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August 2008



Why are They Still Paying a Dividend?

August 12, 2008 – Comments (3) | RELATED TICKERS: FNMA , FMCC , C

Regardless of where we are in the credit cycle, it’s obvious that a lot of companies that were considered “safe” have turned out to be anything but that.  Not a week goes by when we don’t hear about another multi-billion dollar write-down, top executive being forced out, loss expectations increasing, or a company needing to raise capital.  And of course, along with that comes the “XYZ will slash their dividend by 50% to save $X Billion a year.  However, the question is why are any of these companies (Citi, Fannie, Wachovia, etc.) still paying a dividend at all?  [more]



A Little Fun on Saturday…

August 09, 2008 – Comments (0)

CEO = Chief Executive Officer     or  [more]



The Short Case for Shorting Something...

August 08, 2008 – Comments (1) | RELATED TICKERS: DXD , SDS , DUG

There has always been a stigma attached to shorting stocks with the average investor, as if betting a company will fail rather than succeed isn’t the American way.  Maybe it was because of how short sellers got vilified in the media, or because the cost of shorting was just too much or too risky, as a lot of people don’t want to deal with a margin account or options.  However, these days there are so many cheap ways to get short exposure through ETF’s that it would be a shame to not consider shorting something.  Whether you just want to protect some downside movement on your overall portfolio with index short ETF’s, or believe the bubble is popping in energy and want to take advantage of some of that downside movement with a commodity short ETF.  Better yet, if you feel like oil prices have peaked and oil services companies have a lot of downside, you could pick up some DUG which looks like it’s breaking out of a nice round bottom with a lot of room for upside.  [more]



Technical Analysis = Mumbo Jumbo?

August 05, 2008 – Comments (8)

The average investor believes any sort of technical analysis is a waste of time, and it usually gets lumped together with astrology or clairvoyance. A fundamentalist thinks that one should analyze any investment and come up with a fair value, and eventually the market will realize reflect this fair value and the astute investor will be rewarded. He or she would need to consider past and future revenue/income/cash-flow and growth, management ability, the current and expected future economic environment, risk premium, and a whole host of other factors. A technician, on the other hand, basically only considers 3 factors – price, volume, and time. While most people think that technical analysis is akin to trying to predict the future, at the end of the day fundamental and technical analysis are both using the same mechanisms to try and achieve the same result – using past data to come up with a probability of a future event occurring.  [more]



Buy High Sell Higher

August 05, 2008 – Comments (0)

There is one constant in the trading world that you hear over and over again like a broken record.  Buy Low Sell High.  It is treated as trading law and if you don't follow it you are bound to lose.  We are not saying this is completely wrong because if you do find a good low entry to buy in and then turn around and sell it at a high, you made a good trade.  However in a Bearish market especially as bad as the one we are in, trying to Buy Low based on the theory that it is at a near term low or close to it's 52 week low could lead to further losses. How many times have you heard "It can't go any lower, it's bound to turn around" Based on this logic you might as well just mail a check to your broker to re-fund your trading account.  We advocate looking for the strongest 2-3 stocks in any given sector that have been able to thrive in this down market and buy on pullbacks.  These stocks are strong for a reason and show the strength of the company as opposed to looking for the cheap and easy buck on the bargain basement stock that hasn't reported Positive Earnings in 6 quarters.  [more]

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