There is never a shortage of jobs. Some people have two or three jobs. The classified adds have thousands of jobs all the time -- always. If someone is unemployed there is a reason and it is definitely not a lack of jobs.
Sometimes it is a regional lack of jobs, General Motors (NYSE: GM) and Ford Motor (NYSE: F) in the rust belt states of Michigan and Ohio have downsized, but foreign manufacturers Toyota (NYSE: TM) and Nissan Motors (NASDAQ:NSANY) in the Southeast have up sized. This does not help the states where jobs are leaving, and indeed causes other massive problems like weakening the tax base and pushing housing and other elements of the local economy down. However, from a national unemployment standpoint that does not count.
In our discussions of unemployment and the economic picture we attempt to understand the government figures and attribute some meaning. We know the government is prone to put things in their best light (lie) sometimes and there is discussion about what a true measure would be, but does that really matter? It is more important that whatever criteria is used remain constant so that we can use the data for comparisons, not that it be altered often as people become concerned about the exactness of the figures.
It might be time we need to account for a new set of metrics. What are the costs of retraining? How could these costs be distributed without expanding government -- not something I would support. We know that some people are not employable or are only marginally employable because they simply do not have the capability to do many jobs. I have numerous jobs, although generally speaking, I have created them myself over time. Clearly education and training are a factor, along with over all aptitude.
Most investors buy stocks by simply putting in a market order and hoping for the best. That means they'll pay whatever the offer (or ask) price is for the stock. There are a couple of things wrong with this approach. There's a much better way to buy stocks that saves money and makes more money when a stock heads higher.
Here's the problem with buying at the market: you're paying a price set by someone else, and you may not buy all your stock at the same price. Furthermore, if you're looking to buy 1000 shares and buy it all at once, you're betting a stock is at its low, that it will go up from your entry point. Most likely, that's not the case.
Let's start with the price of the stock. If you've done your homework, you should determine what you're willing to pay for a stock. Whether that's from fundamental or technical analysis or both, you determine what's a fair price. Once you know that, and are comfortable with your price, put that price in as a bid. Most likely, it's not where the stock is trading when you decide to enter your order. So put in your order below the market and wait for the stock to come to you.
Every investor I know is hurting. Doesn't matter how great they were in years past. They're all stunned at the hammering in their portfolios. The smart ones are doing two things now: they're moaning, along with the rest of us, and they're doing research to find bargains they haven't seen in decades.
We all know about stock bargains: they look great when you buy them. Some of them do well and bounce back. Others get to be even better bargains, then hit the clearance bin before they become totally worthless. The bargains I'm suggesting here are the ones that have the best chance of bouncing back. How can you tell?
In the midst of all the bad news it's hard to imagine the stock market ending the year higher than it started. However, that is entirely possible and probably much better than a 50/50 bet. If you want to play it safe consider buying into an index fund or exchange traded funds (ETFs) instead of banking on individual stocks.
For broad coverage you cannot beat the Vanguard Total Stock Market or the Total International Stock funds with the lowest fees and longest history in this area. I think it has also been generally accepted investing strategy over the last few decades that in bearish markets there is a run to quality and "guns and butter" stocks. If you were to follow this old adage you would be considering three sectors, healthcare, defense and consumer staples.
Mutual funds and ETFs (with less history) are less volatile and offer greater diversification than most investors could achieve, and at much lower cost. If you dollar cost average over the next few months you should also be able to smooth out some bumps in the current market.
When the political machine goes to work to juice the economy the market has most often responded positively. That does not mean it's smart for the country, but since when is a politicians first thought about the country.
Large-company stock prices have tumbled 13% in three months. Small-company stocks have done worse. The ratio of share prices to company earnings ("P/E") is the lowest it has been in more than a decade. But is it low enough to make the broad market cheap?
That depends on how you measure. Over the past 135 years, stocks have carried an average P/E of 15.1, based on trailing 12-month earnings. (I'm using data provided on the websites of Yale economist Robert Schiller and Standard & Poor's.) As of the close of trading Thursday, the S&P 500 index, which more or less tracks the stock performance of America's 500 largest companies, had a P/E ratio of 16.6. Viewed like that, stocks look a smidgen pricier than average.
Remove special charges for things like bad loan write-downs from the past year's earnings, and the result is a more alluring P/E of 14.9. Whether that's a fairer number or not is a matter of opinion. But if we were able to apply the same tactic to 135 years of corporate accounting, we'd surely end up with a lower historical P/E, too. That suggests again that stocks are pricier than average, but not worrisomely so.
I saw an article on the best performing stocks of 2007. Very helpful if you read it in January ... of last year. Doesn't do any good this year if you're looking to buy stocks. In fact, those stocks should probably be avoided just because they had strong gains.
Here's the deal: stocks that outperform in one year will most likely underperform the next. That's because whatever made them hot has been factored into the price, or the "hot" factor has cooled. For example, when a biotech stock announces it has approval from the FDA to sell a drug, the stock goes way up ... for a while. Then investors dig in and determine exactly what the market for the drug is, how much of the drug will sell at what price, the ability to management to deliver the drug, etc. There is a limit to how much the drug will make the company. When cooler heads prevail, and those numbers are crunched by many investors, the selling starts. Most "hot" stocks will outrun their true value because emotions take over. Greed grabs the wheel and drives. Conversely, stocks crash much lower than their true value when the news is bad because fear takes over, and common sense flies out the window.
A new year always holds great promise. Resolutions are made. Intentions are strong. Still each year, as the days pass, resolve wanes and soon we're back to our old ways. This year be different. Here's a chance to make some investing resolutions, act on them, and have a positive impact on your wealth.
First, pay off credit cards. This is the one of the strongest investments you can make because credit card debt can hit as hard as 18% or higher. Very few stocks make 18% or better. The average return for large stocks is 10% a year, for small stocks 12%. You do the math, and you'll find a focus on paying off credit cards is best.
Second, fund your matching IRA program at work on January 1, if you can. This truly is free money. If your company matches your contributions to your retirement account, the sooner you get that money (and yours) working, the more money you'll make. If you earn 7% interest from January 1st, by the end of the year, you'll have more money than if you start on Feb 1 or April 15 or any other, later date. Get your IRA funded as a priority, even if you don't have a matching program with your employer. You'll earn more on the contribution the sooner it's made.
In Sunday's New York Times, Mark Hulbert wonders whether they're still good for investors. According to Hulbert: S&P focused on those companies within the S&P 500 index that repurchased shares between the beginning of 2006 and June 30, 2007 - a total of 423 companies. It found that, as of Sept. 30 this year, 320 of them - or 76 percent - would have been better off had they not repurchased their shares and instead invested in an index fund benchmarked to the S&P 500.
There are a number of possible reasons for this: companies may be buying back their own plummeting stock in desperation as insider options fall farther and farther out of the money. For instance, Countrywide Financial (NYSE: CFC) actively repurchased stock, even as its CEO dumped huge numbers of shares and the company's prospects weakened.
TheStreet.com's Jim Cramer says this also-ran defensive stock keeps climbing, and that signals a recession.
Colgate Palmolive (NYSE: CL) (Cramer's Take) is menacing. That's right, its action is downright menacing, because it is one of my absolute favorites when I need an indicator of what the market is thinking.
And this stock's action is screaming "Recession." Can one stock be so important? Indeed, if anything, this is the "perfect" security, the also-ran to Procter & Gamble (NYSE: PG) (Cramer's Take) that, without a recession, would be too dicey and marginal to make a bet on.
Several weeks have passed and I still can't help thinking about how tough it is to invest in individual stocks and how many ways there are to be blind-sided. When the Board of Citigroup (NYSE: C) finally asked for the resignation of CEO Chuck Prince at an emergency Sunday meeting, after the company announced that an earlier released figure of a $6.5 billion write-down was actually going to be $11 billion, were they surprised of just disgusted?
Was that the last straw or were they in the dark as to the magnitude of the losses. As investors we have to consider a vast array of issues to determine if a company is worthy of investment. I know most people do not, but lets give them the benefit of the doubt and say they do. So you look at the sales and services offered, the quality of management, the various performance metrics like P/E, P/S, P/B, ROE cash flow, debt and more. You may look at the macro economic environment, interest rates, even the weather but in the end what do you know?
After you analyze everything you can get your hands on you are still just giving it your best shot (in the dark) and hope for the best. If the Board of Citigroup can't keep track of it's own company, its management structure, its risk analysis and it's exposure to major market conditions that will greatly affect the company, how are we supposed to?
Just one more good reason to stay diversified. If you are not, you should give that as much consideration as you do any individual investment. Was the Citigroup Board really in the dark? I don't know, but you should not allow yourself to fall prey to their folly.
Sheldon Liber is the CEO of a small private investment company and the principal for design and research at an architecture & planning firm.
Financial institutions continue to struggle with subprime mortgages, but the homebuilders have their own battle: tight credit and wary buyers. While builders target different markets from entry level to luxury in order to define their niche, when no one's buying, it doesn't matter. Sales aren't happening across the housing spectrum.
According to a recent survey done by Bank of America, real estate agents are all saying the same thing, no matter what part of the country they're showing houses: traffic is lower than expected, and buyers are waiting, thinking the bottom isn't here. There is anecdotal evidence that things are even worse than that.
Six months ago I got all excited about "My pal Warren's" little company and decided it was due for another run when I posted Chasing Value: Berkshire Hathaway -- the time is now . Every investor who is in the market for a while gets to know some companies better than others and this is one I own and have been following for some time. This stock is a Triple-A, large cap that has trounced most everything else for quite some time. However, what suprises me and allows me to make money on it is the frequency with which Wall Street under-appreciates Mr. Buffett and under-values his company. The following is an excerpt from the June post.
Ooooh yes, Berkshire Hathaway (NYSE: BRK.B) is a value, and it will be all the more so if this market takes a summer swoon, or global markets shift, or big caps take the lead. If you are just starting out and want to have a diversified solid foundation, this is a good stock to start with. You will also be a part of a special club receiving the golden words of Buffett in the annual report, although they are on the BRK website for all to see already.
In August when things were becoming a little more dicey I posted Serious Money: Safe havens -- T-Bills or Warren Buffett? stimulated by the notion that T-Bills had very limited value. Shareholders and long time Berkshire watchers are well aware of the stock pattern for BRK.A / B, it trades in a very tight range for several years while all the while it's earnings are growing, P/E shrinking, and shareholder equity and book value build-up becoming more tempting until the cork pops off the bottle. On June 11, 2007 when I started ranting about the opportunity you could have bought "B" shares for $3,612. Yesterday it closed at $4,905 for a six month gain of 35.8%, or you could have accepted about 2.4% on the T-Bill over the same period -- "guaranteed".
Just in time for the holiday shopping season, Stockerblog has released its list of 100 investment books -- the site adds that these are just the last 100 books the site has mentioned in the past couple of years, but if they're good enough to discuss, that's probably an endorsement of some kind. The list contains some classics and a lot of books you've probably never heard of.
Rather than rehash all the classics that every investor worth his or her salt has read, I'm going to give a list of a few of my favorite investment books that are either new but not bestsellers or long and forgotten. Click on the title for my review:
R. Foster Winans' Trading Secrets: This is a richly-written morality tale of sorts about the insider trading scandal that ruined Winans' career.
In our quest to keep you up to date on the evolving language of business, here are some new terms it might behoove you to know:
Alcopop - Hard lemonade and drinks of that ilk that are marketed like beer, but taste more like soft drinks. Training drinks for those entering their drinking years.
Bangalored - One whose job has been outsourced to India is said to have been Bangalored.
Business theater- Bringing theatrics to business presentations, especially at trade shows. For companies who find decolletage doesn't work for them any more.
Caffenol - Drinks combing alcohol and caffeine, producing wide-awake drunks.
Dental Spa - Combines root canals with massage, aromatherapy, etc. A California invention; are you surprised?
Not funny, ha, ha. Funny as in odd. Stocks act differently between now and the beginning of next year. Some stocks move for no apparent reason. Others don't move even when news is good. Here are a few reasons why.
It's time for investors to take losses. And there are plenty of those in housing stocks, financials and biotechs. Other industries have been hit as well this year but those stand out. You'll see many of these stocks drift down over the next few weeks as investors dump them to either take a loss to balance against a gain or decide to move into other stocks, unless there's a specific announcement by a company that is good news. Even then, there may not be as strong a reponse as you'd expect.
There is never a shortage of jobs. Some people have two or three jobs. The classified adds have thousands of jobs all the time -- always. If someone is unemployed there is a reason and it is definitely not a lack of jobs.
Ted Allrich 
Ted Allrich is the founder of 
Large-company stock prices have tumbled 13% in three months. Small-company stocks have done worse. The ratio of share prices to company earnings ("P/E") is the lowest it has been in more than a decade. But is it low enough to make the broad market cheap?
TheStreet.com's Jim Cramer says this also-ran defensive stock keeps climbing, and that signals a recession.
Six months ago I got all excited about "My pal Warren's" little company and decided it was due for another run when I posted 
In our quest to keep you up to date on the evolving language of business, here are some new terms it might behoove you to know:
Just how high will U.S. gasoline prices rise?
Nordstrom and Kohl's post smaller-than-expected Q1 profit declines
Oil hits record $127.43 on supply concerns, raised Goldman forecast
