Get The Best Consistant Information For Research Lesson 119

   Jack Hough is a writer for Smart Money Magazine, and is the author of 'Your next Great Stock'. The article here which he wrote in the May 2010 issue of Smart Money Magazine, page 44, provides information that alerts the investor to always search for the best information used in research.

                                  A Better Grade in P/E

         The price/earnings ratio has long been a popular tool for stock pickers. Here's how to sharpen it.

    Pop Quiz: How do you Calculate a price/earnings ratio? That might seem too simple, but I can think of more than a dozen answers. Divide a company's stock price by a year's worth of its earnings; That's the straightforward answer. To do this, however, we must first decide which year and which earnings. There's the calendar year, fiscal year, and closest four quarters. For each we can look backward at published results, which are reliable buy not especially fresh, or ahead to forecasts, which are fresh but not always reliable.

  For earnings, should we use the measure companies must report, or the one Wall Street perfers to talk about? The first measure--GAAP ( or generally accepted accounting principles) earnings - is sometimes rendered nonsensical by onetime charges related to past endeavors, while the second measure - adjusted or operating earnings - includes only current business results. The second measure sounds fairer, but some companies present "onetime" charges all too frequently, and besides, even charges that don't relate to current decisions still reflect the sum of past ones.

  Already, without getting into the nitty-gritty, we have a dozen possible combinations for our P/E. No wonder many investors who screen for stock bargains rely on less slippery measures than earnings: sales, which aren't blemished by accounting charges; the book value of assets, which tends to change slowly; and dividends, which company managers declare in advance.

  Don't give up on P/E ratios, though. Price and earnings are two of the most useful things to know about a company. The dky to getting P/Es to tell the truth is to make sure they reflect normal results, not ideal ones.

  One way to do that for the broad stock market is to adjust earnings for swings in the business cycle. Standard & Poor's 500 index recently traded at 20 times trailing operating earnings, but that doesn't tell us if the trailing year was normal. The index's earnings are down just over 30 percent from two years ago - so are they too slim now, or were they too puffy then? Yale economics professor Robert Shiller likes to use a 10-year average of index earnings to smooth out the swings. By his math, U.S. stocks are now trading at 21 times earnings, versus an average of 16 since 1881. That is, they're a bit pricey.

  Sometimes an entire decade of earnings can mislead, so rather than use a 10-year P/E,  I like to adjust the market's current P/E for the nations profit margin, so to speak. That's America's corporate earnings as a percentage of its gross domestic income, as reported by the Bureau of Economic Analysis. The average profit margin since 1929 is 4.8 percent, so although corporate profits are lean relative to recent history, they're slightly plump compared with those of the past eight decades. If anything, we should inflate the market's P/E a smidgen to adjust. (As it turns out, that gets us pretty close to Shiller's 10-year P/E of 21.)

  Those tricks are useful for judging the broad market, but they're less useful for single companies. Averaging 10-years of earnings would ignore that companies change, often sharply, as they grow (or shrink). To judge individual companies, start by being wary of ones whose adjusted or operating earnings are consistently much larger than their GAAP earnings. This phenomenon is quietly becoming an epidemic. Next, watch out for companies whose earnings consistently dwarf their free cash flow. Mature companies should collect real cash and not just report paper profits. When free cash flow is larger than earnings, on the other hand, it's often a sign that earnings are about to rise and the stock is set to outperform, studies show.

  To select the five companies below, I searched the S&P500 for firms whose adjusted earnings weren't much larger than their GAAP earnings in recent years. I also looked for those that had recently produced more free cash than earnings. That left just over 170 companies, and only 68 that have increased their sales during the past year. Analysts expect these companies to increase their adjusted earnings by a median of 25 percent in the next four quarters, which is too optimistic for my comfort. So I averaged trailing earnings with forecasted ones and used the result to calculate my P/Es. The result was a median of about 17; the companines that follow have P/Es of 12 or below (the lower the number the better).

  Forest Laboratories has a low P/E ratio for good reason. More than half of its sales last year came from Lexapro, a depression pill that will face generic competition in 2012 (know about the business and how the company makes its money). One analyst recently called that a patent apocalypse, but Forest should be okay. The company holds cash equal to more than one-third its stock value, has seven drugs in late-stage trials and has been aggressively licensing new products.

  GameStop, one of the cheapest stocks on the list, increased its sales an estimated 2 percent during the past year. Its profit margins are much larger than those of many other retailers, in part because GameStop does a lucrative trade in used games, yet the stock fetches less than one-third its Christmas 2007 price. That's because the company used to increase its sales by more than 20 percent a year (know how the company makes its money). It's now a stalled and abandoned growth stock, but those sometimes make excellent value stocks.

  Hearlth-Insurance stocks hot a lift late last year (2009) after Congress turned away from proposals to let government compete against insurers and instead began to focus on whether the uninsured should be required to buy private coverage (Since this was written, The court in Virginia in 2010 said that Congress overstepped their authority in requiring the purchase of anything by citizens). Share prices are still modest relative to profits, however. Aetna handles mostly workplace plans, and so has lost members to unemployment, but premium increases have kept profits and cash flow plentiful. Last year (2009); the company repurchased about 6 percent of its outstanding shares.

  The U.S. Department of Defense's budget, including supplemental spending, is expected to remain flat through 2015. That's why L-3 Communications Holdings, a Manhattan buyer of companies involved with spy systems, warfare electronics, military services and aircraft maintenance, trades at a steep discount to the broad stock market. But its annual sales and profits are increasing, and the company yearly produces free cash that amounts to more than 10 percent of its stock market value, making its 1.7 percent dividend yield look affordable, even stingy.

  Finally, Western Digital makes and sells computer hard drives. After a year of industry downsizing, inventories are lean, selling prices are stable, and demand is picking up. In fact, analysts say growth this year will be constrained only by supply with component makers operation at full capacity. Western Digital has about $2 million in net cash, equal to more than 20 percent of its stock market value.

                                                                                     


                                      Mind the Bottom Line

  The key to getting price/earnings ratios to tell the truth about a company is to make sure they reflect normal results, not ideal ones. The price to earnings ratio is only as reliable as the main ingredient, earnings. Here's what to watch to be sure they're on solid ground.

  1) Chronic excuse-making. Some companies report "onetime" charges to earnings almost every quarter, knowing that Wall Street tends to ignore such charges when discussing earnings.

  2) Looks good on paper, but...When a mature company reports several quarters of excellent earnings but weak free cash flow, it could be a sign that earnings are about to dip.

  3) Cliff ahead? An ultralow P/E could be a sign that recent earnings are unsustainable. Make sure shares are priced cheaply enough to compensate for possible problems.

  I wish to thank Jack Hough for the information he published in Smart Magazine, and again published here. For more on what information is important when doing research, and how to create profits in the stock market visit http://www.youcontrolinvesting.com/  to get started.

          Follow the market and get the information you need at www.Twitter.com/StockMktTeacher

Find Your Own Direction Without Emotion Lesson 118

   As I write this, last week bonds have had their worst week ever in about two years. Treasuries were up sharply, this is impacting prices, pushing them lower. This could be just the beginning. As far as rates are concerned, the increase may not be anything out of the unusual. With alot of the reflation that's occuring, Treasuries may be pushing and inflating the economy to an extent that these safe-haven dollars have had their premiums removed. This is happening at the same time some key critical levels of the S&P are accuring.
  A Critical level of the S&P, such as the retracement Fibonacci (A term used in technical analysis that refers to areas of support (price stops going lower), or resistance (price stops going higher) from our lows in March.
 
  Fibonacci retracement is created by taking two extreme points (usually a major peak and trough) on a stock chart and dividing the vertical distance by the key Fibonacci ratios of 23.6%, 38.2%, 50%, 61.8% and 100%. Once these levels are identified, horizontal lines are drawn and used to identify possible support and resistance levels.

  The stock market is currently looking good for the next two quarters, and maybe on into the third quarter of next year relative to bonds. I continue to recommend that investors lighten their bond positions because to put it simply, too many people are moving to the same side of the boat, bonds are going to roll over.  The same thing happened in Technology with the Dot.Com years of 1995-2000, and housing more recently. Many people went to the same place, and we rolled over and tanked. History does repeat itself.

  How do you become a successful investor? You go it alone. Don't follow the herd. If you have received exciting news of a stock by friend, radio, publication, internet, or TV, the event has already happened. It would be like you hearing that there is a great horse at the race track that won, and now you rush to the track to place money on the horse, except that the race has already ended. The event has already happened, you missed it.

  When you hear of a great stock that is a winner, take note of it, do your homework, and wait for the stock to come down to your price (1/2 of what it's worth). Learn if the stock you heard about is as great and wonderful is you've been told. Check its critical numbers. I teach how to learn the quality of a stock at http://www.youcontrolinvesting.com/ (we offer lesson 1 free).

  Don't ever be in a hurry to place your money on a stock without doing homework (research). Watching your investment go down, will make you very unhappy. Perhaps you paid too much for the stock, and because you failed to use technical analysis, you bought the stock at its peak instead of on a pullback.

  The stock market will continue making people money, but care must be taken. The investor must do research, be patient, invest without emotion, do daily checks of your stocks (about 10 minutes), and be confident in his or her choices.

  On the subject of emotion as an investor, learn to put it aside. I'll give you an example of people losing money due to emotion. Not too long ago gas prices were going to the sky with no limit in sight. People with large vehicles that used large amounts of gas per mile wanted to sell those vehicles (emotion was unhappy).

  Since nobody wanted gas hogs, the value of those cars and trucks went down, and the seller got very little in the sale. At the sametime because of high gas prices, small economical vehicles were getting premium prices. The Toyota Prius was in demand (50 plus MPG), getting the dealers an extra $2000.00 above the selling price, even with a month or more wait for delivery. The seller of the large gas burning vehicle sold at a cheap low price (loss), and bought a new gas saving vehicle at a very high price (another loss). This means that this persons wallet got very thin.
 

  Today gas prices are reasonable, and large gas eating cars and trucks are in demand again. People want SUV's and people want more room (emotion is unhappy). Guess what, small car used prices are low, which will be a selling loss to the owner. The price of the larger vehicle which is back in demand will be high, (another loss).

  Had people waited out the expensive gas period (not sold and bought on emotion), they could have prevented the loss at sale, and loss at purchase the first time. Now to do the samething again allowing emotion to control buying and selling, is to take another double loss again. This is a financial killer. The money lost buying and selling vehicles at a loss twice, could have been better used in the stock market growing  in value.

  Visit us at http://www.youcontrolinvesting.com/ to learn how confidence when investing will help protect you from buying and selling with emotion.  For daily financial information visit www.Twitter.com/StockMktTeacher where you can remain informed on the markets daily moves.

        Good Investing,

           Bruce Cortez

Investing Overseas (European Exposure) Lesson 117

   Investing overseas provides more for the investor to consider. The exchange rate of currencies, local government controls, company report filing methods (may be different than U.S.), and war can all have an effect on the company you invest in that is based in another country.

   The investor can invest in a U.S. based company that has a portion of its revenues coming from foreign countries. An example of this is the S&P 500 for the year of 2009. The companies (stocks) in the S&P 500, representing (you guessed it ), 500 companies have a total revenue of $7.9 Trillion, coming from European exposure. A further break down is; Overseas revenue $2 Trillion, and Europe revenue $513 Billion.

   Only half of S&P 500 companies report revenues region by region. Some companies only say 'Foreign Sales'. Example; Africa, and the Middle East are all placed on the same revenue line. High exposure to Europe, by percent of exposure are; Dow Chemical 33.5%, Johnson and Johnson 26%, GE 24%, Ford 16%, and Exxon Mobil 11%.

   This information is based on SEC (Securities and Exchange Commission) filings. Europe represents only six percent of the total S&P 500 revenues. Half a Trillion dollars of exposure, from a total of eight Trillion, is only six percent. This ratio provides the investor with protection from local problems overseas like the European sovereign debt or the euro. U.S. companies have a low percentage of exposure, compared to an investor buying stock in a company entirely invested on foreign soil.

   Buying American companies that have exposure overseas, adds to the safety an investor requires and should have when investing. The companies I listed in this blog, are just some that receive part of their revenues from other countries.

  Another way to invest in other countries would be ETF's (Exchange Traded Funds). These trade just like stocks, and are each a package of several different companies. Be sure to see what is in the ETF your considering, and if you like what is in the package (do homework on some of the companies), then get in.
 

   I encourge you to always do your homework (research), invest at your personal risk tolerance, and stay informed. For more information Email me,  Bruce@YouControlinvesting.com, and visit our site http://www.YouControlinvesting.com/ to get more investing instruction. www.Twitter.com/StockMktTeacher provides current information of interest to the investor, as a way to receive more market information.

Good investing,
 
       Bruce Cortez, Instructor, Founder of http://www.YouControlinvesting.com/

Investing in a Volatile Market Lesson 116

   The stock market historically, has had good times (stocks rising), and bad times (stock values reducing). Most investors look at only the daily moves of the market and are happy on the days when the market is rising, but panic when the market performs poorly. We need to look at the big picture. Looking at the market over many years, shows us that the market will continue to make the investor money.

  Starting in the early 1950's when the  Korean War armistice was signed the market was rising, and the Dow Jones Industrial Average closed above 1,929 points for the first time. Stocks continued rising, and leveled off at the time that  Sputnik was launched. A short time after Sputnik's launch, stocks fell a bit. From this point the market continued its rise with slight pullbacks on its climb entering  the 1960's to the date of  John F. Kennedy's assassination,  and as terrible as that was to the nation, the market continued marching upward.

  At about the mid 1960's the market started moving sideways, not gaining or losing, followed by a slight drop in stocks. After this pullback the market continued higher to the time that the news announced,  Martin Luther King Jr. had been assassinated, the year was 1968. At this time the market continued skyward, with slight pullbacks, but as the end of the 1960's approached and the U.S. astronauts landed on the moon, the market was making a big correction (falling) till the beginning of the 1970's.

  The early 1970's was a time investors were seeing their investments growing as the market rose, once again. The stock market continued to rise, with normal pullbacks as investors took profits (sold stocks). As always when  stock prices fell, more investors would buy stocks (like buying them on sale), and the market would continued to climb. At about 1972 the market started another correction, and was headed lower.

  Then in 1973 we had the Arab Oil Crises. In October, 1973, panic gripped the United States. The crude oil-rich Middle-Eastern countries had cut off exports of petroleum to Western nations as punishment for their involvement in recent Arab-Israeli conflicts. Remember the long lines of cars at gas stations waiting to buy gas. It got so bad, that the day you could buy gas was dependent on your car's license number. Even or odd days. If the last number on your license was even, then only even days on the calendar would by your day to get gas.

  During this time the market continued to go lower and lower. At its lowest point on August 9, 1974  Nixon resigns. The market was now at its lowest point in 1974, but it remained higher than the lowest point of the 1960's.

  Again the market picks itself up, and starts moving higher towards the ending months of the 1970's. Enter the Iranian hostage crisis. The Iran hostage crisis was a diplomatic crisis between Iran and the United States. Fifty-two US citizens were held hostage for 444 days from November 4, 1979 to January 20, 1981. The market made a slight drop, then began moving to higher levels again.

  Now in the early 1980's the market continued to rally, moving higher till at about February, another pullback. During this time IBM introduced the first personal computer, as the market continues lower. This pullback at its lowest, remained very much higher than the lowest point of 1970.

  The market again picks itself up, and continues its climb upward, to the time that the Space Shuttle Challenger's smoke plume, after launch in-flight breakup, killed all seven STS-51-L crew members. Even with this disaster the market continued higher to 'Black Monday',

  On October 19, 1987, Black Monday was when the New York Stock Exchange (NYSE) experienced a dramatic sell-off, in which most of the stocks listed on the exchange lost a great deal of their value. Many people panicked, seeing a rapid loss of their money. President Ronald Reagan announced that he was puzzled by the financial events, as nothing was wrong with the economy. He urged Americans not to panic. A short time later the market began moving higher as if nothing had happened. Then the next crises.

  In the early part of the 1990's we had the Iraqi Invasion of Kuwait. The Invasion of Kuwait, known as the Iraq-Kuwait War, was a major conflict between the Republic of Iraq and the State of Kuwait, which resulted in the seven-month long Iraqi occupation of Kuwait, which subsequently led to direct military intervention by United States-led forces in the Gulf War.

  On news of the invasion of Kuwait the stock market dropped from the highest point it had risen to. The drop was of concern to investors, but in short order the market again continued its progress upward. The upward move continued when the World Trade Center was attacked with a truck bomb. The date of the bombing was February 26, 1993, but the market continued higher yet. Then news of the bombing in Oklahoma City, of the Alfred P. Murrah Federal Building in downtown Oklahoma City on April 19, 1995.

  The market's move up continues unstopped into August 17, 1998, when the Russian Financial Crisis (also known as 'Ruble Crisis'). During the ensuing decline in world commodity prices, countries heavily dependent on the export of raw materials were among those most severely hit. After another dip here the market advanced higher again.

  The market gained more altitude till the end of 1990. The "dot-com bubble" (or sometimes "IT bubble" or "TMT bubble") was a speculative bubble, covering roughly 1995–2000 (with a climax on March 10, 2000.
Very early in 2000 the market began its decline from the highest point it had ever been. The market was on a slide downward, continuing lower, but remaining much higher than previous lows. Finally the market regained traction, and again began its ascent.

  As the market continued up we experienced the U.S. Invasion of Iraq, and continued rising higher and higher till arriving at our real estate bubble bursting point. This bubble was an economic bubble affecting many parts of the United States housing market. Home owners were defaulting on their loans, and with this the financial institutions were in a very poor position to continue existing.

  When the housing market burst, the market dropped to its lowest point in recent time, but even at its lowest, the market only dropped a bit lower than it had been during the U.S. invasion of Iraq on March 31, 2008. Today the market is again working its way higher.

  The market will always have its ups and downs, that's the tug of war between the bears and the bulls. When the market is down, people are skeptical, and worried. This is the time to be buying stocks when prices are low, to allow you to buy more (on sale). When stocks rise people are encouraged, and become excited because the market is doing well. It's at these times that stocks are more expensive to purchase, allowing you to buy less stocks with a given amount of money.

  Consider keeping your emotions in check when making investing decisions. To learn more, and to get a good understanding of the stock market for creating wealth, visit us at http://www.youcontrolinvesting.com/  We are offering free to you, lesson 1 to get you started. Visit our site and request your free lesson 1, on our 'contact us page', or by email. Get the most current important information about the markets moves at www.Twitter.com/StockmktTeacher 
     Good investing,

           Bruce Cortez





 

How to Choose the Best Fund Lesson 115

 When it comes to choosing a fund to invest our money, there are so many choices. A fund is a blend of stocks and bonds, that a money manager believes will be successful in creating profits for his investment company and for you the investor.

  Many retirement accounts offered at the work place, offer funds that invest your money. A fund is put together with an idea, or game plan in mind. The person that designs the fund is the "Money Manager". When looking at a fund, always start with the person who will be investing your money.

  The first place to start is the "Prospectus" of the fund. The prospectus is a document describing the major features of the fund., in enough detail so that prospective investors have a complete over view of the fund. We can look here to find Managment. Management is the Money Manager.

  I like to see at least five years of tenure of the Money Manager in the fund I'm considering. With five years tenure of the Money Manager, I have confidence that when I look at the performance of a fund, what I'm seeing is the performance of this particular manager. A new person taking over a fund for the original manager, may have a different style of investing, and ideas different from his predecessor that could change the future results of the fund. With a new manager, we have no idea of how the fund will perform going forward.

  On the subject of Money Managers for a fund, be sure to locate a name or names of those managing the fund. Sometimes you will see something similar to "team" as the manager. Without a name we have no way of learning about the track record of the money manager. The money manager is the person you give your money to for investing. You are trusting on the knowledge and experience of this person to increase your wealth. When a fund offers no clear name of the manager, it's time to continue on to the next fund.

  As I pointed out earlier, the prospectus will tell you who the money manager is, but google will do the same for you. Just go to http://www.google.com/ and type in the 'symbol' of the fund for a search. An example would be 'FCNTX' for FIDELITY CONTRA FUND. You will always need the symbol to do any research of a fund. The hand out you get from the investment company provided by work, or in the mail when you request it be sent to you, will provide the information you need. You can also go online to the site of your work provided retirement account for the information on the funds offered.

  Google will provide you with  the name of the fund, so you can be sure that you're looking at the correct fund information. A list of links is provided for you to choose from; Google Finance, Morningstar, Yahoo Finance, MSN Money, Daily Finance, and Reuters. Click on Morningstar. Morningstar provides independent and trusted mutual fund analysis, research, and ratings of the many funds available. If you wish, you can go directly to http://www.morningstar.com/.

  The Morningstar page will provide the current value of the fund, NAV $64.36. The letters 'NAV' next to the price amount is Net Asset Value. This represents a fund's per share value. You don't buy funds by the share as in stocks, rather by a lump dollar sum such as $1000.00.

  The Morningstar site provides the investor with information on how the fund is doing. Remember that the information is always 'past performance', and cannot guarantee future performance. Like a great football team, sometimes they lose, but in the long run they are winners, winning much more consistantly than the rest.

  A chart is provided for you to see how well or poorly the fund has done over an eight year period. The funds performance record from a most recent year to ten years going back is shown. We are looking for consistant growth (making money).

The Funds Top Holdings
  A fund is a mix of stocks and bonds, we want to see what is inside the fund. For example if the fund has a heavy percentage of morgage related stocks, today that would not be a good choice because of the current morgage problems. The funds top holdings will show the percentage of investments the money manager believes will creat profits for the investor.

  Asset Allocation will tell you where your money in the fund is invested. Items include Cash, Stocks, Bonds, or Foreigh Stocks.

  Management; Gives you the name of the person investing your money. This is the important one.

  His/Her Tenure is important. Look for 5 years or more, I explained this earlier. 

  Total Assets;  provides you with the total dollars invested in the fund. This is the size of the fund.

  Top Sectors; Sectors are distinct subset of the market whose components share similar characteristics. Example would be the Technology sector. In this sector you would find computer makers, memory makers, and companies like Microsoft, and Google. These are just some of the many companies in this sector. These are all in a similar field. The market has 12 sectors or parts. By going to http://www.msn.com/  at the money/investment part of the site, you can easily learn the top 50 holdings (investments) the fund contains.

  Dividends and Capital gains distributions. Capital gains is a profit in this case from stocks and bonds in the fund. Dividends are payments made to share holders of stocks (like getting interest). Dividends are the portion of corporate profits paid out to stock holders. Here you will learn what percentage the fund will pay to you.

  You can also learn how big  (size in dollars) the companies are, that the fund is investing your money into. You will see;

  Large Cap, companies with a market capitalization value of more than $10 billion.

  Mid Cap; A company with a market capitalization between $2 and $10 billion.

  Small Cap; a company with a market capitalization of between $300 million and $2 billion.

  Value;  A stock that tends to trade at a lower price relative to it's fundamentals (ie dividends, earnings ...)

  Blend;  Blend funds, contain only stocks and no fixed-income securities (bonds), but holds a mix of  both growth and value stocks.

  Growth; Shares in a company whose earnings are expected to grow at an above-average rate relative to the market.

  The most basic starting point in looking for a fund to place your money, is the portfolio manager, or money manager both names are the same person. This is the person who will be doing all the thinking for you in the fund you choose to place your money. If you pick a winning money manager your account will grow, but if the money manager is a poor performer, then your retirement account will suffer.

  The information you need to be a superior investor in stocks and funds is available at http://www.youcontrolinvesting.com/. We will be happy to provide you with your first lesson free of charge, to begin you on the road of financial success. Visit our site and see how easy investing with confidence is. Just ask for your free 'Lesson 1' at our site or by email; Bruce@YouControlinvesting.com

  Good investing,

  Bruce Cortez

  Visit www.Twitter.com/StockMktTeacher for daily market information, with stock ideas, teaching and more.

 

Deciding When to Sell Lesson 114

  The idea of keeping stock that you buy today for use in your retirement days, was in the past the way to go (till the great depression), when all those stocks were worth a small fraction of the original value. More recently March 2008, with the housing loans defaulting, banks in financial streights, jobs slowing, U.S. and global economy ready to fail, was when the stock market dropped.
 
  Recently the investor because of fear, sold stock quickly. Investing instutitions needed to raise capital to settle with customers pulling out of funds, causing the selling of many good stocks to create capital to settle with out-going customers, when buying these good stocks, would be preferred by money managers.

  Institutions have been selling good stocks because of customer fear, of what may happen if the Fed takes some unknown action. What effect will the new government financial rules on the banks have on the economy? Will Health Care Reform harm the economy, or companies and employees. What will be the costs to companies or the nation to pay for health care. What may happen following the November 2010 mid-term election. The economy in Europe was said to be failing less than a month ago, but for now Europe's economy appears to have improved, and the euro is maintaing its value. Worried investors today read and hear these things and panic sets in. Questions are asked with what seems like only partial answers, or answers where two sources don't agree. Not knowing, causes people to try to protect what money they have and start buying bonds, gold, and Reits for protection of their money.
 
  Gold, bonds, and REITS have had a good run, and to rebalance an investor's portfolio today, would require the selling of these and put the money back into stocks (some prices are at or near 52 week lows). This would be the way to profit from todays equities markets that have been having very low volume (more investors needed), and sell-offs almost day after day of perfectly good companies with strong balance sheets paying dividends (like getting interest).

  We as investors need to remember that things change quickly today. The quarterly statements that your work place retirement account sends home is not the way to keep an eye on your money. The correct way to do this, is to go online daily, and see where you are, then make changes as needed to protect your principal (the money your depositing). The frequency of changes you make won't be often, and  is limited by your account rules. If you max out the account changes in the time period that your account allows, some accounts will allow you to request changes by snail-mail to slow you down (this is to stabalize the money in the account's investments). 
 
  The value of stocks (companies) is always changing. The reason for buying the stock may have changed. The economy can be good or bad, having an effect on a companies ability to grow. Maybe a new company producing the same product or service as the stock you own, can do the samething cheaper, better or faster hurting your company's stock. Consumers may decide that the product of the stock you own is no longer wanted or needed. To this end, the iPad is being seen more often in the business enviroment, replacing the lap top. The iPad is easier to transport, and powerful (great for meetings).There are many more reasons for a stock to lower in price, including changes in federal or state laws, that can effect the ability of your stock to grow.
 
  Bear Stearns was at $159.00 dollars a share, and in one year, was worth only $2.00 (March 17 2008). Today Bear Stearns is gone, and so would have been the entire amount of money you had invested in this stock.  The Lehman Brothers Holdings collapse caused the loss of investments in the stock owned by employees, and the public. The price of Lehman shares declined 94% in the space of a year. Lehman filed for Chapter 11 bankruptcy, which grants protection while it works out a plan to pay back creditors. Share holders lost their stock investment in Lehman.
 
 Old names like General Motors who became government owned, was removed from the stock market listing. Stock holders in GM lost all the money they used to buy GM stock when the company filed bankruptcy. The government feared many people that had anything to do with producing cars (GM employees, its suppliers, and their suppliers) would lead to huge levels of unemployment. To prevent this the government stepped in financially.
 
  General Mills (GIS) makes products that are known all over the world and you would expect that sales would be steady and growing. The recession, a year ago had consumers eating out less, buying branded label products, and commodity prices fell. Today the recession is nearing an end (debatable), consumers are dining out again, and the commodity prices have stopped falling. In addition General Mills now faces the problem of higher raw materials costs and consumer resistance to price increases and, as a result, narrower profit margins. Fourth quarter profit for (GIS) has fallen 41 percent, causing the stock price to drop.

  Pharmaceutical demand can be expected to always continue in companies like Rite Aid (RAD), CVS Caremark (CVS), and Walgreens (WAG). These companies all do the samething, over the counter medicines, prescriptions, flowers, cosmetics and cards. Again things change over time. Wal-Mart, recently began selling over 360 generic drugs for only $4 per subscription. This is significantly less than prices at pharmacies and may put pressure on a company's drug margins.

  Another great company I like is Toyota Motor (TM), the price of the stock in 2008 had been about $121 per share, today the price is $67.84. If you had owned this stock and didn't pay attention to it, today your loss would be $66.63 per share which I think you'll agree is not acceptable. Boeing (BA) in the same time frame was priced at about $84, and today the stock sells for $61.13.

  By knowing something about the business that your stock is involved in, you will be able to see things that could effect the price that are outside the control of the company, to prevent huge losses. Remember, if the reason that caused you to see your stock growing changes, that's the time to consider selling to reduce your loss.

  At http://www.youcontrolinvesting.com/ you will learn how to use charts (called Technical Analysis) as an aid to guide you in the correct time to buy and sell your stock. The professionals use Technical Analysis, and you should to. Visit our site, learn about us, and feel free to ask questions. We offer your first lesson free of charge to learn how easy stock investing is, and to get you started. Visit our site to get instructions on receiving your first lesson free. We look forward to hearing from you.

  Bruce Cortez, Instructor

www.Twitter.com/StockmktTeacher for important daily information.

 

What Influences the Price of Stocks? Lesson 113

 Paying attention to the news and world events is part of investing. What  kind of weather conditions are there in 'Tornado Alley?' Is it hurricane season on the atlantic coast? These weather conditions are the reason to expect Home Depot (HD), or Lowe's (LOW) to increase sales in extra wood and nails to protect property. After the storm, property owners will return to home repair and supply stores to buy all the materials needed to repair the damage done by severe weather.  Ahead of these events would be the time to look at home supply stores and their suppliers of the things they sell.

  We can buy stock in the companies that produce paint, roofing, insulation, lumber, adhesives, and the many other items property owners need to protect property, then later to repair property damage. Look for companies that cover several products that a home owner would need. This would increase sales of the company your considering to buy.
 
  Weather has an effect on how consumers spend money. Natural gas recently had its price plunge (Aug 25 2010). A very active hurricane season was forcast, but it turned out to be very quiet. In addition to this the summer was hot, and an anemic industrial demand was likely to continue, together these two would cut down on the expected demand of gas.

  If you had bought any of these 'Shale players', Chesapeake Energy (CHK), SW Energy (SWN), Range Resources (RRC), or Petrohawk Energy (HK), it was very likely your stock price would lower (not what you want). The effect on price was to lower these stocks 20-30%. The reason for this is that the cost to produce the gas exceedes futures prices of gas, causing a lose for the producer. Another way to say this is,  the cost to produce natural gas is more than what it's selling for.

 To buy a 'Shale player' we need to consider the economy. Are factories working (gas usage), and what are the effects of weather on the stock I'm considering? Will it be a hot summer (air conditioners), or a cooler summer (heat homes at night).
 
  Technology is another example of trying to get the whole picture. Perhaps you're looking at a company that makes chips for computers. Start by looking at the companies that produce the entire finished product for home and business computers, like Dell, Gateway, Hewlett-Packard. Does the news talk about computer sales slumping, and an inventory glut in computers? Now if computer sales are down, and their are deep discount sales to lower inventory, but nobody is buying, that's a problem. We would expect the chip maker to have an inventory that is excessive, and the price of chips to fall due to an excessive inventory. If the computer maker isn't building computers, he isn't buying chips. If the chip maker has no one buying his chips, then the inventory will grow, and stock price will begin to fall, or continue falling. This would cause your chip maker stock to lower in price (not good for the investor).

  This lesson is to allow you to see that when investing, we need to see the whole picture to decide if the stock we wish to own  will be profitable. To be profitable the stock must have growth, if no growth exists then the stock will fail as an investment. More about this can be learned at http://www.youcontrolinvesting.com/. You will learn important lessons in fundamentals, and technical analysis, to allow you to have confidence in your choice of investments.

Good Investing,

 Bruce Cortez, Instructor

Email: Bruce@YouControlinvesting.com

www.Twitter.com/StockmktTeacher
 
 

Your Reason To Buy Lesson 112

  There are many companies, stores, or businesses familer to us that we spend money to fill our needs.
We grow familar with things that have been around for a long time, and feel confident in the business
continuing to survive for many years and we expect it will profit and grow.

Some investors buy stocks on "familarity," and are comfortable with time in existance being the reason the
company will make them profits. Normally I'm asked the question, why did my new stock go down in price,
now I'm negative $300. Another says, my stock keeps going down "should I sell?"
Sometimes the comment to me is, I thought that the stock would do well because I was promised this was up
and coming and my money would grow. "I have a pamflet here that explains everything."

  It's unfortunate that like everything else that needs to be learned, buying stock looks easy, and this causes
the new person investing online to lose money. How hard can it be? Open an account, click your mouse on
the stock you like and presto, your making money. Now you expect your stock to zoom upward, but
surprise, your stock is sinking faster than a rock in the water. 

First thing we need to do is learn the basics, that need to be done, to prevent the loss of principal (the money
you bought stock with). We teach this and more at http://www.youcontrolinvesting.com/, and it's easy. There is nothing "hard to understand," or "too complicated" about buying stocks that can make you money. Many
people do it everyday, from professionals, to the person at home on the computer trading on line building a
retirement account.

In the beginning of this lesson I mentioned "familarity" as being a reason people use to invest in a company's
stock. Questions need to be asked. Even though the company has been around for many years, how well
financially are they doing today. As we know the economy has slowed, people are not working, and are
buying less. By looking at a companies "financials" we can learn if the company is growing financially, and will
stay solvent, or has already filed bankruptcy. Look at General Motors (GM) for an example of this. If you
had invested here, you would have lost your money. Just by looking at GM's financials you would not have
invested money here, and would have prevented the loss of your money.

  The second item at the beginning of this lesson was "price." Why did the price drop lower? Was it because
I bought it (stock always goes lower because I buy), or is there some other reason. Know that you cannot
influence the planets and the stars, and what you do in the market (buying), is not the reason your stock price
fell.  Knowing this is great, because now you know, you can make money in the market.
 
On price we need to find out what the stock is worth, not the price you see on the computer screen (that's
the price the last person was willing to pay). What it's worth is dependent on growth rate in the past, and
future expected growth rate. The other thing to look at is "financials," are they good or bad. Not all
companies doing the same, are worth the same.  Example Rite Aid Pharmacy; filed bankruptcy, and
Walgreens Pharmacy, doing great, which as I write, I own. This is another item covered in our course at
http://www.youcontrolinvesting.com/ .

  People will try to sell using promises and printed material like a "pamflet." It is your money, and research is
required at all times before giving it to someone, or in this case buying a stock. Remember that investors
were asked to invest in an oil well years ago, and lots of money would be made when oil was hit (the
promise). If your stock never hits oil...You lose.

  To learn more about the proper way to invest in stocks, and also understand how to better manage your
workplace retirement account, (help it grow), visit us at http://www.youcontrolinvesting.com/. We also post
important information that changes quickly at www.Twitter.com/StockMktTeacher 

 We welcome your questions and suggestions.

Good Investing,
 
  Bruce Cortez, Instructor
 
Bruce@YouControlinvesting.com
 
http://www.youcontrolinvesting.com/

Technical Analysis (Chart Reading) isn't Technical at all Lesson 111

 Suppose you hear the score of  a game on the radio. You would only learn who was winning and by how much. What you don't know is, was it luck that put one team ahead. Was it the skill of the entire team or one player? We don't know at what point in the game the winning score happened, the beginning, mid game, or at the end of the game.

  If someone were to make a chart that represented the game, using lines and graphs so that you would be able to get all the information that is important to you about the game, this would be Technical Analysis, Chart reading to get information. This chart would represent what people (the players) had done during the game. This is what charts that represent the stock market do. Market charts represent what investors have done in the past, and from this information we can plan on what they may do in the future. People tend to repeat past actions.

  Technical analysis, or chart reading is easier than the name implies. There is nothing technical about it. Using charts allows you to see how traders caused a stock to get where it is, and this allows you to make money, or reduce your losses. If investors buy, you see it. If investors sell, you see it. If investors get excited, you see it. Chart information is very inportant to you when investing. With charts investing is like driving at night with the lights on, instead of driving with the lights off, not knowing what's ahead. Charts allow you to see what others are doing, and this allows you to plan your investments.

  Charts allow you to see if more people are buying (which raises the stock price), or are they selling (taking profits, which lowers the price).

  There are many charts used to get the stock market information needed to guide you when investing. Each chart gives you a different view of the market, and with these different views put together, you get the whole picture. Charts alone will not create wealth, but used with "Fundamentals", wealth will be created.

  The charts we use at http://www.youcontrolinvesting.com/ are;

  1) Moving Average Convergence Divergence (MACD) Prounced Mac Dee, The MACD is the combination of two moving averages- a fast one and a slow one- and how they interact (how they converge and diverge).

  2) Slow Stochastic; Buy line crosses up, Buy. Buy line crosses down, Sell. (not hard is it?)

  3) Moving Average; Moving averages are simply closing prices over a defined number of days divided by that number of days. When the price line crosses above the moving average line, buy. When the price line crosses below the moving average line, sell. (all the math is done for you)

  4) Bollinger Bands; Lines plotted at two standard deviations away from a simple moving average. Aid to see volatility.

  5) Volume; The number of shares or contracts traded in a security (stock), or the entire market during a given period of time.

  If you're just getting started investing, or an advanced investor looking for more information to help you understand how the market moves, "Technical Analysis" is an important part of trading. At http://www.youcontrolinvesting.com/ you will learn how to pick stocks that are worth your money as an investment, this is called "Fundamentals". When you decide that you are ready to invest in a stock, now you look at "Technical Analysis" to guide you on your entry (buy), and exit (sell) point. In between buying and selling, Technical Analysis allows you to see how your stock is doing during the "game" of making money.

  Come see us and get to know what we have to offer you and your financial future.

           Good Investing,
            Bruce Cortez
         Instructor, Owner

Online Discount Brokers Lesson 110

  Price is the new battleground for discount brokers, with some slashing their commissions in half. But who comes out on top in other areas, from research to customer service?
  This information was posted May 20, 2010. This information is intended to give an idea of what is available to the trader, and I recommended that you look at different brokers to find a service that has what you're looking for.

Online brokers are rated here on 1) Mutual funds and investment products, 2) Banking services, 3) Trading tools, 4) Research tools, 5) Customer Service.

The brokers are listed in order of quality as of the time of posting, and the number rating is from 1 to 5, and 5 being best.

                                                                                                                                                              
 Fidelity  http://www.fidelity.com/  Snags top ranking with robust mix of investments, tools and banking service. Commissions $7.95   This one overall rates 5 in all catagories.

  E-Trade http://www.etrade.com/  Strong in research and trading tools; Commissions 9.99, Smartphone aps include live quotes. Overall rating 4 and 5.

 TD Ameritrade http://www.tdameritrade.com/  Big inprovement in customer service. Commissions $9.99 Rating mostly 5.

  Charles Schwab http://www.schwab.com/  Offers more advice and research than many competitors. Commissions 8.95 Ratings mostly 5.

  TradeKing http://www.tradeking.com/  Regains top spot in customer service from last year. CEO is a frequent blogger. Commissions $4.95,  Ratings from 2 to 5.

  Scottrade http://www.scottrade.com/  Nearly 500 branch offices nationwide. Placing online trades is quick and easy. Commissions $7.00. Ratings from 2 to 4.

  WallStreet-E http://www.wallstreete.com/  New customer service system enables quick responses by phone and e-mail.  Commissions 7.99. Ratings from 1 to 5.

  First Trade http://www.firstrade.com/  Keeps No.8 spot with good mix of products, but light on research. Research tools are very important.   Commission $6.95  Rating from 2 to 4.

Just2Trade http://www.just2trade.com/  Cheap trades are geared to active investors. Short on research. Commissions 2.50 Ratings 1 to 4.

  Muriel Siebert http://www.siebertnet.com/  High marks for customer service, but the Web site was sluggish. Commissions $14.95 Ratings from 2 to 4.

  USAA http://www.usaa.com/  Newcomer to online brokerage is most affordable, with a wide array of products. This 9 decades old firm is best known for serving the military and their families. Commissions 5.95 Ratings Mostly 2.

  OptionsXpress http://www.optionsxpress.com/  Big emphasis on tools; new phone apps have options quotes. Commissions $9.95 Rating 1 to 5.

  Zecco http://www.zecco.com/  Ten free trades a month with $25,000 balence. Spiffed up web site. Commissions $0.00 Ratings over all 2.

  WellsTrade http://www.wellstrade.com/ Lags behind the pack in trading tools and investment products. Commissions 19.95 Ratings 1 to 5.

  Banc of America http://www.saisidirect.com/  Commissions and fees can be pricey for nonbank customers. Commissions $14.00 Ratings 1 to 4.

  ShareBuilder http://www.sharebuilder.com/  Expanded research and tools, but ranks low in banking and investment products. Commissions $9.95 Ratings over all 2.

  SogoTrade http://www.sogotrade.com/  No plans to offer funds or bonds. Slow to answer phone and emails. Commissions $3.00 Ratings overall 1.

  This is a quick overview of what's available to you for a trading, investing platform. For myself I use Scottrade because they have a branch I can walk into and talk to a person. A branch is not needed, but for me it's an extra perk. I will also add that, the online service, email response, and phone help has been the best.

  If your new to online trading, talk to a friend or family member that uses the service to get ideas. Opening an account is like opening a bank account. Online brokers make this very easy. The money needed to open an account can be as little as $500.00 (Scottrade) or more at other brokers.

  For more detailed information read blog number 108. If you have any questions, you may comment here, go to my website http://www.youcontrolinvesting.com/  or  http://www.twitter.com/ and search for StockMktTeacher and tweet your question.


Bruce Cortez, instructor

Toyota Share Holders sue over fallen stock prices Lesson 109

  March 21, 2010, this was the head-line on websites, radio, television, and newspapers. Information about Toyota shareholders being mad over Toyota's unintended acceleration problem on some models, and brake problem on some Prius models was very well publicized  in all media. The shareholders that wish to sue Toyota don't understand what being an investor means. Webster defines investor as "to expend for future benefits of advantages."

  An investor buying stock in a company is part owner of that company (business). As a business owner, the investor needs to pay attention to the activities, and news of the company. Perhaps not as much attention as the CEO of the company, but enough attention to protect the money invested. Remember, when you buy stock you are a business owner.

  Before you put down your money buying a business, you do your homework. Homework is studying a company as if you were planning to own the company for 10 years and you expect to make money on your investment for that amount of time. To do this we look at the company's financials to see how the company is doing business, and handling its money. We look for evidence of how the company performed in the past, and with that information we can determine how the company can be expected to perform in the future. From this information we can determine what the company is worth, and therefore, what we are willing to pay to be part owner.

  The shareholder's of Toyota don't understand their responsibilities to themselves. Shareholders  have the responsibility of checking up on the company's progress by reading quarterly reports, and listening to the media. We are looking for the reasons you bought the company to continue or get better. If something changes for the worse, then we need to determine if the information is true or false, and in either case, how will the information affect the value of the company's stock. Good information raises stock value, and bad information lowers stock value.....This is easy!

  Toyota's name is associated with quality and safety in its product. Recently the news has been negative about both quality and safety. Negative information can lower the price of a company's stock. With Toyota we had time to listen, learn , and finally do something with our investment in Toyota.

  The Bad News

"Toyota cars have unintended acceleration problems, Toyota claims it's a mechanical problem."

"Toyota has problems, it can't get a break, now the Prius has brake issues."

"People are claiming the car has a mind of its own and acccererated without warning, could not be stopped."

"I stepped on the brake, but the car accelerated until it hit the wall."

"I don't like Toyotas following me" (fear of being rear ended).

An off duty CHP officer driving his family called 911 stating that the car he was in, continued to accelerate and there was no way of stopping the car. Soon after, I'm sorry to say, all in the car died in the accident that followed.

  After all this, the news is of Toyota ignoring the problem, or having the belief that the problem is due to a floor mat, or the linkage is just hanging up, and not returning to idle.

  All these stories sound like bad press and are very negative news items about a product that prides itself on quality, and safety.

  Due to all the continuing car problems Toyota was having, soon talk was of people not willing to make Toyota a first car. Others decided not to buy a second Toyota, due to the question of reliability.

  It is expected with all this bad news, lower sales, cost of recall to correct problem, questionable product from the public's point of view, and the cost in legal battles in court, that Toyota's stock value would lower. Things like this can happen at anytime. Changes in the company affect the stock price, and that is the reason that an investor needs to keep an eye on the company that was bought, to prevent, or minimize financial loss to the invstor.

  Unlike Worldcom, Enron Energy, and Lehman Brothers, that provided false information to the public, shareholders had no advance warning that the stocks in these companies needed to be sold to prevent huge loses. Toyota's problems were very well known. Over time the problems kept getting worse. An investor in Toyota only had to pay a little attention, and ask in the news I'm hearing good for a company or bad?

  Time and news were on the side of investors as problems increased. The day of the floor mat recall, shares were at just over $75. Then on January 21, shares were at $90, when Toyota announced another recall over gas pedals "that can stick." At this point investors in Toyota , (1) could have taken some of their money out of Toyota, (2) put a "stop loss" to limit loses, and (3) sold all of Toyota shares  and buy again at a cheaper price later if  they wish. After the second recall announcement, the stock price fell, dropping 16 percent to $79.34. Point to remember; stock prices rise on good news (lots of buying), and on bad news, price lowers (lots of selling).

  No matter what company (business) you own, always pay attention to the things that may affect the value of the business, in the news and quarterly reports. When you buy a business, buy a business that you understand, so you will know what is important for positive growth. You are a business owner when you buy  stock, so treat your business as a business owner, and at least be willing to take 15 minutes a day to see how your business is doing, and take control of your investment as needed. When investing don't lose money!

  Shareholders wanting to sue Toyota for the loss of share value is wrong. All the information was present for all to see. As things got worse the stock increased in value for a short time till the stock dropped in price. As I explained, there was ample warning of what was to come. Those that did nothing to prevent the loss of their money, need to wait for the price of Toyota stock to rise again in a few months. This is what investing is! Take the time to learn how well the business you will be buying is doing, then keep a vigilant eye on your business. Keep looking for changes that may indicate continued profits, or the start of stock reducing loses.

  To have control of your investments and lower your expenses in commissions, learn to do the investing yourself in your free time. We provide a teacher to answer your questions as needed by you. Investing is not hard to learn, and the financial rewards are great. You do have control of your financial future.

  See us at http://www.youcontrolinvesting.com/ and ask for lesson #1, free to you to get to know us, and prove to yourself how quickly our course will make you a qualified investor in your financial future.

Bruce Cortez, instructor

What to Look for in an Online Broker Lesson 108

  Learning how to  trade by studying in a college environment, or studying online with us at http://www.youcontrolinvesting.com/ prevents you from making mistakes that can cost you money. A new investor needs to understand the different products available (bonds, stocks, ETF's, CD's IRA's) and more, to place your money into for the purpose of inceasing your financial wealth.

  Learn everything you can in your studies, and by reading other material to get a more rounded feel for investing. When you are ready to start trading in a real trading account, you have many choices to pick from.

  One choice is a full service broker. a full service broker does all the thinking and picking for you, but is required to talk to you first before making changes to your account (Trading). This is a great way to go for the person that doesn't want to take control of his or her money account. Be advised that for the full service offered, you will be charged a fee of about $50.00 per trade. Each office has its own fee schedule for the services offered.

  Your second option is an online broker. You will need a broker to allow you to do the trading you plan to do. Your online broker is the middle man needed to be able to do electronic traking. The services offered vary, so we are going to cover a few things to look for.

  There are many brokerage firms to choose from. The first thing to do, is for us to decide what it is we need from our new broker. I'll provide some ideas for you, but you may think of other needs you would like.

  Experience in the Industry; Check to see how long a broker has been doing business. Some have been around 25-30 years.

  Brick and Mortar; A building in your area is not required for your broker to be top notch, but some people feel better having an office to walk into if needed. Seeing the faces of the people that are on the other side of the computer your looking at is nice. Some brokers have as many as 455 branches to help you.

  Customer Service; There are times when you need some help to your questions. I suggest you call the customer service number of the broker you're considering. See how  long you wait for someone to answer, and if there is a email, send in a question to time the response.

  Account Protection; I would look for a broker that is a member of (SIPC) Securities Investor Protection Corporation. SIPC's focus is restoring funds to investors with assets in the hands of bankrupt and otherwise financially troubled brokerage firms. The other protection I look for is (FINRA) Financial Industry Regulatory Authority. FINRA is the largest independent regulator for all securities firms doing business in the United States. These are the minimums for the protection of your money. Some brokers offer their own money to correct a loss to the customer, due to theft of the accounts funds.

  Instruction / Training area; Does the broker's site provide tutorials on using all the tools the site provides, this is very helpful.

  Trading Tools; What research tools are available? You need to have several different tools to do your research so that you don't need to leave the broker's site because it doesn't offer much and is very limited. After completing our course at http://www.youcontrolinvesting.com/ you will know what to look for. The charts (Tools) you need as a minimum; Slow Stochastic, (MACD) Moving Average Convergence and Divergence, (RSI) Relative Strength Index, Bollinger Bands, and Volume.

  Fees; Look for no inactivity charges because you will not be trading everyday. Normally you will buy a stock, and wait anywhere from a few days to several months before selling. Lets not be charged at a higher rate because we are doing the right thing by waiting for our stock to rise in price.

  Commissions; This is the fee you pay for your trading. Look for a broker that charges only one fee no matter how much or how little your trade. Some brokers charge a lower fee for frequent traders an a higher fee for light infrequent traders Depending on the broker's services, you could pay as little as $4.00 a trade to as much as $50.00. You need to look and compare trade fees with services offered.

  Brokers; There are many brokers to choose from, this is only a short list. More can be found by goint to investment sites and looking at the brokerage advertisements. You can also use google or bing to find a broker. Decide on you requirements and check carefully to be sure the broker meets your needs.

Etrade.com, Ameriprise.com, Scottrade.com, Optionhouse.com, Forex.com, Thinkorswim.com

If you would like more information on this or other investment questions please see our other site http://www.youcontrolinvesting.com/  for information, or to contact us for instruction.

Bruce Cortez

 

When Wall Street is in Turmoil Lesson 107

  -The Date I wrote this 24 Jan. 2010-

  President Obama said he planned to work with Congress to prevent banks from investing in or sponsoring hedge funds of private equity firms, or to engage in "proprietary' trading (When a firm trades for direct gain instead of commission dollars. Essentially, the firm has decided to profit from the market rather than from commissions from processing trades), unrelated to serving bank customers. He also proposed new limits on the size of financial institutions, based on the market share of their liabilities, in addition to their share of deposits. Proprietary trading at commercial banks will be banned. Banks are banks, trading is trading. No more intermingling of the two. Banks can't own hedge funds (An aggressively managed protfolio of investments that uses advanced investment strategies such as leveraged, long, short and derivative positions in both domestic and international markets with the goal of generating high returns), or private equity vehicles. Period! The size of banks will be limited. Details of how any of this will work are nonexistent. This uncertainty is what the market (investors) don't like, and there are lots of questions to be answered. Because of the uncertainty of how the Obama adminstration plans to control banks, and to what degree, the stocks of the major banks lowered.

  The DOW is composed of thirty corporations, with the banks of (BAC), and (JPM), included. The other banks I listed are also affected by Obama's proposed bank requirements.

(BAC) Bank of America, (GS) Goldman Sachs, (MS) Morgan Stanley, (USB) US Bancorp,

(JPM) JPMorgan Chase, (C) Citygroup, Inc,

(Most of the corporations in the DOW lowered in price, because of the uncertainty)

 The President's plan to split up big banks accelerated the disturbance yesterday (Friday 22), sending fears of a new wave of regulation through the markets (investors). Companies have been reporting results (earnings reports) that match or beat estimates, their stocks aren't moving higher - a signal, analysts say, that Wall Street forecasts may have gotten ahead of results (the prices we see today are higher than they should be).

  What you just read is an example of the thinking that goes on in the heads of investors on Wall Street (The Market / investors). The market is constantly evaluating world events, products. earnings reports, and anything that may influence a product, service, or growth rate of corporations. As you read earlier, the market doesn't like "uncertainty".

  Because we can expect that things will happen all the time that may effect our investments, we need to do our homework on the stock we're thinking of putting our hard earned money on. When we know that the companies stock we are buying is worth more than what we paid, then we can take comfort knowing that we will be making money with our investment.

  If the price of our stock lowers, as it will from time to time, then we can take advantage of the opportunity and buy more on the way down (like a professional). The best part of this, is that before you invested, you learned that the stock you were looking at is the best stock for you to put your money into.

  The chance of losing your money is not a worry to the person that does homework before buying a stock. 1) You know the quality of the company you're buying. 2) You know how the company makes its money, and  3) You know you invested in a company that has a history of good performance. You will sleep well at night without worries.

  You Can learn more about investing by going to http://www.youcontrolinvesting.com/ . For a very low tuition fee, you will receive a textbook, instructor by email, and on going information about  Wall Street, stocks, funds, ETF's and other information you may ask about, or we believe is important to you.

  Take a look at what we have to offer and ask for lesson #1 ROIC, Return on Investment Capital, by email. We offer this lesson free to you. You will see how easy it is to learn proper investing methods. Our methods will make you a confident investor. Our promotion page explains the free offer.

      Good Investing,

 Bruce Cortez, instructor

http://www.youcontrolinvesting.com/

 

 

Penny Stocks Lesson 106

  If you wish to make a large profit with a small amount of money buy penny stocks (which I don't recommend, I'll explain later).
 

Penny stocks are shares that trade from a fraction of a penny to $5.00.

  The idea of large profits is exciting. Let me explain with an example. Suppose you have $500.00 to invest. The penny stock investor looks for a very low priced stock at about a dollar or less. Now suppose this great penny stock costs .49 cents per share. Now we do simple division, $500.00 divided by .49 cents equals 1,020 shares that can be bought (to keep the math simple we won't include the broker's commission). Now let's say the stock price increases to $1.00, the increase to you is a profit of .51 cents per share. Let's do the math to look at your money's increase. 1,020 shares that you own multiplied by .51 cents increase in price and you now have $520.00 more than what you started with. As always, you need to sell your stock to keep your profits. When you sell, you get back the $500.00 started with, and the $520.00 profit this stock made. The total you now have in your trading account is $1,020.00. This sample stock trade went well when you first look at the results, which is the money made.

 Did this increase happen in a few days, months, or years?

  With penny stocks the risk of losing your principal (the $500.00), is very high. Penny stocks are priced low for a reason. They are riskier than the average investments, and companies are small, or new. There is no growth history in any of its fundamentals (you learn about fundamentals in our textbooks and instruction). The company could be a consistently poor performer, or it may take a very long time for the price of the stock to increase, how long will this take (we have no history)?

Penny stocks have the ability to turn a small investment into a fortune

  Penny stocks are a speculaton play (because you think you can make some money here, with no proof of performance). This concept goes back to the oil well drillers. The driller believes the oil well will be a money maker, but is running out of money to continue drilling, so the driller goes to the public (you and me) for more money to continue drilling. If the well hits oil, everybody invested makes money, but if the well is dry, then all involved lose all the money invested. Some make money, others lost money (which will you be)? The wells were new with no history of oil production. All that these drillers had is a belief the well would find oil, and a desire to continue drilling using investor's money (the investors hoped to make lots of money quickly).

  A well that is making money, with a history of performance, would be a good place to invest. You will pay more per share for this well ($20-$35 or more). The upside is that you have a history of the wells performance to research (1year,5year,10year), and have reasonable expectation that you will not lose your investment, with the addition of profits paid to you for investing.  (Your research would begin with "ROIC" Return On Investment Capital, which we offer in lesson #1 free at http://www.youcontrolinvesting.com/ ).

Speculation investing, not recommended, but for fun only. 

  If you have quality investments growing for your future, then you're doing well. A small investment in penny stocks, to add some interest to investing, would be good. Speculation helps to remove boredom from the investor.

  Don't be fooled by computer programs that are said to pick penny stocks correctly. No where have I read or heard from any source (other that the promoter), that these programs are reliable or in anyway consistant. Before sending in your money for the purchase of one of these programs, check with the Better Business Bureau for complaints (I would stay away from these programs).

  Avoid promises of winning picks that will make you a fortune. Question everything you read and see in emails and online at penny stock sites. Not all sites and offers are going to help you invest safely.

  For more information on investing wisely and safely see our site http://www.youcontrolinvesting.com/ . You can request our free lesson #1 "ROIC". You will learn how easy it is to pick quality stocks, and begin investing in stocks and watch your money grow. Try lesson #1 on us, it's free.

Good Investing.

           http://www.youcontrolinvesting.com/

email; Bruce@YouControlinvesting.com

Be a Leader Not a Follower Lesson 105

  Each day we hear of a stock "that's on fire," "can't be stopped," "exploding," "looks to double,"and other terms that indicate we're missing something. We get a sense that we're missing out on something that will create wealth for us in a short time. This type of excitement on the radio, news print, or the internet more often than not will cost you money in loses. Investing in a stock by following hype is a great way to gain nothing.

  Buying a stock without looking at its quality, is like buying a car because you were told, "it's a great car." There are great cars to be had, but all cars like all stocks aren't great.

  If a stock is said to be "exploding and looks to double," we have no idea what is causing this stock to increase in value. We have no clue at what price is the best for us to pay, and we have no idea at what price to sell. We also don't know how much more this stock will continue to go up (did this increase begin or is the increase stopping). The other thing we don't know is the qualifications of the person making these exciting comments about a stock.

  I suggest we look at this kind of "helpful" information, like hearing about how great a certain horse ran and won at the trackm as old news. By the time you got this "helpful" information about this horse winning by a "length", the race already happened, it's over, it's done, and there is no point trying to put money on this horse race that is now history.

  The news talks about this great stock going up, but this is after the stock went up (If they told us before the increase, that would be "helpful"). The radio announcer is excited about stock xyz, but this (race) has already happened, so don't put your money on a stock that you heard about, because the increase that everybody is talking about, has already happened (hold on to your money).

  When we hear that a stock "popped", the price increase already happened, Owners of a stock, in anticipation of a "pop" (Leaders) profited. Those that bought after the "pop" (Followers), got nothing except to watch the price go back down.

  All of us need to be leaders in investing. A leader picks the stocks that have meaning (we like the product or what the company represents), and are willing to do homework to learn abour the company and decide at what price your willing to pay in order to make a profit.

  A follower only hears about a stock, doesn't do any homework, and pays too much for a stock that may not perform as hoped. If you get in late you pay too much, and watch the stock lower in value, you now have three choices. Number 1, Hold till the price rises again (when?), Number 2, Sell at a loss (bummer), and number 3 learn how easy it is to do the homework that is required, before investing, to prevent this from happening again.

  For more information on this and other important subjects visit our site; http://www.youcontrolinvesting.com/ to learn how to get started investing the right way at a low cost. For our low price you will receive a textbook to learn with and use as a reference. We also will provide current information by Email, about Wall Street, so that you will be better informed, and become a good investor.

Buying Stocks to Support the Companies That Support Your Opinions Lesson 104

  "Sixteen bodies are found within 24 hours in the Mexican city of Tijuana, in what police say is part of a spate of drug-related killings".

  "Mexican officials say drug-related killings in the country have soared by 50 percent this year, with many recent deaths bunched along the U.S. border".

  "A news report that open-borders advocates would prefer that you not see. The Mexican Drug Cartel is now operating with relative impunity on both sides of the Mexican border."

  "El Monte residents paid tribute today (Jan.01, 2010) to a 33-year old school board member who was abducted and killed in Mexico".

  These are headlines in the papers and online, that tell of killings, kidnappings, and drugs that kill many others, and the huge amount of work that law enforcement has in front of them. Many times we wish to do something, but we as individuals feel there is nothing we are able to do to effect change.

  Buying and supporting the companies (stocks) that supply law enforcement with the tools to combat the enemy, is important to those that need and use the equipment. When we buy a companies stock, the money invested gives companies the capital to continue with research and development for new and better products. When we invest in the companies that support the direction we wish to see our world move into, we get a sense of helping to combat the problem.

  These companies I mention are not to promote them in any way as an investment. You need to decide that for yourself, but I only wish to indicate that by your action in investments you can help to make a difference in our future.

  Most people have heard of Smith & Wesson, ticker symbol (SWHC). This company supplies police almost everywhere with the firearms needed to perform their job. Today this company is the world's largest manufacture of handcuffs, and at some time or another, every military agency has used and depended on the products of this company.

  DuPont, ticker symbol (DD)
 
  DuPont does many things for the improvement of our lives. DuPont created a fabric that was intended to be used for tires, but was found to be effectivce in bulletproof vests. This product (Kevlar) is credited with saving the lives of more than 3000 law enforcement officers. DuPont also produces health care, medical, and electronics, enabling the manufacture of advanced OLED, LCD, and PDP displays and more.

  SELEX Galileo Inc. ticker symbol (FNC.MI)

  This company provides products to our government to support our military, and our border protection units. Mobil ground surveillance units of variors forms, are able to patrol coastal or rough terrain with all-terrain vehicles. SELEX can also be mounted on fixed based structures.

  SELEX has a radar contract with the U.S. Coast Guard, the Vixen 500E Radar integration for the US Customs and Border protection. This electronic equipment can be integrated into unmanned aerial border surveillance aircraft.

  I don't own any of the companies mentioned in this blog. There are many other companies here in the United States that in some form contribute to the protection of our nation's boarders and its people. Companies that manufacture computers and its components, aircraft manufactures, or the equipment that is needed to do a particular operation on the aircraft, are worth a look. The companies that produce fuels, lubricants, electronic components, batteries or equipment to protect those that are protecting us, need our financial support. Buying a part of a company (stock) that has meaning to you, and supports what you believe in, is how you are making a difference to all of us.

  For more information on investing visit our site http://www.youcontrolinvesting.com/ and request a free first lesson to get started moving forward in this new year.


Good Investing,

 Bruce Cortez
http://www.youcontrolinvesting.com/
 Email Bruce@YouControlinvesting.com

How to decide which company (stock) is worth looking at for investing Lesson103

  The information that is needed to evaluate any company's stock, is available online for free. Free means that extra work may be needed by you to get the answers you need. For those that are starting out in learning about stock research, you don't need to spend any money to pay for a full service research company. I find that if you spend extra time doing the work, with extra effort, you will retain what you learn better.

  The first thing I like to look at is companies that do the same type of service or create the same product. My example of this is Home Depot, and Lowe's. Both of these companies provide tools, paint, sheet rock, and lumber. The question here is which of these two is the best? Another example is CVS, Rite Aid, and Walgreens. These three provide similar services and products. These three have flowers, drugs, and over the counter medicines. The question again is, which of these three is the best?

  A quick and easy check is looking at how the company manages its money. For this we look at its "ROIC", Return On Investment Capital. This number is important because we need to see if money is being made by the company, or is the company losing money trying to do what it does.

  The company spends money to operate. Equipment to be maintained and replaced, supplies, electricity, gas, license, permits, insurance, advertising, employees pay, and other miscellaneous items all cost money. The question is, after all these expenses are paid at the end of the year, how much money does the company have, and how fast is this earned money growing?

  For example; if it took $100,000 to operate the company for the year, and after all bills are paid for the year, this company has made $10,000. The ROIC growth rate in this example is 10% ($10,000 is 10% of $100,000). We always want to see 10% growth rate or greater. If you know nothing else about this company, at least you know that management knows how to properly use money in a manner that won't cause bankruptcy.

  From this one quick check we can learn that sales/revenue, the total dollars the business took in from selling its products, is at a rate to allow financial growth. Because of this the EPS (earnings per share), which tells us how much the business is profiting per share of ownership, can be expected to be growing.

  This one quick check saves you lots of time researching a company, and keeps you from doing alot of work needlessly. ROIC gives us the answer we need quickly and tells us that continued research is worth our time or not. There is more research required of any company we are thinking of investing in, but ROIC is always the starting point.

  For more information on learning how to pick quality stocks, see our site at http://www.youcontrolinvesting.com/ and learn how easy it is to be a successful investor. This is the perfect time to make your move.