Before writing the rest of this article I will tell you what I have discovered recently that will make me wait a few months before buying any stocks. Hedge funds are collapsing left and right. They will pull billions of dollars out of the stock market for the next few months as they fall apart and die. Also, mutual funds will be sending out statements that will show 30% losses. This might panic 401k savers and normal investors alike and they will pull money out of these funds. So I expect the stock market to go down over the foreseeable future before it moves up. So read this article as if it is January 1, 2009 and see how I recommend you invest.
Now that the stock market has collapsed what should you do now. There are two ways this market might go. One is further down and more sell offs. The other is for the stock market to just stagnate around its current levels. So the best solution for this market is still the old solution, big companies with lots of cash and paying out dividends. I've always like Philip Morris(PM stock symbol) and Altria(MO stock symbol) as they pay very good dividends.
Companies with no cash or heavy in debt can't protect themselves in this market. They will have to go deeper in debt and then be at risk of going bankrupt. Cash will have dried up so any company that hasn't saved loads of money will have to pay high interest rates to borrow money. If they can't afford the high interest rates they will have to sell themselves and bargain basement prices. Stick with stocks you something about. You will be surprised how much you know. Wal-Mart( WMT ) is a good stock we all know. They will lose some market share but pick up more market share as their low prices are appealing. Proctor and Gamble( PG ) is another large stock that will do ok. They make many staples that people must have. McDonalds( MCD ) will be the inexpensive restaurant that will gain market share as people forego expensive restaurants and head to McDonalds.
Yes you must do your own research. I advise against( against I said! ) hiring a financial advisor. I've met so many people that have lost a fortune listening to financial advisors. Financial advisors charge you a lot of money and they don't beat the street as they say. You've probably heard about the monkey that threw darts on a board to pick stocks. Then they had a financial advisor pick his favorite stocks and they waited a year. The monkey won. I could go into why and how managers siphon off all the profits off and thus it is futile to try to find great companies. I recommend buying an index fund or a mutual fund if you don't have time to research your own stocks.
Some people have access to reports at their online stockbroker's website, like Schwab. I found out most analysts have slapped a sell on almost all companies so they don't look bad after missing the mortgage meltdown. The rule I live by is keep it simple stupid, and it has worked for me. I will share my research on Google and what I think about them.
Google is the #1 in Internet Search. They are expanding into foreign markets. They have great leadership and hire creative forward thinking programmers. They get many talented people applying for jobs because of their reputation as a great company. They are launching a new product, a mobile phone. So I know I will be assuming risk if the fail with the mobile phone. Google has 72% market share in Internet Search. They also have a vast amount of data on every Internet user. They are using this data to customize their advertisements and charge companies more money. When a user visits a website the company wants to know specifics about that person. They want Google to tell them the age, sex, and where the person lives. So if the person is 16-30 years old, male, and living in the New York area the company is willing to pay top dollar to advertise to that person.
This is how Google makes most of its money. A website signs up with Google. They agree to let Google show advertisements on their web pages. Lets say the website is about cars. So Google shows an advertisement for GM. GM only wants people between the age of 18-36. When a person visits the website Google checks the user and sees the criteria of the user matches 18-36 age. Google shows the advertisement for GM and the user clicks the advertisement which takes the user to GM's website and offers them 10% off a new GM car. Google charges GM $4.00 for the click and gives the originating website $2.00 for the click. Google keeps improving their system and how they target ads so I expect them to have good growth for another two years. They have basically crushed their competition. They will raise their prices for clicks and companies will gladly pay. They have so much data of kinds, especially personal data that no other company on earth has except the United States government. I will watch the roll out of the mobile phone to see how well accepted it is.
This is one example of how I research a stock. Many stocks I determine are not worth buying. Google is a rare one I liked. I researched Intel and determined they are a buy around $10. Intel has fierce competition and a manufacturing cycle that is hard to make profits in. Now I know this market is dismal and the best bet might be to wait it out. Even Warren Buffet has lost 6 billion in this stock market crash. Google should hit $1000 at some point in the next 5 years. That is 300% over todays price.
Remember, read all the articles you can find and pay attention to what they are doing.
Use Google to search for information on the company you are interested in. Find out how much money they are paying their executives. I hate to see executives making 5 million. It is a waste of company money as only a few people are worth that kind of pay.
2008 http://unitedstatesvicepresident.com . All rights reserved.
Reprint Rights: You may freely reprint this article only if you post the entire article with no changes. You may not remove the credit to and copyright notice to unitedstatesvicepresident.com. Changing the article in any way invalidates these reprint rights.
Steven Fox, a jack-of-all-trades when it comes to life.
Steven loves sports, chess, nature, science, computers, stocks/investing,
and just being curious on how everything works. Steven loves helping people and
that drives his strong curiosity. Writing articles is a great way to share ones knowledge. Steven writes for United States Vice President and Sell Sheets
The author of this article has chosen to make this article available with free reprint rights. Click here to copy this article.
Disclaimer: All information on this site is provided for informational purposes only! By no means is any
information presented herein intended to substitute for the advice provided to you by any health care or other professional
or organization.
