Oil still Struggling, NASDAQ to 5000

Oil fell down hard today after news of supply still overstocked. This was after a rise from the slump earlier this month. I still think that oil will go up in the long-run back to previous levels but it will be a volatile and rocky road there. I have enjoyed the cheap gasoline at the pump but know that it is a temporary price. A good move will be to take advantage of the cheaper gas now and invest in companies that have been hurt like Exxon and Chevron.

The NASDAQ is closing in on 5000 points around thirty points shy. It's very close to its all time high and one that has not been seen in fifteen years.  Apple has certainly carried it up to the heights it is at now. Once it passes this milestone again will it go up or will it scare investors that the market is overvalued. Earrings at record levels and good prospects on the economy this year point to a great sign that the markets will continue to go up and up. Companies are getting stronger and will attract people to invest in the market. I've invested in this market.

The Market Is Down Again

The market has had several days of losses. It has started high and then nosedived or just started down and never goes positive. This will scare many people from the market and could get people to stop investing or pul money out. This is the wrong strategy. Money should be going into stocks. They are still a great buy and certainly have room to go up even higher. Not only do third year terms for presidents always outperform the average but companies are still profitable.

Companies have changed their outlooks and some companies earnings have missed. Many companies are still strong though and will do really well once the oil is more stabilized and consumers have money to spend from saving at the fuel pump.

At this time I am still strongly a bull and believe the market will shake off these early year jitters. In full disclosure, the Christmas season was not as strong as I expected. It did not have the increase in December spending but a decrease. I cannot always be right but it does seem that consumers had money. The consumers did not spend their extra cash. I think they will spend it and some were probably waiting for the deals after Christmas.

Happy Investing in 2015 may it be profitable.

Need to Make Money

The CEO of BlackBerry said "We need to make money" today in an interview. Well of course the company needs to make money. If not it will not exist as a company anymore but will go to the corporate graveyard. I understand he was saying that his company needed to find new ways to make money and cut costs but it was still an obvious statement. He should have phrased it better. It's almost like when the commentators in a sports competition say that the team to win will need to score more points. Duh, that's how one normally wins games. Obvious statements should be avoided from management. It makes it seem like they don't know the finer points and are just into saying the basic statements which do not put trust into the company. Instead it distracts and in my opinion shows that they are peddling nothing new and have nothing to contribute.

Management steer clear of silly responses it will lead no where. To really instill confidence come up with new things. It will show you are truly doing analysis and understand the business.

The Great Number Eight: General Electric

I really like the products the General Electric produces, it has wide interests and a large industrial player. This is just one reason why I'm including it in the index. The management team is superb. Jeffery Immelt leads from the front and can change GE to a leaner machine than what it already is. The stock is still fairly valued and revenues will grow along with stable dividends.

Immelt has been with GE since the early 80's and knows the company intimately. He instills courage and awe among the employees, convincing them that his path is the right path to make GE stronger. He has created with other executives a strong C-suite that can keep pushing the monolith of GE forward. GE is not afraid of change and is willing to subtract parts of the business that do not fit in with the image.

Overall a great company and one that will be a great pick for any portfolio.

Update on the WML

Sorry folks for never completing the 30 stocks in the WML index but I have been somewhat busy with a new job and just other things. Here though is an update on how well the index has done over the past 5 months.

If you invested in the five stocks I recommended and added to your portfolio you would be up around an average of 9.48% since the start if you had the same amount in each stock. While it might seem that I only had four stocks I'm going to count GoPro as one because I would have put it in the index earlier but it wasn't yet trading.

Hopefully I can add the other 25 or so stocks soon and of course share my reasoning of removing or adding stocks. I don't think I'll remove one of the five just yet.

Happy trading

Diversification into Foreign Markets

For the modern investor it is necessary to diversify risk with bonds, cash, stocks, and other forms of investments. This does not mean putting all your eggs in one area of the world. There are opportunities for expansion and great reward in other markets besides your national one. It decreases risk because one area might be struggling with higher inflation and the other country is booming. Now when investing it is still prudent and wise to go ahead and research everything you can about the foreign firm and how the market operates. Due diligence is a must. It is still your money and information is out there about these firms. Just because it is in a different local does not suddenly make it a fountain if wealth or even the exact opposite of what is happening at home.

Foreign companies can be valued differently. A company in the US has average price to earnings of maybe 18-20 while in Eastern Europe it might be closer to 4 or 5 because of the known corruption that will take place. So because it might look like a bargain with American eyes an investor has to put on the correct lenses to value and understand the company.

The investor should also not put more than 25% in foreign stocks and bonds. You want to be well diversified but the home turf is still the better place to invest. It saves transactions costs and the possibility of losing the money with a sudden change. The Ukraine recently had a revolution and those old bond investors might not have a claim to money anymore. Things can happen rapidly and too much abroad might hinder your overall return.

That being said lower risk with probability of higher profits is always a good thing. Investing in foreign markets is an easy way to diversify risk and boost return. Happy investing and start researching those new firms.

Bad February…Not yet

Does the Dow dropping 2% and the S&P dropping 2.5% mean that we will have a terrible year? It could definitely mean that the market will not do as well as its fantastic last year. I believe that this market is just showing people being cautious in a new year with Fed tapering and skeptical of the market return from last year. The market's return last year was Dow gained 26.5% and the S&P returned 29.5%. Way above historical averages so it makes many investors hesitant about the next year and many think a bubble has formed. The market has several factors pushing it down, people taking profits, a new Fed Chairman, and a possible idea for a bubble. This year though is not 2008 or 1929.

So many companies had such a great fourth quarter/Christmas season. They beat expectations in earnings and returned high profits. A few big names with high bars on earnings fell flat but this was not due to poor economic conditions. It was mostly changing tastes, weather related, or poor execution. Companies sometimes do not do well in a quarter it does not mean that a bubble has formed in stock assets and everybody needs to convert to cash.

You can try and beat the market but I know I cannot beat the market so I remain in my positions and trust that the economy is strong. The economy collapses in a manner that all companies go under it won't really matter that much that you have cash because it would be worthless. Take head and do not get too caught up in the wildness and scare tactics of the market. Remain strong and stick to your investment plan that you know works.

The market I think will still be up this year or just slightly down. Companies are doing great and the economy is doing better. Although with stocks being down this week it would be a good time to get in to investments that might have been expensive last year or rearrange your portfolio to a new balance. Continue making wise investments, studying and choosing.