Investing
Stocks are down big again, with the S&P as a negative for 2010. Stocks feel because the bank profits aren’t as good as they must be to sustain a rally in stocks.
Bonds, Gold, and the Euro all went sideways today.
Oil and gasoline declined again today, and this continues to be good news (unless it signals the double dip recession is here and alive).
In the news today……
Unemployment – rose in 43 of the 50 states last month.
Investing in General……
Here are some rules you might consider when you invest in stocks. I think they have some wisdom in them, so I’m sharing them with you. Thanks to the Casey Report for these ideas.
Rule #1: Be skeptical.
Rule #2: See Rule #1.
1) When you talk to the company, how do the people make you feel? If they come across like used-car salesmen, you should probably trust your gut reaction.
2) Ask questions any company exec should know the answer to. Any CEO or president who doesn’t know how many shares his or her company has issued & outstanding, or how much cash the company has in the bank, is either dishonest or incompetent. Probably both.
3) Always review a company’s financial statements. Balance sheets and income statements tell stories, loud and clear. If a company is spending more money on Taj Mahal-like offices than it is putting into the ground, there’s a clear red flag. Disclosure requirements result in a lot of stuff going into the MD&A statements that go with financials.
4) Learn. You may not have time to get a degree in geology, but you can learn a few basics to help to have a general understanding of the business. If you don’t know that open pit grades don’t work in mining veins, you shouldn’t be investing in mining companies.
5) Grow a network, ask for help. Investors can build networks. The fact that so few investors go through the trouble of doing so leaves the field wide open. Investors are important to company people, so they try to be helpful.
6) Remember Rule #1 – be skeptical. A good investor relations person or other corporate storyteller gets paid for painting glowing pictures of riches merely waiting to be picked off the ground by the fast-moving investor… you. Understanding that it is their role to tell a compelling story leads to the logical conclusion that it is your role to separate the facts from the fiction.
Here are the last numbers for today:
Dow Jones 30 Industrial – 10,172 (down 217)
10 Year Treasury Bond – 3.60% (down 0.01%)
Euro – $1.4133
Gold – $1091 (down $12)
Oil – $74.23 (down $1.85)
Gasoline – $1.97 (down $0.02)
