How To Survive A Stock Market Correction

market-correction

“We’re overdue for a stock market collapse.” “This could be the big one.” This is what you hear when you turn on the news or read magazines and newspapers. After the great bull market run from 2009 to today, many are predicting the stock market is going to drop. Depending on who you listen to, this drop could be as little as 5% to as much as 30%. With so many “experts” telling you the market is going to drop, how does an investor invest their money now and still be successful? Should you be afraid of a stock market pullback? What Is A Stock Market Correction By definition, a stock market correction is when the stock market drops by 10%. This usually doesn’t happen in one day’s time, but rather over time, say a few weeks. While 10% might sound like a lot, this type of a decline is … Continue reading

Everyone Is A Genius In A Bull Market

fish

Everyone is a Genius.  During my years playing tens of thousands of hands of online poker I learned a very important lesson. Variance is a cruel, cruel mistress. If you play enough poker you’ll experience days, weeks, even months where you can do no wrong. You hit every straight or flush you’re drawing for, your pocket aces never get cracked and you make money hand over fist every time you sit down at the table. Many players confuse these hot streaks with their incredible edge in skill over their opponents. They take their newly flush bankrolls, sit down in bigger (read: more expensive) games and more often than not…they get crushed. The mistake these players make is overrating their skill level based on being on the right side of statistical variance. They forget that right around the corner, somewhere, at some point, they’re going to be sitting on the other … Continue reading

Taking Profits In A Bull Market

bear-market

Today’s post comes courtesy of Troy at The Financial Economist:  As you probably know, Jay recently wrote a post about the wild bull market we’ve been experiencing lately. In response to this, I figured I’d write a guest post about taking profits in this bull market, since (if you’ve read my blog) I’m rather bearish on this bull market. The reason for my bearishness is rather simple – I think that this stock market is way overbought, thanks to the Federal Reserve’s crazed stock manipulation. The economic news is terrible, corporate earnings have all missed revenue expectations, yet the stock market is on a tear. Does that make any sense? Absolutely not! However, astute investors have said that “the market can stay irrational longer than you can stay solvent”. Thus, I am not going to short stocks now. I’m too young to die. For investors that still hold stock positions, here are 3 … Continue reading

Should You Buy Stock In the Company You Work For?

financials

One of the most popular “perks” of working for a publicly traded company is that your employer will offer you the chance to buy their stock. Most, if not all companies have a company stock fund in their 401k plans that invests in nothing but your employer’s stock. I’ve even seen some companies who give their 401k match as a contribution into the company stock fund. Stock options are another popular way employers offer employees chances to buy company stock. Stock options are a chance for the employee to buy shares of stock in the company for a significant discount to the current market price of the stock. The catch with stock options is that there are usually a bunch of terms and conditions attached. You may have to work for the company for several years before your stock options will fully vest. There may be other restrictions on when, and how … Continue reading

Investing Experts and the Herd Mentality

sheep

Buy low, sell high.  Any idiot off the street could repeat this phrase to you as if they had the secret recipe for investing success. Honestly, it’s good advice. One of my favorite investing quotes, and one I try to base my investing strategy around comes from the great Warren Buffet. He famously said “Be greedy when others are fearful, and fearful when others are greedy.” On the surface it seems like Buffett is saying the same thing a different way. But what I love about his quote is that it’s actually much deeper than simply buying low and selling high. His quote also illustrates why “buy low, sell high” is much easier said than done. In the investing world, almost like no place else there is an amazing herd mentality. When things are going good, such as over the past month, all the talking heads will tell you how great of … Continue reading

Recent Stock Purchase – American Express

american-express-logo

It’s been a while since I’ve made any purchases 1 in the dividend stock portfolio I’m building in my Roth IRA. The last new position I took in a stock was in First Niagara Financial Group. So far I’m losing on that purchase, but I still feel strongly about the company’s long-term prospects and have used some of the larger dips in price to add more shares. However this post is about my most recent addition to the portfolio: American Express (NYSE: AXP). Overall I’m pretty bullish on the credit card industry as a whole. Regardless of what I, or any other bloggers my write, Americans are still extremely dependent on credit cards. While the recession did get more people using credit wisely, as the economy recovers credit card use is sure to increase even more. What drew me to American Express over its competitors in the credit card industry was … Continue reading