Ted Allrich is the founder of The Online Investor and author of the book: Comfort Zone Investing: Build Wealth and Sleep Well at Night. In this weekly column, he'll offer advice to investors who are just getting started.

Many stocks are paying dividends that give very high yields. It's tempting to buy a stock based solely on the yield, say 5% or more, when bank CD's are giving 2% or 3% without any potential for capital gains (or losses). But looking at just one number is never good enough. If you're after income, then by all means consider stocks, but be sure the dividend is safe.

First, look at the relative yield. In today's market, the average yield for Value Line's universe of 1,700 stocks is 3.6%. That universe includes almost every actively traded and/or large cap stock so it's a good benchmark. That means, on average, stocks that pay dividends are paying out a yield of 3.6%. As with all averages, it doesn't mean much for the individual stock you may be investigating, but it does show an average yield to which you can compare your stock's yield.

Ted Allrich is the founder of The Online Investor and author of the book: Comfort Zone Investing: Build Wealth and Sleep Well at Night. In this weekly column, he'll offer advice to investors who are just getting started.

... wait until deflation hits the economy. That's when prices go down instead of up. What could be wrong with that? Plenty.

When there's inflation, people scramble to buy things now, right now. The overriding psychology is that prices will go up forever so buying something has to be cheaper today than it will be tomorrow.

Ted Allrich is the founder of The Online Investor and author of the just released book: Comfort Zone Investing: Build Wealth and Sleep Well at Night. In this weekly column, he'll offer advice to investors who are just getting started.

In today's market it seems every stock is a bad stock. Doesn't matter what you buy. It goes down. But I'm not talking about good stocks caught in a bad market. This is about bad stocks with no earnings and no real prospects, the ones with great stories but nothing else. Lots of promise, but no profits.

There are lots of bad stocks, many more than good ones. Any prudent investor should avoid them. But most of us don't. There's always a story that seems so compelling, so right, so possible, that many of us buy a bad stock even though it has no earnings, or racked up huge losses. It's only human to hope for the best even when the facts tell you the odds are against success.

Ted Allrich is the founder of The Online Investor and author of the book: Comfort Zone Investing: Build Wealth and Sleep Well at Night. In this weekly column, he'll offer advice to investors who are just getting started.

No one knows what will happen as we stumble through the worst economic mess since the Depression. Yes, it's that bad. We're in a financial maelstrom that is setting new records, bad ones, like 800 points down in one day before rallying back a little to the relief of no one. How will all of this play out? What will be left on the economic landscape? Here's how I see it.

The stock market will eventually stop dropping. Profound I know, but it's a start. What will be unusual is that there won't be a large bounce once the bottom is found. That's because fear and greed drive the market, and fear is so overwhelmingly in control now that greed will have a hard time taking back the wheel of the economic car. As the old saying goes: when fear comes in the room, reason goes out the window. Fear is in the room. Don't expect it to leave any time soon.

Ted Allrich is the founder of The Online Investor and author of the just released book: Comfort Zone Investing: Build Wealth And Sleep Well At Night. In this weekly column, he'll offer advice to investors who are just getting started.

You may not follow the ongoing drama, the one about Freddie Mac (Federal Home Loan Mortgage Corp.: NYSE: FRE) and Fannie Mae (Federal National Mortgage Association: NYSE:FNM).

You probably see the headlines about problems each has, maybe wonder what the fuss is about. Since you don't own the stock or the preferred or any of the debt, you don't really spend too much time on it. You've got your own stocks with problems, or you've just got enough problems without any stocks.

Ted Allrich is the founder of The Online Investor and author of: Comfort Zone Investing: Build Wealth And Sleep Well At Night. In this weekly column, he'll offer advice to investors who are just getting started.

You may see a recommendation to "overweight" a stock or sector. An analyst is bullish on a stock or group and feels buying more than usual will be rewarded. It may or may not come true. While it's a good idea to overweight at times, it should never be done in excess, to a point where you're putting too much of your portfolio in one stock or group of stocks. That's when overweight turns into speculate.

A rational approach to building a portfolio is to have at least five different sectors, ones that aren't correlated. There are different definitions of sectors but there are usually between 10 and 15, depending on what publication or expert you use. These sectors are categorized into broad groups, such as Healthcare, Technology, Manufacturing, etc. Within each sector are many industries. Value Line defines 98 different industries, ranging from Coal to Auto Parts to Water Utility to Beverages. Healthcare, as one example of a sector, has pharmaceutical companies, hospitals, medical devices, anything associated with health. Technology has a broad spectrum as well, encompassing everything from computers to wireless communication.

Ted Allrich is the founder of The Online Investor and author of: Comfort Zone Investing: Build Wealth And Sleep Well At Night. In this weekly column, he'll offer advice to investors who are just getting started.

One outstanding opportunity in a stock market hammered as hard as this one is that great stocks are on sale. Many of the best known, best-earning companies are trading at valuations not seen in decades. That's the good news.

The bad news is that many stocks most of us own are way down, trading at levels well below where we bought them. In order to buy anything else, we have to sell what we have for a loss. Most of us can't do that, can't stand the pain. Get over it. Sell some of your worst losers and buy some of the great names.

I can hear many of you now: But Ted, you don't understand. I bought this stock at $10 a share and now it's trading at $1. I'd lose 90% of my money. I do understand. I've done it. Several times. That biotech I was sure was going to cure (pick one): cancer, malaria, the common cold, bursitis, arthritis, dandruff, ear wax, split ends, etc. Somehow they never came through except in their need for more money. They were always so close. Management just needed a little more time and a lot more money.

Ted Allrich is the founder of The Online Investor and author of the just released book: Comfort Zone Investing: Build Wealth And Sleep Well At Night. In this weekly column, he'll offer advice to investors who are just getting started.

Preferred stocks are much like squirrels. They don't live on the ground. They don't fly in the air. They're always somewhere in between. A preferred is like that. It's not equity in a company. It's not debt of a company. It's always somewhere in between.

That state of being, being in between, sometimes pays handsomely to investors. Other times, it leaves them totally isolated, with nothing to show for their investments. Here's how preferred stocks work, and why they're really for institutions, not individuals. Still, individuals may find them irresistible when they see some of the yields these hybrids offer.

Ted Allrich is the founder of The Online Investor and author of the just released book: Comfort Zone Investing: Build Wealth And Sleep Well At Night. In this weekly column, he'll offer advice to investors who are just getting started.

There are clearly some banks, thrifts and other financial institutions doing better than others. That became clear in the most recent earnings releases. Wells Fargo & Co. (NYSE: WFC) showed a profit. True, lower than last year but that was expected. What wasn't expected was better revenues and lower losses. JPMorgan & Chase & Co. (NYSE: JPM) had a similar story. So did Bank of America Corp. (NYSE: BAC). Citigroup (NYSE: C) gave better than predicted numbers. Those were the good announcements.

Not doing so well is Wachovia Bank (NYSE: WB). That loss was much larger than analysts projected. The bank cut the dividend, as expected. The stock gave up more ground.

Ted Allrich is the founder of The Online Investor and author of the just released book: Comfort Zone Investing: Build Wealth And Sleep Well At Night. In this weekly column, he'll offer advice to investors who are just getting started.

We are heading for a crisis of confidence, confidence in the core of the U.S. economy, the capitalist way of life, starting with financial institutions and permeating every other industry from autos to homebuilders. Investors wonder if institutions as we know them will survive. Will foreign firms buy every American company? Or will they dry up and blow away? Will all the banks shut down? Stock prices suggest many investors are thinking maybe all of these will happen.

And why not? Ford Motor (NYSE: F) announced it won't introduce a new F-150 truck, the best selling truck of all time. The reason: there are acres and acres of old F-150s sitting on dealer lots that no one wants. General Motors (NYSE: GM) is shutting truck plants longer than usual since very few of its big moneymakers are moving off lots. Homebuilders are showing huge losses and all of them say there is no light at the end of this dark tunnel. Bank news gets worse each day, with headlines screaming that we aren't near to knowing how bad this mortgage and credit crisis really is.

There is no shelter in this storm. Everywhere investors look, they see more dark clouds. Most of them believe that it gets darkest just before it get pitch black. Is the American dream gone, turned into an economic nightmare, the likes of which we haven't seen since the Depression?

Hardly. During the depression, over 30% of the workforce wasn't working. Prices were constantly going lower as fewer and fewer goods were sold. All the banks were shut for a "Bank Holiday" for three days shortly after Roosevelt was elected. People were roaming the country, looking for a job, anything to keep food on the table for their families. If the American dream were going to die, it would have done so in the late 30's and early 40's. But it didn't.

Ted Allrich is the founder of The Online Investor and author of the just released book: Comfort Zone Investing: Build Wealth And Sleep Well At Night. In this weekly column, he'll offer advice to investors who are just getting started.

Last week I wrote about what might happen if gas continues its seemingly inevitable march upward, maybe reaching $10 a gallon. There will be changes in our lifestyles, major changes. Some companies will benefit greatly, others will simply go away, unable to evolve with the new reality. Here are more industries that will be affected.

The airlines, at least the ones left, will fly smaller planes, more fuel efficient. They'll be full, every one, every time. They may not take off unless they are. Some cancelled if they're not booked up 12 hours in advance. Expect more hassles at the airport, more charges and fees for whatever airlines can imagine. (How about charging by the pound? Passengers get on a scale, then pay at the counter based on their weight.) Seat space will get even smaller.

Ted Allrich is the founder of The Online Investor and author of the just released book: Comfort Zone Investing: Build Wealth And Sleep Well At Night. In this weekly column, he'll offer advice to investors who are just getting started.

Things are different now. Gas is more expensive, way more expensive. You used to fill a car for $20 (way back in the '60's it was $5). Now it easily costs $80 and is going higher. What does this one thing suggest will happen, not only in the U.S. but globally? The ramifications are huge. Some companies will benefit. Others will be crunched under the wheels of evolution as the inevitable occurs.

First, let's go to extremes. Say gas costs $10 a gallon. It's already close to $5 here in California. Give it a few more weeks, especially around the 4th of July. It'll break $5 and keep going. Some people have already started to adapt to the new reality. They're buying cars that get better gas mileage, dumping SUVs or big cars that slurp gas like it's a buck a gallon. So the first group of companies to benefit will be the ones making the most fuel efficient cars. That started happening about a year ago as Toyota couldn't make enough Priuses to keep up with demand. Now GM and Ford are trying to move as fast as possible to get out electric cars and/or hybrids. Do they have enough capital to make the transition?

Ted Allrich is the founder of The Online Investor and author of the just released book: Comfort Zone Investing: Build Wealth And Sleep Well At Night. In this weekly column, he'll offer advice to investors who are just getting started.

Merrill, Lynch (NYSE: MER), Lehman Brothers (NYSE: LEH) and Morgan Stanley (NYSE: MS) are on the watch list at Standard & Poor's, the ratings agency that can make raising money very expensive for companies that get downgraded. Of the three, Lehman appears the most shaky with many expecting it to report a loss for the first time since it went public. Word is that the firm is trying to raise $3 billion to $4 billion to keep its capital base healthy. It's out there competing with many banks and insurance companies working on the same thing. Merrill Lynch already has its money in the bank but may need more.

The real problem all these firms have, along with all financial institution money raisers, is that they are loaded with securities they can't sell. They're called mortgage-back securities or Collateralized Debt Obligations (CDO's) or SIV's (Structured Investment Vehicles) or some other acronym. They all mean the same thing: no buyers anywhere at any price. It reminds me of the high inflationary days of the 70's when selling a 30-year bond was impossible. The joke was: What's the difference between a long term bond and VD? You can get rid of VD.

Ted Allrich is the founder of The Online Investor and author of the just released book: Comfort Zone Investing: Build Wealth And Sleep Well At Night. In this weekly column, he'll offer advice to investors who are just getting started.

Consumer Confidence came out. It's at a 16-year low. Oil is taking a breather as this is written, off its all-time high of $133 recently. No one thinks it's going back to $100 or lower. Not ever. There's too much demand from China, India and Brazil for that. Housing stats are enough to induce stomach problems with first quarter prices down 14.4% from the same quarter last year. They were accelerating downward as the quarter ended, setting up for a miserable number for this quarter.

On the political front, the Democrats are locked in a battle over their nominee, both of whom want out of the Iraqi war but also want to raise taxes on higher incomes. The Republican nominee wants to stay the course in Iraq but wants to keep taxes low. It's the usual splits about taxes, government vs. private enterprise. It doesn't matter who wins, change is coming. Most likely the candidate that can offer resolutions for the high cost of gas and food will get most of the votes. Neither problem is easily or quickly solved. And certainly not by a legislative fiat. But incentives can come from Washington.

Ted Allrich is the founder of The Online Investor and author of the just released book: Comfort Zone Investing: Build Wealth And Sleep Well At Night. In this weekly column, he'll offer advice to investors who are just getting started.

While lenders and builders have been cruelly battered by a real estate market that seems to have no bottom, there's another industry group that suffers as much if not more: the newspaper business.

First, newspapers were hit by the Internet, taking readers faster than rebate checks are spent. Now it's real estate ads, and their complementary advertisers such as home furnishings. Another weak advertiser: automobiles. All ads have decreased to a point where some publishers are laying off employees every month, trying to cut costs fast enough to offset lower revenues.