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I am thankful for…

November 27, 2008 By Leave a Comment

thanksgiving_prayer

…our current circumstances. Rather than ignore the current economic problems, I choose to acknowledge this elephant in the living room during our Thanksgiving holiday.

We are bombarded with headlines like “What will fix our economic problems?” It is absolutely silly. The recession is the solution to the problem of the asinine acts of American government, corporations, and consumers. There is no galactic lottery that our country can win. We have to play by the rules of the game that we started. No person or government can perpetually spend more money than they earn. Such behavior can only be temporary and always leads to self inflicted unpleasantness.

I truly am thankful for our recession because it should help cleanse our government and society of self destructive behavior. We are now forced to [Read more...]

Filed Under: Health, Money, Personal Enjoyment, Personal Productivity, Self Directed IRA Solo 401k Tagged With: american, bailout, clean, consumer, consumerism, corporate, corruption, crisis, economic, economy, energy, entertainment, entrepreneuer, escapism, government, holiday, independence, inflation, materialism, media, phychology, productivity, prosperity, revolution, scandal, self employed, self employment, thanksgiving, thrive, transportation, united states, wealth

Who will bail out the government?

October 1, 2008 By Leave a Comment

Although the House rejected the recent $700 billion bailout, there is plenty of bailing out that has already happened, and there is more to come. Already:

  • $80 billion injected into failed AIG
  • IndyMac bank taken over by FDIC
  • Bank of America bought Merrill Lynch for $50 billion – 70% over its September 12 closing price
  • Bear Sterns was bought by JP Morgan Chase for $1.2 billion and the Fed then loaned JP Morgan Chase $29 billion (without recourse) to ensure that JP Morgan Chase didn’t actually have to suffer the consequences of buying a failed bank
  • Washington Mutual failed – it is the largest bank failure in American history. In 2007, its share price was $45. By the time it was sold to JP Morgan Chase, it’s share price was 16 cents. The CEO stepped down on September 8, 2008 and a new CEO received a $7.5 million sign-on bonus. 17 days later, he received an $11.6 million severance package as WAMU filed for bankruptcy.
  • Bank of America has become the nation’s largest mortgage lender by purchasing Countrywide & Interfirst

Hundreds of billions of dollars have already been injected into the system as seen on this timeline. It’s been happening every couple of months – 5, 10, or 20 billion dollars at a time. That kind of help hasn’t helped enough, and the $700 billion bailout is a sign that zeros will soon be added to the bailouts, and they will total in the trillions of dollars.

What happens to a company that gets bailed out?

  • It becomes either under the control of whoever provided the money; and/or
  • It becomes indebted to whoever provided the money.

How will our government pay for this?

Firstly, it’s important to understand that [Read more...]

Filed Under: Money, Personal Enjoyment, Self Directed IRA Solo 401k Tagged With: 401k, bail out, bailout, citizens, corruption, crisis, debale, economy, fed, federal reserve, finance, global government, government, inflation, invest, investing, ira, lobbying, mortgage, new world order, one world government, solo, Solo 401k, tax, taxpayers, wall street

Is this the bottom? How to recover your stock market losses

September 30, 2008 By Leave a Comment

This question is on the minds of millions of Americans. I know exactly how to recover your losses: get out of the U.S. stock market and recoup your losses elsewhere.

S&P 500 loses 28% in one year

The sales pitch of securities salesman is that the stock market goes up around 8% or 9% per year over the long run – so don’t ever sell as a reaction to losing money. Let’s examine this, and assume your investment performance equaled the S&P 500 (even though the majority of mutual funds’ performance is inferior to that of the S&P 500).

Scenario A – You entered the [Read more...]

Filed Under: Money, Self Directed IRA Solo 401k Tagged With: 401, bailout, collapse, crash, crisis, debacle, government, invest, investment, ira, losses, market, mortgage, mutual fund, self directed, solo, Solo 401k, stock

Self Honesty: Stock Market Strategies Worth Considering

June 6, 2008 By Leave a Comment

While I generally avoid mutual funds like the plague, I don’t avoid the stock market altogether. I’ll split what I do in the stock market into two categories: long and short. Either way, I’m honest with myself in admitting that no matter what I do in the stock market, it will be speculative and risky.

Long

“Going long” means buying a stock and expecting its price or income to rise so I can sell later for a profit. There are millions of people who have access to the same information as you, and that is generally reflected in the price of that stock. If you know something non-public about the company, trading it may be illegal for you. I’ve bought individual stocks before; I just treat the situation honestly; it is speculative in nature, and I only make such trades with very small portions of my portfolio.

I don’t go long on mutual funds because I don’t know what I’m going long on. It is virtually impossible to know what I’m actually investing in when I buy shares of a fund.

Short

Selling Short… A short position is the opposite of a long one. Instead of buying low and selling high, selling short is a matter of selling high and then buying low. For me to do this, I borrow shares of a stock and simultaneously sell them at the market price in expectation of a price decrease. To close this position later, I just have to buy back shares of the same stock at the then market price and pay back the borrowed stock. If during my position the stock price declined, I profit; if the stock price increased, I have a loss.

Ex: ABC Company seems to be doomed. It’s currently trading at $50, but I think it will go much lower over the next couple months. I sell 100 shares short. This means I borrow 100 shares and simultaneously sell them for $5,000. A few months later I see the stock price has declined to $35. To close my position, I buy 100 shares back for $3,500. I pay back the borrowed shares and retain the $1,500 profit, less fees and commissions.

I like short selling more than going long. I often notice [Read more...]

Filed Under: Self Directed IRA Solo 401k Tagged With: 401k, call, crash, crisis, fund, going long, hold, holding, home builder, index, inverse, investing, ira, lender, loss, mortgage, mutual fund, options, position, profit, put, risk, self directed, selling short, short selling, stock market, subprime, trade, trading
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