stocks

Stock investing is at a very interesting juncture right now. All of the economists and stock analysts say the same thing. The financial markets are doing essentially only one trade. That means all of the assets are strongly correlated, which is an indicator that they are a moving for the same macroeconomic reasons. As you are looking for good stock investments, you need to know how to play what’s going on in the economy.

If you are a momentum investor or a position trader, this is a great time for you to find some easy strategies. If I were you, I would develop some investment strategies around the stock market, economic indicators and Fed policies. Here is how I think all of these will play out toward the end of the year.

Let’s start with the fact that quantitative easing is ending in the next week. That will cause the stock market to decline and come closer to economic numbers, which is starting to ebb right now. So here is the thing, there are a lot of very smart people out there who think that the US government, primarily the Fed, will not allow the stock market to correct to a certain level. I happen to believe that as well. It was a moral hazard of their last 3 years of monetary policies.

So if the market corrects say around 9-10%, watch for the Fed to do something. This action, possibly another round of easing or some other stimulus package, will cause the market to find it’s floor and start rising again. There are economic costs to this for sure. But as an investor, this provides some entry opportunities for you.

You basically go in at the floor of the market correction around 7-8%, looking for the Fed to make an announcement to bounce back up. They will not allow to go below a certain point.

Best Stocks for the Current Economy

The economy is uncertain right now. We saw some rising figures that were very encouraging, but it was not sustainable. Most of those positive numbers came from the government stimulus. It was bound to rebound as those policies ended. Here are some good stocks to invest in for the current situation in the markets.

Health care is a great sector right now. It is outpacing the S&P 500, the total stock market and any other sector. A good stock in this sector would be a company like Abbott Laboratories (ABT). They are a pharmaceutical company. Some of the more popular drugs are for arthritis. Those will grow in demand as our population ages over the next several years and decades.

I also like natural gas. The price of the commodity is down due to exploding supply, but I think the demand side will grow exponentially over the next decade. That means now is probably a good time to get in. If you don’t want to look into individual stocks, get a natural gas ETF. So far there is only one that tracks equities in this sector.

Utilities companies are also good for uncertain economic times. That is because you need things like electricity and water no matter what the situation looks like. It’s really the basics of life. They also tend to pay out dividends

In this sector, I like AES Corporation. They are a power generation company. Not only are they a billion dollar company, they are also investing in wind power generation. That means they are forward looking at a time when the US is looking for renewable sources of energy. As oil prices go higher due to supply shortages in the next decade, you will see wind are a viable and cost-effective alternative.

These are just some of my suggestions for current events. They are good stocks to hide in during turbulent times.

{ 0 comments }

The number one goal of stock investing is for wealth preservation. If this is not your top priority, you will not be successful. Yes, your ultimate goal should be to grow your money and get a return. But at the end of the day, you want to keep as much of the money that you make as possible.

You are a professional or you own your own business. No matter what you do for money, the idea is to make as much of it as possible. Your next step after that is to preserve it. The next step is to grow it. That is the order you should take things in. People go backwards on this all too often.

But you’d be shocked at how hard it is to preserve wealth. If you have a surplus of capital right now, you understand how this is.

Stocks May Not Preserve Wealth

Investing in stocks seem very risky right now because of the global economic situation. Recovery is slow and there seems to be fiscal cliffs all over the world. There are some good stocks to invest in right now, but you have to look really hard. In addition, there aren’t many companies that are immune to global risk.

Bonds Are No Longer Safe

Even bonds seems sketchy. Traditionally, it has been the safe place to put money. But now, with the growing deficit in the US, it may not be as safe as it used to be.

The Fed Chairman came out saying that we are on the verge of going over a fiscal cliff. The current Congress and President has done nothing to prevent that from happening.

If the US is not able to pay it’s bills, balance it’s budget or keep Medicare and Social Security solvent, your bonds are at risk.

Are Banks Safe?

Putting your money in a savings account will not preserve it. The main reason is because your purchasing power will be eaten up by inflation. Even if you get a modest interest rate out of that account, it is usually not enough to make up for inflation. In the long term, you will lose money. This is why you need to develop investment strategies to keep this from happening.

This inflation risk has never been more real. The US Federal Reserve is printing money like made and injecting it into the world economy.

That will serve to devalue the US dollar over time. This will also increase inflation, which will eat away at the preservation of our wealth.

As you can see, preserving wealth is a lot more difficult than you might think. The US is no longer the safe haven it used to be.

But even overseas investments might put your wealth in jeopardy. If you move your money into the Euro Zone, the other historically stable place to park your money, you are still putting your money at risk.

Some safe places that come to mind is Canada, Australia and Switzerland. But everybody is going to Switzerland and jacking up the currency value.

{ 0 comments }

Investing in the stock market these days might be considered a great risk. This is mainly because of the wild fluctuations in the market recently. With the sharp drops, followed by the immediate spikes, it can be hard to tell what will happen in the near future. Still, there are some companies on the market that remain promising despite the crazy chaos of the overall market. If you are considering investing in the market, then perhaps one of these five choices can provide you with a stable investment future.

  1. Potash: Considered the very best of the best in the feed and fertilizer industry, Potash is a solid stock pick and a very promising company to consider investing money into. As a solid company, shares run fairly high at about $212 each, but the forecast is that the price will continue to rise despite the dwindling economy and the inflation that will ride on its heels. While this company cannot provide short term gains, if you want total return on your equity, then this is the company to choose.
  2. Mosaic: Another farm related company, Mosaic is considered a leader in the crop nutrient and phosphate industry. Experts say that this is a stable and well positioned company to invest in due to the fact that over half of their revenue comes from other countries around the globe. Because of this, the company stands to make more money and grow faster than companies which rely on US income alone.
  3. Transocean: Known as RIG on the New York Stock Exchange, Transocean provides deepwater drilling services around the globe. With the demand for oil at an all time high, Transocean has not suffered due to the economic slowdown like many other companies throughout the Nation have. One side effect of this situation is that the company continues to grow and claim huge profits despite the current global economic crisis.
  4. Freeport-McMoRan: Freeport-McMoRan is a copper and gold mining company that boasts a very prestigious clientele and an economy of its own that can compete in the global, rather than just national, mining sector. With investments in gold on the rise, it is no wonder this company continues to grow despite the economic problems throughout the world today. Consider this stock if you are looking for a long term return on a decent sized investment.
  5. CSX Corporation: What many people do not realize is that railroads are the new transportation sweet spot. Without having to deal with the rising costs of gasoline like truck transport does, or having to worry about the inadequacy of the highway system, trains can get things there faster, at half the cost. With this in mind, experts say that there is only one way for this stock to go, and that is up.
Disclaimer: This article is not intended as investment advice. You must check with a qualified professional before making any investment decision.

{ 0 comments }