Ok, like many of you I open some of my investment statements and see BIG RED numbers.
Those are not the ones you like to see. But, let's look a little closer, shall we?

Well, some of those are dividend stocks. Yes, I had them marked for re-investment. As dividends were paid, I was paid in stock, less foreign exchange fees, and many had those. Ok, the foreign exchange made money,, lol. Technically, so did I. My numbers on "Gains" may be negative, but those "negative" numbers, are less than the values of the stocks that were bought with the dividends. So, my numbers there are a nice shade of pink? Not nearly as red as they would have me believe. And, I have more of what I bought initially, without spending a penny more out of my pocket. Yes, the re-investmnet is noted as expense on my statement. Is it really. Techically, yes. I bought, and it dropped. Technically, no, I did not buy, I was GIVEN, and reinvested that.

Then there is the other factor. When I started investing, I had limited resources. I could not afford to diversify, even if I wanted to. Enter the stock split. Ok, no, I did not gain a dime on stock splits, and you don't. But, in many cases, I was able to maintain, or increase my original investment amount, take some off the table, and invest elsewhere. Yes, this is the KEY to diversification. And, BELIEVE ME, you need some. If your stock is so good, you can always invest more in it later, as you have funds become available. Your stock price, just dropped, so take a little off, and sock some for a rebuy later. With the rest, invest in divesting. Buy more of things you have less of, or that the market thinks is HOT,, right now.

And what IS the market doing right now? Based on what I see, ABSOLUTELY NOTHING.

So, what should YOU be doing?

ADDING SHARES. Of just about anything. Profitable stocks would be nice, but how long before most of them become MORE profitable than they are now? Well, I will tell you. In the short run, you could lose money on just about ANY of them. If you require returns in a day, a week, or a month, you are wasting your time,,, and mine. I would bet against it. Then again, if you are in for the long term, I have to bet with you. In terms of three years or longer.

In the longer term, the one with more shares, will be the winner. Assuming (the least favorite word in my vocabulary), you have the slightest notion of how to pick a stock, and have ANY luck at all (other than bad luck).

So, quick and brief. It does not matter if you are new to investing or not. Do with what you have.

Make a portfoilio of some dividend stocks. Be willing to ride them for a time. Let them grow, and THEN, at the right time (what have I gotten myself into?) sell for a PROFIT, the growth from the dividends, so you can diversify. Add to that portfolio some stocks with traditions of prior stock splits. Yes, darn it, homework is required. So, is a little luck. It is nearly IMPOSSIBLE to pick a stock based on the fact it will likely split. So, pick good companies, and HOPE they split, when gains are WONDERFUL.

Another way to win, is pick companies you KNOW should be acquistion targets. Hard to figure who they are? Everyone wants a bigger piece of the pie. Who is mostly likely to be today's pie?
Can they be bought out. Many can't. Who is the biggest pie eater right now? You can play both sides of that coin.

But, I can only think of ONE real way to lose in a market doing ABSOLUTELY NOTHING. That is for YOU, to do ABSOLUTELY NOTHING.

Ok, you say the market is up some 25% off of it's bottom of last year. Correct. You say it could and likely will drop. Correct. As sure as God make raindrops (or they come from someplace for you agnostics), the market WILL go up in time. It has to, or it has to cease to exist. Nobody will continue to be a fool long enough for the market to wither and die. It is more guaranteed than the government bonds. The governement is backed by fools and idiots, that are by any other means, court jesters at best. Businesses on the other hand, have a profit incentive.
And, while your "government" may be willing to lose (SQUANDER) MULTI-TRILLIONS, I can assure you, any succesful business venture would not stand for it. Even an unsuccessful one has better sense. (the beatings will continue until Morale improves?)

So, I do believe in the market. I do not believe in the American government. Or, it is what I believe in them to do (mess up a free lunch).

Be that as it may, I know what to do in these times, and YOU should too. ADD SHARES of stocks,,, like a madman. Then pray, and dream of a time when the DOW exceeds 16,000.

And, if we do not get hit by a comet, or have any other global disaster, it WILL. I GUARANTEE it.

Comments: View Comments |  Wednesday September 30, 2009

First, this not not based on anything but my personal expectations. I,e, my crystal ball is, and has always been, in the shop, because it NEVER works. In it's place I have to use some logic.
No gauarantee things will work this way, but it just makes sense that they would.

First, everyone wants to know the graphic that the recovery will have. Hockey stick, "V", 'U", "W. Well, I have to describe it for you. To do that, you have to envision the trip down as something like falling off of a cliff. It was a dramatic fall, and let's say, the parchute failed to open, until very late. By some miracle, before you perished, the shoot did open, and you caught an immediate updraught. It did not take you to near the height you were, but you recovered enough to know, you need to clean your drawers. To this point, we can call it a somewhat "v" shaped recovery, but it has in fact, not recovered. And, it will not, for some time yet. But, if riding air draughts is your thing, you might understands some of the rest of this too.
While we toil between the thrill of the ride, and the need for clean drawers, and counting our blessings for still being alive, we ride to a shortened upside of the "V" recovery (about present time), and take a dip in a "U" shaped fashion. Well, since we had a great fall already, the left side of this "U" is not as great as the right side will be. And, the bottom of the "U" would last maybe 6-9 months. So, by mid-2010, we may be about where we are right now. I can clearly see the DOW to once again flirt with 9200, or lower, and I can see a Dow of 10,000 being surpassed in just over a year. Actually, expect a Dow of 11,500 or better by 2nd quarter 2011.

Ok, it get's fuzzy from here. So far, is pure REASONING. It dropped too far too quick. It recovered too quick, and adjusted. It has not accounted for one thing. TIME. In time, cost go up.
Make that stock prices go up. And to this end, I expect to see a fairly steep rise in the right side of the "U" that followed the small 'v''. By the end of 2011, I expect to see gold at near $1100 an ounce. It will be in range with the other stock price rises, and maybe even slightly less, on a percentage basis. By the end of 2011, I expect to see $90 barrel oil, consistently.

My questions come from the end of 2011 to early 2012. So let me make a definition here. A recession, is a time of hardship, for BANKS. Nothing more, nothing less. Granted, struggling economies can put tight reins on banks. I do see dips on banks throughout 2010 and 2011.
But there is a new concern by 2012. Banks are simply too far over-valued. And I see that sector getting SLAMMED. But, unlike other recessions, caused by banks, this one is different. The market as a whole, goes forward. And, by mid 2012, the Dow is tettering near 12,000. As it shakes off the damage banks try to do, by second quarter 2013, the Dow is pushing 13,500.

To do this takes some great awakening. Somewhere, somehow, people have to "wake up". Enough to realize, that if you let computers rule your life, they will. Goldman's, JP Morgan's, B of A's, Merrill's, they all have "TOYS", to ruin your world,,, forever. Hopefully, by then, people will realize, we can live without those "programs" quite adequately.

Yes, there is some financial pain in the mean time. When, and if we get past that, there is a growth side to push Dow to over 14000, by the end of 2013, with more upside potential beyond that. Dow of 16,000 not out of the question by 2015,,, if you do something to STOP the computers from ruling your world.

A computer is a tool. Nothing more. Take a serious look at a movie called "War Games", and then apply that to the market. Global Nuclear Financial War? No, thank you. How about a nice game of Chess?

I will not be easy, but we can get there. We have to put reins on some of the top players, and the market can soar.

Comments: View Comments |  Monday September 21, 2009