiting for.  Let's hope President Obama can deliver.

The stimulus bill was also signed into law today. While I am not a huge fan of it, I also do not believe it is as bad as everyone says. At least something is being done to help unemployment and I am glad the bill is signed and ready to go so it can start working. We've been waiting too long for something to be done to help create jobs. Stocks have been discounted a lot because investors believe the stimulus is useless. It is only a matter of time before investors see the stimulus package will work better than expected (I think the stimulus package could have been changed to work a lot better, but we have to work with what we got) and stocks post a rebound.

Mr. President, please please PLEASE give us some details tomorrow!

Will We Make New Lows?

Let's see if the previous lows hold today. The Dow Jones made a low of 7449 and the S&P 500 741 back in November. The closing lows were 752 for the S&P 500 and the Dow had a closing low of 7552. I hope investors see this as a buying opportunity and send the market back later in the day.  We still have a ways to go to reach the S&P 500 low, but we are awfully close to reaching the Dow Jones low. It will be a matter of how much bad news is priced in or not, did the previous lows price in the worst economic news? We could find out today.

Carnival of Everything Money #2!

Welcome to the second edition of the Carnival of Everything Money. Thanks to everyone who submitted an article, it was enjoyable to go through and read them all. I would appreciate it if anyone who is featured in the carnival links back to this post. If you want to submit an article for next week's edition, the submission form is here. Onto the carnival! 

Editor's Choice (These are just some articles that I found really interesting/informative, I hope you enjoy them as well)

The Investor presents Coping with the guilt of losing money posted at, saying, "Losses when investing come with the territory. It's natural for most of us to feel guilty when we lose our hard-earned cash, but here's some advice on stopping that feeling derailing your investment plans."

Silicon Valley Blogger presents No 2009 Economic Stimulus Check? How Obama’s Stimulus Plan Affects The Middle Class posted at The Digerati Life, saying, "This post is about the economy and how the stimulus plan affects the middle class."

Aryn presents Could You Afford to Drop Out of Life? posted at Sound Money Matters.

Chris presents Is It Time to Retire the Penny? posted at financial reflections, saying, "For Abraham Lincoln's 200th birthday, the US Mint unveiled some new designs for the once cent piece. But after one hundred years of Honest Abe's face on the coin, should we consider retiring it?"


Finance Tips 101 presents Answers About Home Equity Loans posted at Finance Tips 101.

keevisr presents Loan Info Central posted at Loan Info Central.


Mr Credit Card presents Chase Balance Transfer Offer - My Letter from Chase posted at Ask Mr Credit Card.

David presents Capital One No Hassle Miles Rewards Credit Card Review posted at Credit Card Offers IQ, saying, "The No Hassle Miles Rewards credit card from Capital One can help pay for your next vacation."

The Dough Roller presents Why Some Online Credit Card Applications Say ‘Hurry Up And Wait’ posted at The Dough Roller, saying, "The truth about online credit card applications."

Raj Patel presents Don’t Believe These 7 Credit Card Myths posted at DebtGoal.


David presents Stupid Advice from a Payday Lender Courtesy of Google News posted at Payday Loans Review, saying, "Why you should never pay off your credit cards with a payday loan."


Dollar Frugal presents Aldi?s Shopping posted at Dollar Frugal.

Tristan presents Safe Strategies For Financial Freedom posted at Find Financial Freedom, saying, "A safe guide to finding financial freedom and a look at the inherent risks in any strategy that is adopted in a bid to find financial freedom."

The Smarter Wallet presents Expedia Deals and Travel Discounts For The Frugal Traveler posted at The Smarter Wallet.

Steve Faber presents How to Save Money on Car Insurance posted at DebtBlog.


Investing School presents 30 Components of The Dow Jones Industrial Average Index posted at Investing School, saying, "Here's a look at how the dow is calculated and what it means for investors like us."

korprit zombie presents Beginner Online Stock Market Investing Advice posted at Beginner Investing.

Nesher presents Free trade recorder and equity curve money management system posted at Internet Stock Trading for Beginners.

Brian McKay presents Health Savings Account as a Retirement Account? posted at, saying, "Are you maxing out your 401K and IRA contributions every year and want a way to save more for retirement using a pretax method? Another way of stashing away money pretax for your retirement is using a health savings account (HSA)."

Locke Dauch presents Ways to Make Money Online posted at Your Blog Is Money.

The Shark Investor presents Strategies For Raising Funds: Borrow Your Way To Wealth posted at The Shark Investor, saying, "How and when to use loans for investing"

FIRE Getters presents What Should We Do If Our Mutual Fund Goes Belly Up? posted at FIRE Finance.


Jacquelyn presents Simple Ways to Teach Your Child the Value of Money posted at - Wise Parenting Guide, saying, "Teaching your children the value of money is the parent's responsibilities through parental guidance and example. Read about it in this article."

ChristianPF presents Is the Fed running the U.S. economy into the ground? posted at Money in the Bible | Christian Personal Finance Blog, saying, "This video makes it pretty clear that we are going to be in for some big inflation numbers soon..."

Isaac Yassar presents Why You Should Never Join MLM posted at Isaac Yassar's Overture, saying, "Most people want fast and passive money, and that's why they join MLM companies. However, they do not notice that according to statistics, most of MLM are scam-ful, and most of those who joined, end up scammed. Bill Gates successfully made Windows the most popular operating system in the world because he did not sell it through MLM."

cfgoulart presents Google AdSense Tips - AdSense How To Series posted at Making Money Resources, saying, "Making money with Google's Adsense - Tips on getting started."


jim presents Best Money Market Account (MMA) Rates posted at Blueprint for Financial Prosperity.

asgreen presents That Good Old E-Fund posted at Always the Planner....

Raily Arena presents Finding Online Work That Pays posted at Make Money Easy Online.

Mr. Banker presents High Interest Money Market Accounts (MMA) posted at Best Interest Rate Banks.

travelcat4 presents GreenPrint - Helping To Save Printer Paper posted at Latest Inventions.


Adam presents Top 5 Best Discount Brokers for Your Money posted at Pimp My Trade, saying, "A list of the best discount brokers with great software and low commissions."


freefrombroke presents Paying Back The Economic Stimulus Payment - Lots Of Tax Confusion posted at Free From Broke, saying, "There's been a lot of confusion over how the Economic Stimulus payments are handled on this year's taxes. Here's the deal."

Thanks again to everyone who participated! Please remember to link back to this post. Check back next week for a new edition.

Monday, February 16, 2009

Festival of Stocks: #128!

Welcome to the 128th Festival of Stocks! There were a lot of great articles on a wide array of topics. If you are featured in this edition, please make sure you link back to this post. Thanks!

Editor's Choice: This is an article I found particurally interesting; I suggest you check it out.

The Smarter Wallet presents 5 Stock Sectors To Avoid In A Recession posted at The Smarter Wallet

The Rest of the Articles: 

The Investor presents Why investing in overseas markets will diversify your portfolio posted at, saying, "Putting some money in overseas stocks can diversify your exposure to the markets and smooth your returns."

Madison presents ShareBuilder Review: My New Account posted at My Dollar Plan.

James Cullen presents Primus Guaranty (PRS) Earnings Notes posted at College Analysts.

Trade in Groups presents Profiting from Volatility by Selling Options posted at Trade in Groups, saying, "Options volumes are down because of a pullback by institutional investors - so are these the worst of times for the options markets, or the best?"

Sun presents Fundamentals vs Technical posted at The Sun’s Financial Diary.

Adam presents Swing Trading Strategy: Touch and Go! posted at Pimp My Trade, saying, "This article outlines a winning swing trading strategy that I use over and over again to pull in money from the stock market."

Manshu presents Do not use a Leveraged ETF for Hedging | OneMint posted at OneMint, saying, "Analysis of Leveraged ETFs and why they shouldn't be used to hedge portfolios."

Dividends4Life presents Stock Analysis: BP Plc (BP) posted at Dividends Value, saying, "This supermajor integrated oil company (formerly BP Amoco p.l.c.) is based in London and is the world’s second largest publicly owned oil company and the fourth largest U.S. refiner."

Steve Alexander presents Quick Take: Heartland Payment Systems Inc (HPY) - MagicDiligence posted at MagicDiligence - Optimizing Joel Greenblatts Value Stock Strategy, saying, "Heartland Payment Systems is a well-run company in a business with intrinsic moat qualities, but can the company overcome a recent security lapse?"

Investing School presents 30 Components of The Dow Jones Industrial Average Index posted at Investing School, saying, "Here's a look at how the dow is calculated and what it means for investors like us."

George presents Puget Energy Buyout Completed posted at Fat Pitch Financials, saying, "A look back at the history of how I made a 117% annualized return on Puget Energy (PSD)."

To read any past posts, see future hosts or apply to host a future edition, check out the Festival of Stocks homepage. If you'd like to submit an article for a future edition of the carnival, here is the carnival submission form.

Friday, February 13, 2009

Carnival of Investing Strategies #2

Welcome to the second edition of the Carnival of Investing Strategies. This is a carnival focused on different strategies of investing your money. If your article was included, please be sure to link back to this carnival. If you want to make a submission for the next edition, the form is here.

Silicon Valley Blogger presents Best Online Stock Brokers For Cheap Stock Trades posted at The Digerati Life.

Sarah Scrafford presents Is the Fed Hurting the Dollar in the Long-Term? posted at Currency

Burak Bilgin presents The Simple Rule of the Economics Game posted at Distiller's Corner, saying, "How does game theory apply to economics, and how can you can benefit from a simple rule derived from it?"

Ricky Deez presents How Does a Company Go Public? posted at Stock Tips.

MoneyNing presents First National Bank Omaha FNBO Direct Review posted at Money Ning, saying, "With this economy, every bit of interest helps. Get an online savings account to maximize those dollars."

Insurance Toolbox presents Vanguard, Schwab and Fidelity Offering New Investment Options to Retirees posted at Fine-Tuned Finances.

Raymond presents Best Online Tax Preparation Software For 2009: TurboTax vs. TaxCut posted at Money Blue Book.

Investing School presents 30 Components of The Dow Jones Industrial Average Index posted at Investing School, saying, "Here's a look at how the dow is calculated and what it means for investors like us."

Brian Clark presents Dhandho Basics posted at Cultivate Money, saying, "This is a short post introducing the reader to the concept of "dhandho" investing. At how the market prices risk and uncertainty."

jim presents Tax Loss Harvesting posted at Blueprint for Financial Prosperity.

Thanks to everyone who submitted! It was a great turnout. Check back next week for the next edition.

Thursday, February 12, 2009

Testing The Lows

Pay attention folks. The next few days are going to give us a good tell on how the market is going to perform this year. The market hates what the government is doing and we are seeing that with the Dow Jones shedding hundreds of points every day. What is the government doing that investors hate so much? Two things: uncertainty and too little stimulus spending.  The market hates uncertainty and the fact is that Geithner has not shed light on the details of his plan to help banks. Without details, it is hard for people to invest when they do not know what is going to happen with the government's spending. Now, to be fair, fixing the banks has no easy solution and it is going to take time to come up with one. But as long as we don't have the details of the bad bank plan, don't expect the markets to have a sustained rally. The second thing scaring investors is the stimulus package. Investors are afraid it is too big and is going to sink the U.S in debt. And more importantly, there is not enough stimulus. Businesses don't like the idea of 40% tax cuts because people rarely spend that money, they save it. With only 60% of the spending going to stimulus, investors are losing faith that the package will actually stimulate the economy.

You hear analysts giving predictions on what they think the market low is going/has been. But you can decide that for yourself in the next few days.

Now, the reason I say that the next few days are going to give us a good tell on how the market is going to do is because we are testing the lows. If the lows hold, then you can rest assured that we have created a bottom and that the market is not going to go much lower. The market has had bad news before and still held the November low, we'll see if the lows hold one more time. This is some of the worst news the market is going to have thrown at it and if the lows hold, we can be optimistic about the future.  

However, if we break the previous low, we could be in some trouble. It shows that the market has not priced in the worst of the news. I would not invest for the short term because no one knows how low the market could end up going. It could be a rough year if the market has not bottomed yet.

So make sure you pay attention to how the stock indexes are doing over the next few days, it will give you a good insight on what kind of investment to make. 

*Well on a funny note… while I was writing this the market finally got some details about the treasury plan and boy did we see a quick rally, I think the market just went up 200 points in 30 minutes all because we got DETAILS on what the government is doing! Be cautious though, quick movements in the market like this almost always overshoot and we see the repercussions the next day.*

Wednesday, February 11, 2009

What To Look For When Investing In A Company

Yesterday the market dropped almost 400 points. The market clearly did not like the plan Timothy Geithner outlined and it overshot the loss. Investors saw the market dip over a hundred points and started to panic and sent it down even more, way more than it should have been. The news was not that bad that it was worth an almost 5% drop in the DOW. The market has done this before, it gets some bad news, panics and plummets way more than necessary. In today's market investors are constantly scared so overshoots are common. The market will bounce back from today's overshot drop as investors realize yesterday's drop was not a fair evaluation of the market. This has happened before folks.  So when you see these dips, don't panic and stress out, think of them as a buying opportunity. I did.

Today I added AT&T to my portfolio. Why? Because I trust their management. It is my personal opinion that the most important thing to look for when investing in a company is their management. After all, the management is the one running the business, they have the power to make it soar or drown. When you are investing in a company, you want to know how it will perform in the future, and who knows that better than the management? Whenever I contemplating investing in a company the first thing I do is look at conference calls and management's outlook for the company. This gives me a huge amount of insight on how my investment is going to do. Let me give you an example of two companies I was debating between, Caterpillar and AT&T. 

Both firms recently released their earnings for the 4th quarter and more importantly, their outlook for 2009.

Here are the opening lines of Caterpillar's outlook for 2009:
Global economic conditions and key commodity prices have continued to decline significantly. Financial markets remain under stress, and our expectations for 2009 have deteriorated. Uncertainty around the depth and duration of this recession makes it very difficult to forecast sales and revenues. As a result, Caterpillar is rapidly executing strategic “trough” plans and implementing actions throughout the company to deal with a very challenging global business environment. We have initiated actions which will remove about 20,000 workers from our business and every indirect spend dollar will be heavily scrutinized. These actions support lowering our production costs in line with a 25-percent decline in sales volume and reducing Selling, General and Administrative (SG&A) and Research and Development (R&D) costs supporting our Machinery and Engines business by about 15 percent. We are encouraged by government stimulus programs and actions taken by central banks around the world to spur growth. However, economic conditions remain uncertain, and we are planning for 2009 sales and revenues to be in a range of plus or minus 10 percent from $40 billion. At $40 billion in 2009 sales and revenues, the company expects to achieve profit of $2.50 per share, excluding redundancy costs.

“These are very uncertain times, and it’s imperative that we focus Team Caterpillar on dramatically reducing production schedules and costs in light of poor economic conditions throughout the world,” Owens said. “While it’s painful for our employees and suppliers, it’s absolutely necessary given economic circumstances. We expect to have most of the actions needed to lower employment and cost levels in place by the end of the first quarter,” Owens added.
And here is AT&T's 2009 outlook:
In 2009, despite a challenging environment, AT&T expects to deliver solid results. AT&T expects to grow consolidated revenues, make significant progress in its key growth initiatives, keep an aggressive focus on cost management and continue its strong record of returning substantial value to shareowners. Specific expectations for the full year, based on 2008 reported results, include the following:
  • Continued consolidated revenue growth in the low single-digit range, led by gains in wireless and IP data services.
  • A significant increase in wireless margins as the iPhone 3G customer base matures, with continued revenue growth. AT&T expects to achieve wireless service OIBDA margins in the low 40 percent range by the end of 2009, with a longer-term expectation of reaching the mid 40 percent range.
  • Stable reported consolidated earnings and margins excluding pension and retiree benefit costs. AT&T expects approximately $0.19 of incremental noncash pressure to 2009 reported earnings per share due to increased expenses related to pension and retiree benefits. This reflects 2008 plan returns and AT&T's consistent accounting approach that accelerates recognition of the effects of large changes in plan asset valuations. AT&T does not anticipate significant pension funding requirements in 2009.
  • Stable free cash flow while executing a disciplined capital program that focuses investment in key growth initiatives. Total capital expenditures for 2009 are expected to be down 10 to 15 percent versus 2008 levels. AT&T expects to make continued good progress on its network build in 2009. Deployment currently reaches 17 million living units, and the company expects to reach its previously announced target of 30 million living units in 2011, a year later than its original plan.
It is obvious the difference between Cat and AT&T. Caterpillar's management does not think the company is going to do well in 2009 while AT&T's management in confident it can grow the business in 2009. Now you might say AT&T is lying and just trying to make people think they are ok. But they have no incentive to do so, it hurts the company to give misleading expectations for the future because then when they fail to deliver it not only looks really bad on management's behalf, putting their jobs in jeopardy, but it also hurts the stock price. However, that doesn't mean you should trust everything they say. You need to look at management's past performance. Randall Stephenson has done a great job with AT&T in the past and has really grown the business. On top of all that, AT&T is buying back shares throughout 2009, a move done when management thinks they are going to perform well. Buying back shares is a vote of confidence by management for their ability to deliver in the year to come. 

If Caterpillar's management doesn't see growth in the year ahead and AT&T's management does, the choice is clear.

Now management is not the only factor I look at, but it is a pretty big one. Other things attract me to AT&T such as their drive to gain market share in the cell phone business through iPhone subscriptions and the fact that they do a lot of government contracts which provides them with some steady income. AT&T has a great dividend, yielding over 6% and has a strong balance sheet with a lot of cash. Also AT&T is one of the few companies to continue to raise its dividend. AT&T increased the amount of wireless and broadband customers in the quarter 4, which is impressive considering the economy. AT&T is also currently cheaper than its competitor Verizon. 

So remember, when investing in a company, make sure you scrutinize management and their outlook. They are the ones in the driver seat of the company and ultimately your investment. To find management's outlook, go to the company's website and look for an investor relations.

Info from Caterpillar can be found here and info for AT&T can be found here.

Tuesday, February 10, 2009

Carnival of Everything Money

Welcome to the first edition of the Carnival of Everything Money. I wanted to give my thanks to everyone who is contributing to making this carnival a success! I would appreciate it if anyone who is featured in the carnival links back to this post. If you want to submit an article for next week's edition, the submission form is here. Onto the carnival! 

Editor's Choice (These are just some articles that I found really interesting/informative, I hope you enjoy them as well)

Woman Tribune presents Living Off of Your Credit Cards posted at Woman Tribune.

Toolsie presents How drill bits can keep you thrifty posted at Drill Bits, saying, "Making it yourself will save you thousands. A table sold for a thousand dollars is probably only worth $50 in material. Make it yourself! It's easier than you think."

Nickel presents Readers’ Choice: The Best High-Yield Online Savings Banks posted at

The Smarter Wallet presents Will The Obama Economic Stimulus Check and 2009 Stimulus Plan Save The Economy? posted at The Smarter Wallet, saying, "Some info on the economy."

Raymond presents Best CD Rates For High Yield Certificate Of Deposits posted at Money Blue Book.


Debt Freedom Fighter presents What is a Personal Loan? posted at Discover Debt Freedom!.

Debt Kid presents Why Budgets Don't Work For Everyone posted at DebtKid.

Financialnut presents Budgeting Tips: 5 Things You Must Do When You Go Over Your Budget posted at Financial Nut, saying, "My wife and I have recently been spending WAY TOO MUCH MONEY! This is how we've used our budget to fix our problems!"

Save This Memo presents Mint: The Free Budget and Finances Tracker posted at Save This Memo.

Chris presents House-hunting expenses and how to minimize them (part 1) posted at Home I Own, saying, "The frugal way of house-hunting"


David presents What is aMerchant Cash Advance posted at Merchant Cash Advance Guide, saying, "A merchant cash advance is a relatively new form of business financing that relies on the company's future credit card sales for repayment." presents Credit Card Habits and the Recession posted at Credit Cards Blog |

Apply4-Credit presents Why Your Credit Card Application Was Rejected posted at Credit Card Applications Expert |

Silicon Valley Blogger presents Best Cash Back Credit Cards: Your Rewards For Spending posted at The Digerati Life, saying, "Thank you!"


DebtLite presents What's the Difference Between Good Debt and Bad Debt? posted at Debt Advice.

Debt Free Destiny presents 3 Tips to Stablilize Your Finances posted at Debt Free Destiny.

Destroy Debt presents Are You One of the Lucky Ones with a Refund Coming Your Way? posted at Destroy Debt.

Kristjan presents Blame Keynesian Economics posted at Personal Development for Awesome People, saying, "Keynesian economics will lead the world to a depression!"


MoneyNing presents What Everyone Ought to Know When Applying for Free Stuff posted at Money Ning, saying, "Are you taking advantage of free stuff offers? Here's what you need to know!"

PFCreditCards presents How to Beat Priceline and Get a Winning Bid posted at PF Credit Cards, saying, "Priceline's name your own price program is amazing. Here's what it is and how to use it to your advantage."

Abigail Perry presents February 15th: The frugalist's Valentine's Day posted at i pick up pennies, saying, "Why we should take a new approach to Valentine's Day"

Celes presents How Rich Are You? posted at EmbraceLiving.Net, saying, The intention of this article is to invite everyone to rethink the way they look at their money"

Wenchypoo presents A Blast From the Past: "Luxury" Sacrifices posted at Wisdom From Wenchypoo's Mental Wastebasket.


Ben presents 7 Things Your Insurance Company or Agent Won't Tell You posted at Money Smart Life.

Matthew Paulson presents Beware the Insurance Sales Pitch posted at American Consumer News.


Kelli-Ann Hopewell presents 4 Steps To Effective Forum Marketing posted at Internet Business Make Money Online With Welly Mulia.

Deposit Accounts presents Should You Keep all of Your Accounts with One Bank? posted at Deposit Accounts.

Raily Arena presents Sell Your Own Home - Despite the Lousy Economy posted at How to Sell Your Own Home.

Frank Curmudgeon presents ETFs and Other Mutual Funds posted at Bad Money Advice.

Leaving The Folks presents Avoiding Resume Mistakes posted at Real World Advice, saying, "Given today's tough job market, it is important to not have any mistakes on your resume."

Joe Manausa presents Safe Home Buying Process In Tallahassee | Tallahassee Real Estate Blog posted at Tallahassee Real Estate Blog, saying, "If you have ever purchased a home, then you know how much emotion goes into the selection process. Buying a home is not like buying something off the shelf at a consumables store, rather it is a process in which we determine how we will be living our lives in the near future. A prudent buyer knows this and therefore should create a process that does not allow emotion to initiate the home selection process."

The Investor presents Why investing in overseas markets will diversify your portfolio posted at, saying, "Don't keep all your eggs in one basket. Putting money overseas diversifies your stock market and currency exposure."


Livingalmostlarge presents The $155k Dog posted at LivingAlmostLarge, saying, "Would you pay $155k to clone a dog?"

Jacquelyn presents The Wise Parent & Child Money Guide posted at - Wise Parenting Guide, saying, "Give your child an introduction to the subject of money by reading this article together."

NetBiz presents Second Chance Checking Accounts: Banks That Do Not Use ChexSystems posted at Money Galaxy - Make Money | Save Money | Invest Money, saying, "For those who need a second chance"

Lazy Man and Money presents Why is Moderate Inflation Desirable? posted at Lazy Man and Money.

Jim presents How to Negotiate A Severance Package posted at Blueprint for Financial Prosperity.

Chris presents How to Spot a Scam posted at Financial Reflections, saying, "Can you spot a scam? Here are some strategies to help."

DebbieDragon presents Things to Think About When Setting Your Prices posted at Freelance Sprout.

Steve Holder presents Head Injuries - Injury Claim Basics posted at Head and Brain Injuries, saying, "For someone involved in an accident, knowing how to file an injury claim can make a big financial difference."


Raymond presents Second Stimulus Check For Obama 2009 Economic Stimulus Package? posted at Money Blue Book.

The Shark Investor presents Strategies For Raising Funds: Saving posted at The Shark Investor, saying, "All time strategy for raising funds"

Abigail Perry presents Saving for retirement on $20 a week posted at Ms. Money Savvy, saying, "i pick up pennies"

MBHunter presents Let’s keep the savings rate going up posted at Mighty Bargain Hunter.


Robert Hazlewood presents A Potential 100% Investment Return In Weeks posted at Ways to Survive Life, saying, "Information on investing in 2x and 3x ETF's"

Adam presents Swing Trading Strategy: Touch and Go! posted at Pimp My Trade, saying, "This article outlines a winning swing trading strategy that I use over and over again to pull in money from the stock market."


Gavin R. Putland presents Stupid property owners posted at LVRG Blog, saying, "Property owners' attitudes to taxation inhibit growth in property values.

DebbieDragon presents Tips for Choosing the Right Tax Preparation Service posted at American Consumer News.

Thanks again to everyone who participated! Please remember to link back to this post. Check back next week for a new edition.

Monday, February 9, 2009

Is GE A Buy?

Sorry about getting this post out to you late. I wanted to keep you guys updated with what I am buying for my portfolio. Just as I told you guys to sit out the past couple of weeks while earnings came out, I too sat out. And after sitting out for a couple weeks, I am hungry to buy again. I made my first purchase last week on Thursday, buying General Electric at $11 a share. 

So why GE? Well, I think General Electric is one of the best companies out there. They have products that people will always need and they are adapting to the changing economy. As the economy gears more towards new forms of energy, GE has changed its infrastructure business to provide more windmills and conduct research with hydroelectric power. GE also has tremendous business overseas, and believe it or not, GE is still seeing decent orders being placed in by emerging economies for GE's infrastructure tools. GE is also sure to benefit from the stimulus package, considering GE is the leader in alternative energy technology. I think GE is poised to do very well in the future.

Now there has been a lot of talk about GE Capital and what a mess it is. Well it’s not that bad. GE is without a doubt doing better than other banks, and management of GE sees GE Capital making a profit, not a great one, but at least it’s making a profit, in 2009. Yes GE took a hit in its finance arm, but I think that has been discounted into the price already. The credit markets seem to be getting better, I think GE Capital is going to be alright.  Management has done an excellent job turning it around in this economy. Not to mention, the U.S Treasury is unveiling a new plan to help out banks, so investors should rest assured in investing in GE because something is being done to take care of GE Capital's toxic assets.

I also have faith in Jeff Immelt. He is a guy who can deliver on what he says. He has GE moving in the right direction and I like his optimism about handling the dividend while keeping the AAA credit rating. Management is the most important thing for a company, and GE's management has show in its ability to adapt to the economy and run it in an efficient manner.

You also probably heard a lot of talk about the dividend. GE has more than enough cash flow to pay its dividend. They have upwards of $40 Billion in cash and Immelt thinks the best way to allocate that money is in a nice dividend for the shareholders. News of cutting the dividend skyrocketed the stock today, but GE has confirmed it will pay a 31 cent dividend for next quarter and will debate cutting the dividend for the 2nd half of 2009. And even if they cut the dividend, the yield has been around 10-11%, the dividend will still be one of the best yielders out there. NOTE, I said considering, they are not saying for certain they will cut it, just that they are looking into it. If GE's revenue picks up, they can keep the dividend and the AAA rating.

Lastly, I simply think GE is undervalued. When I bought GE at $11, its market cap was around 100 billion dollars, which is absolutely ridiculous considering the size of the company. GE took a HUGE beating for its finance arm, and the price of the share went down way more than it should have. It’s only a matter of time before investors realize GE is unreasonably low, and send the stock higher. GE capital does not even come close to making up the majority of GE's business, and for the stock to have dropped more than 60% is nonsensical.  It’s trading at a PE ratio in the single digits, much cheaper than its competitors.

GE has also shown it is willing to keep its AAA rating, which the market loves. GE's openness to slightly cutting the dividend should give Moody’s enough reason to leave the credit rating at the highest possible.

GE is also a great long term investment. GE is not going anywhere, it’s too big to fail, and its business is too diversified for it to disappear. Your investment is safe with GE, you can't lose it all. Even if GE tanks, the worst that can happen is you have to hold GE for longer than you thought and wait until it comes back up.

I see the stock going back up to around $16-$18 a share in the near term. In my eyes, GE is a buy.

*GE had a huge pop today, it is bound to have a price correction so wait for the stock to pull back a little if you want to buy*

Carnival of Investing Strategies

Welcome to the first edition of the Carnival of Investing Strategies. This is a new carnival and I am very excited to get it started. If your article was included, please be sure to link back to this carnival. If you want to make a submission for the next edition, the form is here.

Amanda Espinoza at Homemaker Barbi explains what an Education Savings Account or ESA is and how to invest for your child’s college tuition tax-free in College Costs Are Rising: Save Now With an Education Savings Account (ESA).

Debt Kid presents The Number One Reason You Can't Get Out of Debt.

Deposit Accounts discusses Savings Accounts for Children.

Lauren Rose at No Debt talks about how under certain circumstances, your clipboard contents from a copy and paste command can be stolen from the Internet, including your credit card number and banking info, in Never Use Copy Paste for Your Credit Card Number and Internet Explorer.

Stockaholic at Traders Corner asks whether Nova Chemicals looking at bankruptcy or a turn around in Nova Chemicals (TSE: NCX) – Bankruptcy, Or A Screaming Buy?.

One Family at One Family's Blog contributed Our Fannie Mae (FNM) Investment – A Case Of Escaping With Minor Wounds!

ChristianPF at Christian Personal Finance Blog discusses how even though Zecco's name itself means free, they aren't free for most investors anymore in Zecco no longer free.

SJ at Save Money On Gas asks if you are thinking about how you can start saving petrol and states that the truth is that the rising gas prices have hit everyone on a global scale in Saving Petrol - Easy And Effective Tips That Work.

Will at Make Money | Save Money | Invest Money presents Stock Market Success For Beginners & Dummies.

Raily Arena at Make Money Easy Online offers Making Money Online Scams: Knowing the Cream from the Crop.

Silicon Valley Blogger at The Digerati Life discusses High Yield Savings Account Interest Rates: Changes Ahead?.

The Smarter Wallet presents Charting Stock Movements With Fibonacci Trading Techniques.

Ryan Suenaga at Uncommon Cents submitted January was Still Cold and Dark: My Model Portfolio Performance.

Thursday at Wealth Junkies says making the switch to long-term thinking about finance isn’t always easy and gives some tips on how to do so in 5 Tips For Taking The Long View With Money.

Nickel at posted The Safest Banks.

Gavin R. Putland presents Stupid property owners, an article about property owners' attitudes to taxation inhibit growth in property values.

Adam at Pimp My Trade discusses a winning swing trading strategy that he uses over and over again to pull in money from the stock market in Swing Trading Strategy: Touch and Go!

Thanks to everyone who submitted! It was a great turnout. Check back next week for the next edition.