Inflation Investments are the Future?
Filed under: Commodities Bull Market, Financing, Investing, Stock Market History, Stock Market Predictions, Stock Picks
A very good article on Inflation Investments points out that hyperinflation is quite possible in the very near future. With Ben Bernanke printing as much money as possible, it is almost inevitable. If we do see inflation in the coming years, the place to be is in commodity investments. As many of you know, this site has been strongly invested in commodities for quite some time and we think the commodities bull market is only half way complete. That means we could see another NINE years of heavy commodity gains.
Short the S&P 500 at 803
This bear market rally has been very strong with gains of over 20%. Now with the market throughly oversold, it is time to short the S&P 500 at 803. The 50 dma is exactly 803 and that is where the S&P 500 currently stands. I would be very suprised to see the market eclipse this mark with how oversold we are. We should see some steady losses in the near term.
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President Obama Mortgage Bailout Plan – How Much Will it Save Me?
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Foreclosure Prevention Program: Am I Eligible?
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Where Do I Invest During a Bear Market?
U.S. Stock Market – A Yard Sale for the Rich?
After a 6% rally, one must wonder if it is sustainable. Is this a bear market rally or the beginning of a bull market? No one will know that answer until the gains and losses have already been sorted out. The one thing that is certain is that that are many “valued” companies that have stock prices under $10 a share. One analysts called it a “yard sale for the rich.” This seems to be the case as many great American companies are trading at a P/E ratio below 10.
While P/E ratios are not the be all, end all of stock picking, it is very important to value investors. If a company is earning $12.00 a share and is only trading at $50, a value investor is likely to jump all over this opportunity: a P/E ratio of 4.16. There are many stocks that are currently in this P/E range in the current market. Manitowac traded at $45 a share less than a year ago and now trades around $3 a share making its P/E ratio approximately 5.
This is a perfect example of a huge opportunity for those with money. The United States stock market is a yard sale for the rich. The NYSE and NASDAQ are littered with stocks trading at P/E ratios under 10 which was unheard of three short years ago. It is true that the stock market is the value of FUTURE earnings, but can these stocks really go down even more than they currently are? Some investors have never had this opportunity in their entire investing careers.
If Manitowac gains just HALF its value back, you would have a 650% gain on your investment had bought today. This is how many investors are looking at the current market. On the flip side of this argument is the fact that future earnings look very bleak. Some companies do not expect to produce a profit for three to five years after the credit crisis is over. With that in mind, the best time to get into the stock market is when everyone is pessimistic and bearish. When every newspaper makes the claim that the US Stock Market will never produce profits it is a great time to invest.
Is that time today? You must ask yourself that question before you put any capital into the current market. The overall pessimism does seem quite low, but are there still bulls out there? If there are bulls, we still need to see a steeper decline until every single person is bearish. This will make you a ton of money as a true contrarian investor, ask Jim Rogers.
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President Obama, This Stock Market Decline is YOUR Fault!
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Obama Mortgage Bailout Plan Promotes Bad Financial Behavior
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Foreclosure Prevention Program: Am I Eligible?
President Obama, This Stock Market Decline is YOUR Fault!
President Obama, I think we have heard enough excuses. You and your buddy Tim Geithner have used the Bush Administration crutch for too long. Look in the mirror, it is your administration that is causing historical fear in this market. Since you were elected President on November 4th, 2008, the Dow Jones Industrial Average has plummeted from 9635 to 6569, a 32% loss. Almost ONE THIRD of the investment value of Americans stocks have disappeared since you were elected!
Let me guess, those months shouldn’t count because you weren’t the president. I will accept that. Since you took office on January 20th, you would expect to see some stabilization with your new programs being implemented, correct? The truth of the matter is that the stock market PREDICTS the direction of the economy so if your plans are legimate then the market should have found a bottom between now an then, right? Let’s do some research. On January 20th, the Dow Jones Industrial average closed at 8281. Today, the market is at 6569. The market has lost over 20% in your first two months!
You MUST do something to stabilize the stock market. It is the #1 investment resource of this country. Why does the market keep going down? You are INCREASING capital gains tax?!? Why would you do this? Wouldn’t it be wise to ENCOURAGE Americans to invest rather than discourage it. If you are going to tax us more on our gains, we are not willing to invest as much. Good call president, let’s push people away from investing.
To top it all off, you are taxing the rich and most prosperous of the country. WHY?!? Do you realize that the most wealthy make this economy run? Do you think the $200 being invested by little ole me is going to help the stock market? NO! The $500,000 being invested by Jim Rogers is going to help the stock market. You are taxing him MUCH more than me though, so he is very reluctant to put any money into this economy. Taxing the wealthy to give to those in need sounds wonderful, but in reality, it is NOT going to make this economy happy.
There will be MORE job losses, the housing market will CONTINUE to decline and you will see this stock market fall even further until you change things President Obama and not the CHANGE you have been implementing.
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Obama Mortgage Bailout Plan Promotes Bad Financial Behavior
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Debt Analysis – What Americans Need Right Now
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Foreclosure Prevention Program: Am I Eligible?
GM Stock Advice – Buy, Sell or Hold
GM reported a $9.6 billion loss for the fourth quarter; that means that the automobile giant lost almost $85 million a day. GM stock is down over 90% in the last year so many shareholders are looking for GM stock advice. We all realize that the big three automakers from Detroit are extremely behind when it comes to technology and change. The Asian automakers continue to gain market share while the American automakers get closer and closer to bankruptcy. Should you buy, sell or hold GM stock?
If you have been a shareholder for the long haul, it is very difficult to fathom selling this stock at such low prices. Can it really go bankrupt? Shouldn’t I just hold it until it comes back? Well, based on your age, it will probably never get back to 2007 levels during your lifetime. GM is in great debt. The company itself doesn’t feel they will be able to make a profit for TWO more years. Even if they somehow turn over a profit, it will go towards paying off the enormous debt they have built up just to survive.
Should I dollar cost average down and buy more shares? In a word, no! Once again, this company will be in debt for the next ten years. There is a possibility that it may not survive at all. It seems very attractive to pick up some shares at $2, but if there is very little chance of near term profits, why bother? It is not advisable to invest in companies, or people, who are in debt that they cannot control. There is no definite answer when they will start paying off this debt, no less get completely out of it.
I have been a shareholder for 20 years, shouldn’t I just hold onto the stock? That is a question that you need to answer yourself, but if you want to see a return on your investment, GM is not the place. Companies selling products that cost $15,000 to build will struggle greatly in this economy. Americans don’t have money to buy a pair of shoes, no less a brand new vehicle.
The GM stock advice that we offer is to sell what you have unless you are in it for more than ten years. Anything less than that and you will see GM continue to announce that they are paying back their debt and the profits will soon be used for research and design. Sadly, this means, NO PROFIT.
UBS List of Americans with Swiss Bank Accounts
Today we learned that UBS will pay $780 million in damages and close all of its offshore accounts held by American citizens. UBS, the largest bank of Switzerland, agreed to provide a list of names of all the wealthy Americans who held Swiss Bank Accounts to avoid taxes and other United States regulations. The exact number of clients on the list is not currently available but the early estimate is around 19,000 according to the New York Times
This event could change Swiss banking as we currently know it. Prosecutors feel that Swiss bank accounts helped Americans hide over $20 billion from the United States government over the last five years. UBS agreed that some of its employees actually participated in the “scheme” to help Americans avoid taxation.
Since most of us were young, it has been a given that any “dirty” money has gone into a Swiss bank account. It has almost become accepted in eyes of Americans. This is not the case anymore. The list provided by UBS will change everything. Many high income individuals are not sleeping well at night right now because they know they could be exposed for tax evasion causing them to lose their reputation and possibly spend many years in jail.
Stay posted as we will provide the list as soon as it is available.
I Own Stock in Bank of America, What Should I Do?
Bank of America is trading under $5 a share and there is talk of nationalization. Less than two years ago, this stock traded over $50 a share. To make matters even worse, a letter has been sent to shareholders that Bank of America will be completing a non mandatory reorganization or tender offer to its shareholders of 99 shares or less. With many shareholders taking a steep loss, many are asking what to do.
While it is hard to imagine that Bank of America could go any lower, you must look no further than Ford and GM. These two American trademarks have shown that this is possible as they both currently trade under $2.50 a share. It is highly unlikely that most of the American public could have guessed this to happen so quickly.
Could Bank of America be the next bank to go under? The answer is no as the United States government will not let that happen. The government will nationalize the bank before it goes under as there are way too many assets that are held by Bank of America. If all these assets vanished, this country as we know it would cease to exist.
That leaves you with three options: buy, sell or hold. If you are a former Bank of America employee who hopes to see the stock back to its better days, do not “bank” on it as it will not happen in our lifetimes. The company as a whole has too much exposure to subprime mortgages and intensified these problems by purchasing Countrywide. If these mortgages were not being paid at the beginning of this recession, how is it possible they are going to be paid after there have been several hundred thousand layoffs in the last month alone.
To be completely honest, you would be hard pressed to convince me why you should hold any bad bank stock right now. The only bank that has a solid chance of gaining any profits in the near future is Wells Fargo and some of the smaller, rationalized banks that have absolutely no subprime exposure. We have determined that you definitely aren’t buying. So should you sell or hold?
For many of you, I am sure it is going to be very hard to sell a stock that has gone down over 80%. The common psychology is that it must come back, especially if it is one of the great American companies. Well, those of you who lived through the 1970s know that just because you were once a great American company doesn’t mean you will survive into the future. It is quite possible we could see Ford, GM, Chrysler, Bank of America and Citi all file bankruptcy in the next 12 months. This is not mentioning the many home builders and retailers that are likely to go bankrupt as well.
Ultimately, if you haven’t gotten out yet, it is best to get out now as the financial industry is only going to get worse for a few more years. It is honestly hard to think about Bank of America and Citi as stocks under $1 but who would have ever thought Fannie Mae and Freddie Mac would trade under fifty cents.
Bank of America Tender Offer – What to Do?
Bank of America is going through with a non mandatory reorganization or tender offer to its shareholders of 99 shares or less. Isn’t this just like Bank (RUPT) of America to try to weed out the little guys so they can let the “high rollers” bask in the glory. Every day, Americans must regret working with this bank. Who really knows what will happen in the future but as a shareholder, it is a very hard decision to take a tender offer which is one of your options. The tender offer is often at a premium of the current price, but if you have held this stock for more than a month, it would have to be an extremely high premium to get any gains out of this.
We can only hope, for the shareholders, that things get better. Maybe Mr. Lewis and his group of misfits will figure things out, but that is unlikely.
Great Article about Bank of America written on January 15th