Crash Market Stocks - Financial Tips On Making Money In The Stock Market

It seems as though Wall Street approves of the latest changes in politics that took place on Tuesday. The Dow enjoyed a 200+ point move today as investors seem to have a bit of optimism. In reality, there is little that the changes will be able to do. Sure, efficient incentives and policies can mitigate damages done to the economy and ease the pain, but the careless management and banking that has taken place the past 10 years cannot be erased by the signing of a pen or printing new money. It will take a lot of time and, unfortunately, pain.

Last year I discussed a penny stock with you that I had invested in and seen a great deal of success. The company is Imaging3 (IMGG). We were able to buy into this stock a $0.05, where the stock remained at for a few years. Well, last year, rumors of a near FDA deal caused for the stock to leap the the near $2.00 range, which we then opted to sell all of our shares. I have dealt with FDA pending stocks before, and history has shown me that it is much better to get out on the hype then to roll the dice on whether it really happens. Well, in this case, it was a wise decision.

This past week, IMGG had a shareholder conference call in which they announced that their application for FDA was rejected which greatly surprised IMGG management. Much of their notes, related to administrative deficiencies more so than actual performance of their product. You could sense the frustration of the CEO in not knowing exactly why it happened. As a result, the stock has now plummeted back down to the near $0.10.

Sure, the news is frustrating for investors, but this does not mean they will not get approval. In fact, the stock price is starting to become very appealing for re-entry at this point, as it is clear they will continue to fight for FDA approval. If it becomes clear that once again they are near that approval, I expect the stock to react much like it did the first time around. So, IMGG is definitely on the hot watch list for me and anymore decay in its price will force me to have to make a move.

First Friday of the month coming this week, which you know what that means...Unemployment data. Once again, unemployment will act as the main driver of sentiment in the marketplace and until we can consistently start to reduce that number, massive problems will still be in our midst. Anyway, look for this political rally to quickly be squashed of the numbers come in disappointing. Happy Trading.

We have reached yet another November 2nd voting day and I expect to see some fireworks that usually accompany the day. It is been estimated that Wall Street has already factored in the expected "change of power" that is to take place with a Republican victory, however that may not be the result. If it is not the result, I would definitely expect to see a big drop in markets, financials especially.

We are starting to see some unique transactions that are new to this cycle that we saw in the 90's. This is the trading of distressed and performing notes from one bank to another. Banks benefit greatly to profit off of written down loans from other institutions. For the selling bank, there is not much net effect as the asset has already been written down following an appraisal. If this action is reversely repeated, then it can turn out to be quite beneficial and profitable for banks.

So what does this mean for the economy. Well, banks making money does not necessarily mean a healthy economy. Sure, we need the banks to be liquid and healthy, however, banks have been making record profits the past year and as for the commercial lending market, well, it remains pretty frozen. In fact, providing a route for banks to be so profitable without having to lend, may come back to bite us in the near future. As of now, banks are able to borrow 12 times the dollar you deposit and put them in treasuries, yielding a sub 3% return when they only have to pay you 0.45% on your dollar. When you do the math, you can quickly see how profits are piling up.

As of now, the profits are severely needed and banks are pacing their disposal of distressed properties at what they perceive a healthy rate to coexist with their profits. This is why a defaulted loan may get ignored for a year, only to have a speedy eviction notice pop up one day. The question is, when banks begin to become more balanced, will we begin to see lending occur. Why should the bank take on that kind of risk for profits that are pennies compared to their current arrangement. You can quickly see the paradox that exists.

We will know by tonight, whether or not big movements will be made. Either way, history tells us that day after voting days are usually a bit more volatile than the rest. No matter what happens, new uncertainty is created, which in turn shakes investor confidence a bit. So it will be interesting to see how it all unfolds.

Many have the question when going to purchase a stock or mutual fund, "What does the dividend reinvest option mean, and should I do it?"

First of all, for those that are not aware of it, there is usually a dividend reinvest option that your trading account offers you when taking a new position. If it is not there visibly, call your brokerage company.

For my platform, I am given the option to check the dividend reinvest box right before confirming my trade.

To start it off, dividends are cash distributions given by companies to their shareholders following a profitable time period. For the most part, companies have two options when dealing with profits.

First, companies can choose to retain earnings in the company, making the company ultimately worth more (higher asset value), thus hoping to increase the stock price. Apple is a prime example of this. Rarely will you receive a dividend from Apple, however, owners have enjoyed a rather steady increase in their stock price.

The other option companies have is to share a portion of their profits with their shareholders. Sure, for the most part, this is not anything significant due to the amount of shareholders, but you might be surprised at how big dividends can be. Because of the cash distribution, stock volatility is usually much lower. Verizon is a good example of this, as they have really low volatility with a rather strong dividend for investors.

Neither approach is ultimately better than the other. It all depends on the individual company and how they choose to handle it. From an investment standpoint, the two different scenarios can be more intriguing, depending on your investment goals. For instance, I prefer to load up on high yielding dividend stocks for my retirement accounts, because over time, the dividends can pay off, despite the stock price moving with lower volatility.

In addition, I always choose to reinvest my dividends. By doing this, I then utilize the principle of compound interest. When reinvesting your dividends, you opt out of taking the cash and purchase more shares with it instead. Thus, after time, you can end up with double or triple the shares you started with, while continuing to earn dividends from the increased shareholding. Hopefully, if the company remains strong, your position will be great increased over time.

Dividends are an important trading principle to consider when taking a position. For some portfolios, it will not make sense to buy dividend yielding stocks, for others it definitely will. Happy Trading.

Once again, I apologize for my limited updates to the site, as times continue to be busy. As we can see, there has definitely been upward movements in stock prices. In fact, with my last post, the Dow was lingering around the 10000 mark at which I said that I expected a "rubber bottom" at around that point and expected to see a rather steep jump from there. As of now, we can clearly see that has been the case. Now the question is how much is left as we begin to head near the always interesting "end of year" times.

One luxury that the housing market has enjoyed throughout most of the summer months was the lack of foreclosing from banks. Hundreds of thousands of potential foreclosed homes have been delayed due to a variety of reasons. Now, we are starting to see the banks move forward more aggressively. In fact, Bank of America announced today that it plans to resume paperwork for over 100,000 cases of foreclosures in 23 different states. Not only will the housing market now have to endure the off season, they will also have to do it while competing with a fresh load of foreclosed homes. Let the auctions begin!

The housing market will not be the only sector to get affected by the change. For several months now, hundreds of thousands (if not millions) have enjoyed the extra disposable income that has been generated from not having to pay their mortgage. This can be quite significant. As banks begin to foreclose more aggressively, this means that more and more people will be forced to pay occupancy costs again (duh!), which in turn will affect several other sectors. We have seen in recent studies that much of the recent economic activity is a result from government stimulus. If these go away, market growth goes away with it. So now the decision is, when do we make the decision to pay the bill of this party we have been enjoying for the last year and a half.

As of now, I believe we are nearing a rather aggressive pullback. November is known for the massive hedge fund redemptions that take place before year end as well as other year end pressures begin to pile up. Shorts should perform well during the end of October/beginning of November. Happy Trading.

Well, as I expected, we are continuing to see a rather strong "bouncing bottom" at around the 10000 level of the Dow. This last bounce has taken us above and beyond the 10700's, which seems to be a trend at this point. However, signs of a decreasing dollar is starting to raise concerns for investors.

Nothing could be more dangerous to our economy at this point than a sustained, low value dollar. There already exists massive threats of hyperinflation as the government continues to run ramped with government spending and bailouts. Recent jumps in gold are confirming investor's worries about inflation as gold prices are the best measure for investor's sentiment towards the dollar.

Many worry that declining dollar will not continue to "prop up" the market. A declining dollar would also equate to a decline in US consumer's spending power, which in turn will be a direct effect on GDP and economic growth. It is because of this, eyes are closely watching and hoping that we see strides of progress in regards to the dollar's strength.

There are others who feel that the dollar is primed to launch at this point. Some optimists feel that they expect to see some big gains in the dollar in the short term. I cannot agree with them at this point, when considering other lagging indicators that are still existing at this point, but we will see.

One big problem with a declining dollar is that we have not seen much inflation in the marketplace, which would be a normal sign of inflation. So although we are seeing the value of the dollar go down, consumers do not have an inflated amount of dollars in order to compensate for the drop in value. Thus the drop in spending power. Although it may seem to some not a big deal, the value of the dollar is critical at this point. Happy Trading.