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Investing With The Glass Half Full

June 17, 2011 by Jon

Market CorrectionsOne of the hardest things to do with money in the market, is to hold on for the ride.  The easy way out is to simple sell everything and curse the day you thought you could make money in the market.  I’m not surprised that some people may feel this way.  I think too often, people expect their money to only go up.  But after ’08, I wouldn’t blame you for taking your money and going home.

People saw 30%, 40%, even 50% or more losses in less than a year.  Something most people never experienced and for some, should never have been in that position.  It’s one of the major faults with a 401k.  Even though many people have a good understanding of how to invest, there’s even more that don’t, yet are pushed into it blindly by their own retirement plans.

The stock market isn’t built for everyone.  To paraphrase Warren Buffett, people who can’t handle a 50% loss in their stock’s value, shouldn’t own stocks.  There has to be an emotional disconnect between you and your money.  It’s the only way to maintain sanity.  But is easier said than done.

When the market collapsed in Oct. ’08 most people eventually took their money and ran.  Fear set in, which caused a bigger sell off, causing even more fear, and more selling.  Until it finally bottomed in March ’09 with the Dow around 6500.  People took the pain all the way down until they couldn’t take it any longer.  They finally got out of the market, but it was at the worst time possible.  Right near the bottom. Continue Reading…

Long Term Profits From Cyber Attacks

June 10, 2011 by Jon

Cloud SecurityIt seems that hacking data networks has become the new fad recently.  With companies like Google, Sony, Nintendo, Lockheed Martin, and most recently Citibank, it appears that, with the exception of Lockheed Martin, the attackers are going after customer data.  All this coming at a time when the internet is experiencing an evolution to a wireless, mobile (or cloud) network.

It’s a potential one step forward, two steps back moment and companies will need to start spending on their security in order to keep customer confidence up.  Especially when most people, myself included, don’t really understand the how, where, and why these cyber attacks are possible.

The Corporate Perspective

Big business has been turning to the “cloud” to do business and maintain their data.  If you haven’t heard of the “cloud” yet, it’s a broad term covering the evolution of the internet that allows corporations to store data, applications, programs, etc., on a virtual server.  It allows both big and small businesses to have the use of all the new technology, without the cost of buying the new hardware.

Corporate spending will continue to be the bulk of the revenues for security companies.  The more businesses that turn to the “cloud”, the more security that is required to protect those companies.    With the latest cyber attacks hitting some major corporations, the spending will only increase to protect brand names, and keep them out of the headlines.  Combine that with the fact that the “cloud” is still at the early stages of it’s life cycle, the technology to secure the “cloud” will continue to evolve. Continue Reading…

Stock Basics: How Does The Company Make Money?

June 2, 2011 by Jon

Business SummaryThe best advice I’ve ever heard regarding investing is if you don’t understand the investment don’t put your money into it.  Similar advice can be said about stocks and is the philosophy of some of the greatest money managers.  If you don’t understand how the company makes money, don’t buy the stock.  It’s a pretty simple idea, but often overlooked.

By knowing how a company makes money, it becomes much easier to understand what will help and hurt a company when the facts change.  Higher oil prices, for instance, may be good for an oil company, but bad for transportation companies.

If we are researching McDonald’s Corp. (NYSE: MCD), the next step is to find out how the company makes money.  Head on over to your favorite research site and look for the company profile section.  Digging through this information is the best place to start your research. Continue Reading…

Stock Basics: Stock Price Summary

May 27, 2011 by Jon

The stock price summary is the first information you see when researching a stock.  Whether you use a free site like Yahoo Finance, a premium research site, or just your online broker, this information defines a stock every day.  And is a great place to start a “Stock Basics” series to show how to sift out the important information when doing your own stock research.

The stock price summary is simply a quick overview of a stocks performance.  It tells us where the stock is at right now, what it has done for the day so far and over the past year.

The goal of this initial research is to eventually find a stock that is going to make us some money, from either a rising stock price, dividends, or both.  We thought we’d use McDonald’s Corp. (NYSE: MCD) as an example since its a well known company.  A few questions we might want answered are where is the stock price at now?  How close to it’s one year high is it?  Does it pay a dividend?  And what’s the yield? Continue Reading…

Defining Large, Mid, and Small Caps

May 12, 2011 by Jon

Market CapYou see the terms large cap, mid cap, and small cap when describing a company, mutual fund, or ETF. What do they actually mean? How do they impact an investment strategy?

The “cap” portion of these terms is short for market cap or market capitalization. A company’s market cap is the total market value of a company. This is found by multiplying the stock price by the total outstanding shares of the company.

What is a Large Cap?

Large cap refers to the largest companies traded on the stock market and have a market cap of $10 billion or more. They, also, tend to be the most followed by analysts and investors.

Historically, large cap companies experience a slower growth rate and have less risk due to their size and stability. Because of this many large caps are given the Blue Chip designation. A few well known large cap companies include Microsoft, Walmart, Amazon, and Nike. Continue Reading…

How Much Is Enough For An Emergency Fund

April 28, 2011 by Jon

Emergency FundHave you ever had the small misfortune to wake up, take a shower, but have no hot water, or where you’re driving to work, only to get a flat.  You hope these problems are just a quick fix.  But when they’re not, you know it’s going to cost more than you want to spend.  The good news is you have an emergency fund set aside just for these situations, right.

When these unplanned problems show up, it’s easy to turn to a credit card and slowly pay it off each month until the next big surprise happens.  Of course paying off the extra debt won’t be fun and if it piles up too high, credit cards no longer become an option when the water heater craps out or worse, there’s a job loss.

How Much Should Be Save?

Financial experts give a wide range for how much should be saved for an emergency fund.  A starting point is 4 to 6 months of basic expenses.  With the recent recession, some experts go as far out as 9 to 12 months. Which may be a bit excessive. Continue Reading…

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