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.

TARP stands for Troubled Asset Relief Program. You may have heard about it, how $194.2 billion has already been given out by the agency to 317 institutions in 43 states and Puerto Rico. The Treasury is in charge and estimates that 25% of about 8,000 banks may apply for funds. But not all of them will take it. What should investors think about a bank they own that qualifies but doesn't take the money?

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.

Two emotions run the stock market: fear and greed. We've seen greed hit its apex in the late 90's when some stocks with profits were selling at more than 100 times their earnings per share. Others had no earnings at all but lots of "eyeballs" (a new metric for dot com stocks). Unfortunately those eyeballs never got monetized, and many of those wonder stocks are names long forgotten. In hindsight, it's easy to ask: why would anybody buy those stocks?

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.

Warren Buffett said that the two rules of investing are: #1: Don't lose money, and #2: Don't forget rule number one.

He then explained some more basics: When you buy a share do so as though you are becoming a partner in the business; Make sure you use the market to serve you, not to instruct you; And before buying be certain there is a sufficient margin of safety, a cushion of comfort between the price you are paying and the value of the company.

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.

Several responses to my columns on 2009 expectations and how to invest for the year have been totally negative. They claim I'm too optimistic. The only way to survive is to buy gold. America is finished. The new administration is socialism. The American capitalist system is done. These readers are not students of history.

America is built on hopes and dreams, fueled by Darwinian survivors of other countries with enough energy and nerve to come to a land of freedom where their dreams can become real. We have been peopled by brave and strong immigrants who gave up everything to have the chance for a better life for themselves and their children.

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.

For a better investing year in 2009, think about championship basketball. Winners at every level have one thing in common: defense. It's defense that wins rings. And this year, in the stock market, defense will keep you alive. It will be the kind of year where making a little money makes you a winner. Think defensively until there are clear signs that the economy is improving.

First, keep your expectations low. No one knows when the current economic cycle will end and begin to heal. What we do know is that all indicators keep going lower: housing starts, employment, consumer spending, housing prices. While the market discounts good news well in advance (some 6 to 9 months ahead of the real numbers), there's no indication from any front that better days are ahead. We know the new administration will spend money to create jobs so more spending power will be in the economy. We know there will most likely be tax breaks for companies to encourage production and hiring. But none of that is in place. Investors have to wait and see how and if these develop and what effect they will have on the economy and on stocks. It might take all year. Or longer. If it does, the stock market won't be doing too much.

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 offers advice to investors who are just getting started.

It is the best of times. It is the worst of times. I'm paraphrasing a little from Mr. Dickens, but his sage words still apply. How could this be the best of times? We'll come back to that. First, let's look at the worst scenario for next year.

The Worst:
More mortgages default. With Option ARMs and Alt-A loans and NINJA loans (No Income, No Job or Assets), there are going to be more defaults coming in 2009. That's unavoidable. As loans that were made with teaser rates (rates lower than currently charged so some borrowers could qualify) move up from teaser levels, some borrowers won't be able to make payments because they've lost their jobs or their income isn't sufficient. Expect more credit problems, both in residential and commercial mortgages. Credit card defaults will grow.

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: 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.