On this blog I will collect my own and other writer’s writings of financial matters, investment advice and anything affects our life. I hope these writings will give you fresh ideas on life and bring you health, wealth and happiness. We are living very special times. These next few years just might be the tipping point for the future of the entire world. We have terrorism, wars, global warming and a huge financial mess to deal with. It pays to be informed!

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New Year Greetings 2009

I hope you had a very nice Holiday. Here in Thailand where most people are Buddhist, Christmas is not a religious holiday but Thais don’t mind if we westerners celebrate it and the Thais are also getting into buying gifts and putting up some decorations; so at least they embrace the commercial aspect of it. Let’s hope that the New Year will be better for us than 08 was even though I doubt it.

I believe that we will have a very bad few years ahead of us. I hope that I am wrong and I can easily be wrong, but it will take a lot of stimulus to keep the consumers and business spending. Actually my biggest fear is that all this stimulus (easy money) is just going to make it all ten times worse than if we would face the music now.  How can you fix an easy money problem with more easy money?

But of course that’s all we can do right now; throw more money into the fire because all the other options are too painful.  No politician, central banker or a president have the guts to put a stop to this madness because the ultimate truth is that all they care are the next elections and their image etc.

Well, all this stimulus will at least extend the party for little longer so use ANY rallies to unload your stock holdings even if you have to sell at a loss. The end of 2009 to 2013 could turn out to be years of utmost despair and then any money you have will be needed real bad. Also if you have any extra cash; buy some gold. This time put 5 to 10% of your assets into PMs, but in the future there could easily be a time when the recommended percentage will be 80%!

By the way I am not trying to say that I have the answers to this global mess. I have no glue either, but I do have a pretty good idea how to navigate through this mess as an individual while profiting from it or at least with as little as possible of personal hardship and would like to help you to do the same if you allow me.

I hate to start the year off like this scaring you because there is a big possibility that I am wrong, but if I didn’t tell you how I really feel about these things then what good would I be? After all this is my position here; to give you my take on the stock market and anything that affects your well being. 

But now more than ever trading is going to be the way to go; whipsaws and all. Buy and hold is dead. Also shorting or using reverse ETFs is going to very important.

For our Euro zone members there are some pretty bleak predictions:  “The euro could die in 2009,” forecasts currency man Bill Jenkins.

“When the European Union was formed, most supporters saw it as the cat's pajamas. Strongly growing economies, all banded together, ready to take the economic world by storm. And so long as the party lasted, everybody was happy. Everybody was making money. The wine was flowing in France, and the beer in Germany.

“But now that the flasks and kegs are empty, all the party food has been consumed and it's time to pay the caterer, all the participants are looking at each other to see who is going to pick up the bill…

“A number of the euro countries are in real trouble... Spain, Italy and Greece, just to name three. At the same time, chief member Germany, which has always been the economic muscle behind the euro (and a model of fiscal reliability) is falling into recession. They will no longer have the "excess" to help bring lagging countries along.

”Add that to the fact that now many of the eurozone countries are crying out to the ECB for ‘stimulus.’ Who is going to pay for that? Germany, of course! Are they willing to do that? Probably no more than you and I are willing to pay for a bailout for Mexico! Additionally, had Germany not been sharing its wealth with the less-productive nations of the ‘zone,’ they would certainly be in a much better economic position right now…

”Needless to say, if the European Union begins to fragment, the euro will go into the toilet. Where will all the currency chasers turn then? I would suspect right back to the dollar. Now, don't get me wrong, if this happens, and that is a pretty big if, it is not going to be next week. But we need to keep our eyes open on the big trends to see where there is opportunity to make some money.” end

This isn’t the first of this kind of predictions that I have seen. As incredible this sounds it’s not as far fetched that it seems. When this financial mess gets (really) tough the whole EU could be in big trouble. Don’t wait and trust that the Euro leaders or bank executives will warn you for it because they don’t have a glue as to what is or isn’t going to happen. And even if they have a glue, they cannot tell you it, because it would cause a panic and then the worst would happen for sure. So they, as all the other politicians will keep on telling us that all will be well.

A good example of how off the high paid top of the world analysts were last year in their analyses is the price of oil. Just a few short months ago it was selling for $150 and now it’s selling for less than $40. NO ONE analyst predicted that we will ever see oil below $100 let alone below $40. Every single analyst, governments, banks and even oil companies were pointing to an oil price of over $200 per barrel. And yet here we are; oil, gold are down and US Dollar that was supposed to became worthless piece of paper is going on strong.  Go figure.

So my point here is that we are going through some truly incredible times and that this is just the beginning. There has not been anything like this since 1930, at least for US members. Of course there has been Asian financial crisis and wars etc. but this a totally new global phenomena that we are facing. In my future newsletters I will outline a plan of action to get through it. 

Cholera

If not before now we have absolute proof that west or so called developed nations really don’t care about Africa. Cholera situation in Zimbabwe is getting out of hand, but what are we doing about it. Not much!

If this outbreak had happened in let’s say Netherlands, Poland or Mexico the neighboring countries would have put so much pressure to these countries that the situation would have been corrected. But now that the outbreak is so far away in the dark Africa, no one cares.

Had the Zimbabwe situation been happening in Europe the president would have been forced out a long time ago.

Brainwashing

12.08. We all are slaves to our particular society we happen to live in. We westerners tend to think that people and nations that believe in and support Taliban rule and religion are brainwashed, but we westerners are just as brainwashed. We are controlled by our religion, governments and commercial interest as much as any other human being in the world. The only difference is the degree of control. Main street Christianity is not as harsh as Taliban rule is, but it still controls our actions. And there are ultra religious fractions of Christianity that are just as harsh as Taliban, but right now in this time of history these ultra religious fractions are not in power, but there has been time that they were in power. In the west right now the commercial interests are in control more than in Afghanistan. A typical Taliban is not interested in wearing the latest fashion or seeing the new block buster movie, but we westerners are, not because it's what we want to do, but because we are brainwashed to believe that it's what we want to and should do. 

I just saw a news clip on Chinese economy and the finical downturn affect on the sale of luxury goods. A Chinese man who is a head of the Chinese's luxury goods marketing association said that now (that many people have lost money) one must buy even more luxury goods to show others that he or she is not affected by the market downturn and has not taken a hit. 

In the west we are more subtle of showing off, but in these emerging markets where living it up is a fairly new phenomena people are still very openly naive about these things. They speak very seriously and openly that they must look successful no matter what and that happiness comes form buying stuff; when in the west no one would openly admit that, even though at least on subconscious level many of us if not most of us keep on buying (useless) stuff to show off and to (try to) feel happy at least a moment. 

The famous Milgram experiment from the 1960's has just been replicated at Santa Clara University in California. It demonstrates that approximately 70 percent of all people will willingly administering torturous and even apparently-lethal electric shocks to fellow human beings if ordered to do so.

This study confirms once again that most people are obedient mind slaves who will do exactly what they're told even if the orders violate laws, ethics and common sense. It's a startling look at the power of apparent authority over human behavior.

In a highly-controversial article that's already generating lots of responses, I take an honest look at the ramifications of this study, revealing:

• Why most people are really "sheeple" who walk through life brainwashed.

• How public schools actually train people to be obedient mind slaves.

• Why the most easily-brainwashed individuals in society end up working in law enforcement or military positions.

• Why typical Holiday behavior demonstrates the mass hallucinations that permeate modern society.

• Why the behavior of shoppers reveals a "mind slave" mentality.

• How to tell if you're a mind slave right now!

If you think you're a true free thinkers, read that article right now and learn more about the Milgram experiments and what they really say about the gullibility of modern people: http://www.naturalnews.com/025141.html

Obama problems..

12.9.08 IF the facts turn out to be that Obama had some shady dealings with this Illinois's governor scum bag we all are in deep deep trouble. Most of the world is waiting for the Obama to walk on water and save us form the finical calamity that we are facing and if it turns out that Obama is another crook after all the world will go to a tailspin. The problem is that Obama has all kinds of shady characters rattling in his closets and it seems that there is something in the water of Chicago because so many of its politicians are in prison or guilty of some kind of shady dealings, so it doesn't look good! If there's any indication to that Obama might be a wolf in sheep's clothing; sell everything, buy a gun and move to a mountain. 

Different rallies

Never forget that even though all the indicators are screaming for buy or sell signal; any rally can fail! During bear markets 80 to 90% of rallies on the upside fail to produce any meaningful returns. During bear markets most money is made by shorting and on a few bear market rallies. And of course the opposite is true for the bull market conditions. And then there is a time when the markets can whipsaw for months and all rallies; up and down fail. But in order to win you must be in. We just must have enough trust in our system that at the end of the year it has produced more winners than losers. Some years are more profitable than others. Don't get greedy or desperate that will cause you to make wrong choices and you will lose your money. If you go long during a bear market you can expect a small loss or (hopefully) breaking even in most rally attempts. This is why during bear markets you must learn to short or use reverse ETFs.  

“One thing that makes us think there will be a substantial rally,” 

noted Bill Bonner in 12.9.08’s Daily Reckoning, “is that there’s something phony about the ‘gloom and doom’ you read about in the paper…

“For now, people have lost money... but they are still fascinated by it. They still talk about it. They joke about it. They practically wallow in their losses…

“Gloom and doom is the fashion. Apocalypse is the style. Hemlines are set for the end of the world.

“But who really believes it? Who really feels that the end is nigh? Don’t we all still hope that Obama will pull off a really big save? Even if we think the bubble has burst...we still feel as though somehow, everything will turn out all right.

“People are fascinated by the bust...they look upon it as though it was a horror movie…

“But when the real doom and gloom sets in… the last thing they want to do then is talk about the horror around them. Instead, they want to forget about it. They won’t want to hear about stocks... or commodity prices... or bankruptcies and bailouts. They’ll be sick to death of the whole thing.

“We have a long way to go, dear reader. We will have a rally... then another, worse, drop. People will not suddenly give up hope; it will have to be crushed out of them. And then, instead of enjoying the spectacle of the mighty captains of industry and masters of the universe humbled... the show will take on a tragic theme... with ordinary people hung up on the hooks of debt... stretched out on the rack of joblessness... beaten by losses on their houses, their 401(k)s, and so on.

“Then, the jokes will stop.”

I feel exactly the same way. We are not scared enough for the ultimate bottom to be in yet. 

How Much Ink Is Left in That Dead Cartridge?

We ran printers until they said it was time to change the cartridge--and found that some left more than 40 percent of their ink unused. Jeff Bertolucci, PC World.Nov 3, 2008.

PC World decided to do some real lab testing on this issue; and the results confirm what you may have suspected: Many manufacturer-branded (OEM) and third-party (aftermarket) vendor cartridges leave a startling amount of ink unused when they read empty. In fact, some inkjet printers force users to replace black ink cartridges when the cartridge is nearly half full, PC World has found.

They tested printers from four major manufacturers: Canon, Epson, Hewlett-Packard, and Kodak. The models from Canon, Epson, and Kodak reported ink cartridges as being empty when in some cases the tanks had 40 percent of their black ink remaining. The quantity of unused ink ranged from about 8 percent in an Epson-brand cartridge to 45 percent in a cartridge for a Canon printer. And the printers wouldn't resume printing until a new cartridge was inserted. 

There are valid reasons for not draining an ink cartridge completely -- many inks, if they run dry, can cause significant damage to the printer. However, printer owners are still probably throwing away a lot of usable ink. And consider that an average black-ink cartridge contains 8 milliliters of ink and costs about $10 -- which translates into a cost of $1250 per liter of ink. One gallon would cost about $5000! That’s better than liquid gold. 

All in all who cares if we waste a few drops of ink, but I think this is why we as a world are doomed. We have become so greedy that everything is just about money. Hardly anything is based on honesty and trying to help each other. Bank big wigs are ruining the whole world and then when they get caught they will make sure that they will depart with tens of millions of dollars. 

Everything is about power, greed and fame. No one who has some power is concerned about the nature or the world. Everybody is just thinking about lining their own pockets with money. This ink thing may seem small, but it’s a sign of what we are. Medicine companies sell us dangerous drugs and food companies bad foods etc. There is no hope for us. That is the sad truth. Read the PC World article here...

Excellent Book for anyone who likes to ...

Preview: If you are not going to buy my book; Emotional Wealth then buy Tolle's The Power of Now. It's one of my favorite books. I still have not been able to figure out why it's so good. It's written in very simple question / answer format and is not a great piece of literature like for example Deepak Chopra's books are... but something about it hit me like a sledge hammer in my first reading. I have reread it several times and it's always as good as the first time; I cannot say that from many other experiences I have had during my life time. It's really worth your time.

Prostate health...

Obama November 2008. 

I think the whole world feels exactly like the people of Congo. I was watching news during the last days of the US presidential elections and people of Obama’s grandparent’s old village were interviewed and one could easily see that they are hoping that something really spectacular will happen to them if Obama becomes a president. One young boy said that maybe it will be easier to get in US.

I actually felt this same kind of collective hope when Clinton became the president. It was not as strong, but there definitely was a sense that things are going to change for the better. And they did change for the better. All in all Clinton was a good president, but it’s easy to be a good president when you can print money like there is no tomorrow. President Regan who started the printing press mess was mainly a good president for the same reason. 

But now we have printed (borrowed) just about all the money we can as a country and individuals. So how are we going to keep this madding consumption up? As you know US and the rest of the world’s growth has mostly come from the consumer. Now they are taped out. In Finland the working generation that is supposed to keep wheels moving (24 to 40 years old) are already over 180% in debt. So how can they keep on buying al the junk that China makes? They cannot!

I hope that I am wrong about this; nothing good will happen to these people in this village in Congo and that will be also the case for the rest of the world. Obama is facing the worst economical situation since 1930 and I just don’t see that he can know something that other very smart people haven’t known before. He has got no a any formal education that would give him some insight to these matters. And he has a few year career in politics, so what can he know that will save us?

I must admit that often it’s not what a leader knows, but how he or she is able to unite people behind a common cause that can create miracles. Obama has an opportunity to become the greatest president ever for the whole world and be a uniting catalyst for the humankind, but that is only if he can create a miracle in Washington. There is the old boy network of special interest like arms manufacturing and the whole war machine. All the lobbyist have not gone anywhere and they will keep on sucking us dry.

Will he succeed? I doubt it. I am too realistic to believe that he can, but I am willing to support him the best I can.  He has an opportunity to become more important and famous than any leader since Napoleon or Cesar. And he could be known for good not for wars like the most other really famous leaders in the world’s history are know for. 

If the shit hits the fan … November 2008.

… and we face a depression of 1930’s magnitude or even worse… most banks will fail among other things. And I am afraid that banks are already pretty empty and if they fail only few people will get their money out in time.

Well, you say what about the FDIC, they will protect our money. Yes they even raised the level of protection, but FDIC was never intended to cover losses of most US banks at the same time. It was created to cover an individual bank going belly up. There is no way it could ever have enough money to bail out every individual in US.

Even in good times banks can loan out 90% of the amount they have as savings. So they are overextend even then, let alone in bad times. Actually banks operate like a (legal) pyramid scheme and that’s why so many of them are having problems now. All pyramid schemes work fine and dandy until there is hiccup. Then they crumble like a house of cards…. just like what’s happening now.

Should there be a major depression; the government would most likely make a new law that people would get only a few cents for the dollar if any from FDIC. What else it could do? FDIC have reserves of only a few percent of the total savings of US.

It may sound crazy that the government would do something like this, but it can and will. Devaluation that many nations have done is another similar move that simply robs the citizens of part of their money. In Finland we have had a few of those; in one of them overnight 20% your worth was wiped away. This hit very hard companies and individuals that had foreign currency loans etc. Next morning you owed 120k instead of 100k to your foreign creditor. 

So don’t believe anybody that your savings are safe in a local bank. If things start getting bad; under the mattress might be the best place for your money. Let’s say you have a 100k savings. If you have it in the bank you may now get 3 to 5 % interest on it. Then you pay tax on the interest… so your net gain is probably less than 2k. Inflation eats the value of your savings whether it is in the bank or under the matters at the same rate. But if you have the cash under the mattress, you can sleep well on that mattress.  

During a major recession …

… even the insurance companies can fail as happened to AIG. So who is guaranteeing the insurance companies that provide you a protection against brokerage insolvency. No body! By then the governments will be out of money for sure. They will set up another law that people will get pennies for a dollar settlement. What else are they going to do? There is nothing else that they could do. During major catastrophes old rules and laws don’t apply as is the case during major wars.

So what can you do? If the clouds darken take some of your savings out and if nothing else you can set up external transferee things in your bank to another safer bank or to your brokerage house just in case. (I actually believe that the brokerage houses are the last to fall, I might be wrong, but that’s my thinking.) Be aware that some banks don’t allow external transfers to brokerage houses, only to real banks. For example Emigrantdirect.com net bank doesn’t allow that. That is why I left them.

You should at least make sure what are the transferee limits are in your bank. For example in Bank of America it’s only $20 k per month. I moved some of my money to www.FNBOdirect.com net bank, because their limits are higher and I can transfer to and from my brokerage accounts with them. But even they have a special clause that they can for any reason limit or delay transferees. This clause is designed for a possible run on the banks that we might face in the future.

Also your 401K and IRA accounts are in danger. If it gets really bad I will pull my IRA out and pay the early withdrawal penalty rather than risk it all. If you have your IRA in a bank you may want to transferee it to a brokerage house IF you think, as I do that they may survive longer than regular banks.

Also the insurance on your brokerage account is limited. Check what your brokerage house’s limits are. This is what TDAmeritrade emailed me:

The cash and securities held in your account are insured against broker/dealer insolvency by SIPC. TD Ameritrade does carry SIPC excess insurance for all of it's accounts. Our SIPC insurance is:

*$500,000 through standard SIPC ($100,000 sub-limit for cash)

*$149.5 million through our Excess SIPC insurance policy ($900,000 sub-limit for cash)

Additional Information - The best source for coverage information is the SIPC web site at www.sipc.org . Their direct number is 202-371-8300 fax number is 202-371-6728. The Excess SIPC insurance policy follows all terms, definitions, conditions, and limitations of SIPC.

This is what I found on their website: TD AMERITRADE, Inc. is a member of the Securities Investor Protection Corporation. Securities in your account protected up to $500,000. (See the discrepancy!)

TD AMERITRADE offers unlimited check writing. There is no per-check minimum amount. You can complete the checking application online once your account has been opened. Please note: your TD AMERITRADE account is not FDIC-insured or bank guaranteed.

Up to an aggregate of $250 million of additional securities protection, of which $900,000 may be applied to cash, is provided by London insurers, also limited to a combined return to any client from a Trustee, SIPC and London of $150 million. This coverage provides you protection against brokerage insolvency and does not protect against loss in market value of the securities. end.

The Financial Industry Regulatory Authority (FINRA) www.finra.org is the largest non-governmental regulator for all securities firms doing business in the United States. All told, FINRA oversees nearly 5,000 brokerage firms, about 173,000 branch offices and approximately 677,000 registered securities representatives.

I am more confused than ever. I will keep on finding out about this and try to be ready to pull my money out if the shit hits the fan.

Colin Twiggs
November 8. 2008

These extracts from his trading diary are for educational purposes and should not be interpreted as investment or trading advice.

“Most of us have heard these re-assuring words from at least one economist in recent weeks: "Don't worry. This is not another Great Depression. We have learned a lot since then." What have we learned? In 1929 investors had a currency backed by gold; nowadays our dollars are backed by an IOU from the world's biggest debtor. In 1929 the financial system was far less sophisticated: accounts were tallied with pen and paper. Today we have sophisticated financial models which we trust implicitly — until they fail to predict the impending collapse. In 1929 communication was largely by mail. Today we are all inter-connected, with communications around the globe measured in milliseconds. In 1929 the relatively new Fed was still cautiously finding their way and regularly making mistakes. Today we have a Fed confidently patrolling the financial markets with a huge can of gasoline, ready to douse any new flare-ups. And promising to use as much gas as it takes to restore stability.

In 1929 voters distrusted government and any big spending programs were likely to be met by howls of outrage. Roosevelt won election in 1932 by criticizing Hoover's huge deficits, advocating "immediate and drastic reductions of all public expenditures," "abolishing useless commissions and offices, consolidating bureaus and eliminating extravagances reductions in bureaucracy," and for a "sound currency to be maintained at all hazards." His New Deal program then went on to do exactly the opposite, far surpassing any previous excesses. Today we have House majority leaders who subscribe to the same New Deal philosophy of big government spending in order to "rescue" the economy.

Why am I not confident that we are in good hands? The mistakes being made threaten to dwarf those of 1929. Leaders seem to be ignorant that negative real interest rates and budget deficits are the same gasoline that caused the fire in the first place. If they continue along their present path, the inevitable conflagration will make the Great Depression seem like a backyard barbecue by comparison.” end of Colin Twiggs.

My thinking is along the same lines as Colin's. How can we keep this crazy shopping spree going on if everybody is taped out? The only way to do is to somehow wipe the debt away. 

This following may sound crazy, but just maybe our government is thinking the same way as the banks have been thinking for the past few years before they fell. I am sure the management knew a long time ago that the way they were doing business is going to end very badly. But they also knew that if their banks start falling first; the government will pail them out. And secondly; who cares because they all had negotiated golden parachutes for themselves. Not all, but many of these people are just greedy sharks they don't care about their customers or anybody else. 

As an example I don't have to go to any further than the resent government pail out. The Wall Street executives made sure they will get their bonuses first from the pail out money. These guys were making tens of millions per year and now they rob the money that is meant for the saving of the company that they messed up. If they would have been smart leaders they would not be in this mess. I truly feel that I could have done as good of job as any of them to run a company down to the ground. All they would had to pay me would have been a million or two a year. 

This is why I think we are doomed as a country and the world. Greed has taken a choke hold on us like a massive cancer and it will kill us all. There has been too much of all these very bad things that anyone can turn this boat around. Below there is short writing from Ayn Rand, it explains my point very eloquently. 

My thinking is that the US government leaders at least have been the same, (maybe Obama's government will be different, but I strongly doubt it). They may already know that sooner or later they have somehow wipe the government dept away.

(This move would be just what many devolving countries do especially in Africa. They rake up all the loans they can from individual countries and the World Bank knowing very well that they have no intentions to ever repay the loans. They pay just enough the interest to keep money coming. They know that after the dept that is so huge that is way beyond their means, the international community cannot do anything else but to forgive them. The other option is to let the innocent civilians to starve to death in these countries. The rulers who are responsible for the dept will do fine even if the citizens suffer as is the case in Zimbabwe.)

Until they wipe it way any normal and legal way of reducing the dept is just going to be a ban aid and in few years the dept will be back to same level. How can you get rid of a dept that is up to trillions of dollars. 

The government is facing the same situation as a house owner whose income is $40 per year and mortgage eats most of it and his house value is falling and is already way below the purchase price. So as many do; they just walk away from the house and the obligation of the mortgage. It just doesn't pay to keep throwing good money after bad. With his income he will never be able to save enough to make any meaningful dent to his dept. By walking away at least he can start aging on a clean slate.

The US government is facing exactly the same situation. With it's income it will never be able to pay back the dept it owes. It has to and it will find a way to wipe the dept away with some kind of crazy move. It may offer pennies for a dollar deal to it's creditors or just inflate the dept away or ? I am not smart enough in these matters that I could even imagine what it may do, but mark my words that it will do something like this sooner or later. 

Something may happen that starts this house of cards falling and if we get into a super depression, that just might be the time to simply for US government to declare that "Sorry, no have money. You can wipe your asses with the loan documents." Something like this will be the only way to get out of this mess. And US is not going to be the only or even the first country to do this. The civilized and well to do western county of Iceland already came very close to going belly up.

Can you trust free stock market newsletters? 2008.

Should you trust the free email newsletters that many stock market publishing houses send out like there’s no tomorrow? 

I have been regarding a few of them for a long time from different publishers and have noticed that most of the time when they slip out a free recommendation of a stock that they currently have in their own portfolio is usually for two reasons and neither one is not because they want to help you.

1. They recommended a stock to their readers a week or two ago and the stock has either sank or hit a resistance and they need your help to get it going again.

2. It’s a long ago recommendation that is sinking and now they need your help to get it out of this jam.

Also you must be aware that even if you do get a good free recommendation, these letters will not tell you when to sell this stock. Actually they want you to keep holding it as long as possible so that they can sell it for profit. They may even decide to get rid of a stock that is in the red, but before selling it they will try to create some hype over this stock to get it temporarily up, and after it perks up they will sell it leaving you holding the bag. 

This is exactly the same that many stock email spamers and discussion boards do; they hype a stock up and after it jumps the people in the know sell it leaving unsuspecting small investors holding a worthless stock. 

Below is an actual free recommendation that sounds very innocent and not pushy at all, but it has very clever bait that many people get hooked on:

“As at least some of you know, XXXX has been a core recommendation of my newsletter, XXXX, since early XXXX. Sales fell short of expectations in the fourth quarter, and the company gave a tepid forecast for XXXX – which seems sensible given headwinds that the world seems to be facing.

I don't have a forecast for XXXX sales in XXXX, but I didn't when I recommended XXXX, either. I recommended XXXX because it is the world's leading XXXX company, it was incredibly cheap (and is incredibly cheap again), and I'm certain that in the future the world will buy more XXXXX than it does today. In other words, you don't have to be right about too many things to do well in XXXX over time. 

So... do I care that the stock has pulled back? Not really. We bought at a great price ($XXXX). Even after falling close to 30% from its high, XXXX is still trading above where I first recommended it. 

Should you buy it now? Only if you're looking for a super high-quality, blue-chip company. And only if you're reasonable about the likely future returns and your holding period. Buying now, I think you're likely to make around 20% a year (on average) over the next five years.”

This is how many newsletters use you and your money for their profit. Yes it’s possible that you could make 20% with this stock over time, but just remember that they will hardly ever recommend a free stock pick that is doing well at that particular time. The stock is always in trouble.

Besides this statement was not true: “Even after falling close to 30% from its high, XXXX is still trading above where I first recommended it.” This free recommendation was on their weekend edition and the stock in question closed on Friday $0.35 below their purchase price. (May be the letter was written before the close?)  On top of this there is also a great likelihood that the market slide will continue, since it's mid January 08 right now. They might be hoping for a bounce to sell this stock at a small profit? Also this recommendation is quite tame compared on some other that I have seen. 

Some other warning signs: You don’t have to hype a good profitable letter with totally ridiculous promises of free money or 900% results. If you receive a new super duper secret (too good to be true) news letter add every week from a publishing house that may mean they are just making money with their letters and not the stock market. I am sure you count how much money some of these publishing houses are raking in. Several thousands of members at hundreds or even thousands of dollars per member!

Don’t subscribe to a new letter that has no money back return policy. If they don’t offer a free look that is for a reason; usually they either are not profitable or their system is too difficult to implement in real life. Many letters look very good on paper, but are just about impossible to follow. Or in order to make money with them you would had to be with them from the get go. In other words it will take years to get fully invested with them because they recommend a new stock only once a month.

Also if they use fear as a main thrust for selling their letters it is not a good sign. It’s fairly easy to paint the future so bleak that it looks like the sky is falling and scare people to buy something, but that usually means that this company is more concerned about making money than your well being. A respectable publishing house would never use scare tactics or hype to sell something.

There is nothing wrong with subscribing to a good reliable honest newsletters. When reading a stock website, you can tell on your gut level if you can trust it or not. Follow that feeling. If they use scare tactics, hype or promise too good to be true results I would be careful. Good letters have all their results easily accessible not hidden or that in order to get the results you would have to subscribe to them. If they ‘scream’ that they made 300% on this stock and 250% with this one it's a trick to get you hooked. If a newsletter really is profitable they will publish ALL their results openly, if they don’t show them openly they are not profitable. Why would they hide good results?

Select a turtle rather than a rabbit. Rabbit, in other words a letter that is good one year is often so because they just got lucky with one or two stocks. Next year they (according to Mark Hulbert) usually are at the bottom of the deck. So analyze their method and results as to why they are profitable right now. Is it because a lucky stock pick or two, or is it something their system can produce year after year? There are some sectors that can be profitable for a long time though, like PM and energy sectors. But all sectors go in and out of 'fashion'.

Take care of your money and invest it wisely. Take an advantage of free trial periods that most letters offer; cancel without any hesitation if it’s not what you want. Stock market can be a great place to be in both bull or bear markets if you have the right help. Look for a system that can make money on a bear market too. If you are not too greedy, don’t expect the moon and look for a stock market system that is based on TA (technical analysis) rather than the author feelings about some stocks you will have a good chance to make some money.

How to become a millionaire?

2007. Even though a million dollars is no longer as much money as it once was. Not too long ago one could almost retire on one million, but it's still a lot of money. If you are old enough to retire near future one million dollars could help you a great deal to have a nice comfortable retirement.

That is if you have lived within your means for the last 10 to 20 years. But if you have a lot of debt and expenses you can burn through a million real fast. You may not even be able to retire as this is the case for too many people today. They have trusted their good luck or just wish for some sort of miracle that will enable them to retire in debt free. Most people in US don’t have enough money to retire or to keep their current living standards.

According to the Social Security Administration; take any 100 people at the start of their working careers. Follow them for 40 years until they reach retirement age, and here’s what you’ll find:

- Only 1 will be wealthy.

- 4 will be financially secure.

- 5 will continue working, not because they want to but because they have to.

- 54 will be dead broke – dependent on their meager Social Security checks, relatives, friends, and even charity for a minimum standard of living.

- 36 will be dead.

- That means only 5% of the work force ends up being financially successful while 95% retire more or less destitute.

What group of people you will belong to at your retirement? Even if you are close to a retirement age, there are still many things you can do to better your future. And if you are still young don't trust your good luck that you will be ok at the retirement age, even if the most of the population does so.

Simple solution: Be smart; plan early and act on your plans. Be careful with your money. Start saving money early. Spend less than you earn. Invest smart. And the most importantly live healthy so that you will not be one of the 36 who will be dead. Find your passion, eat healthy foods, don't put on excess weight, live clean life without drugs and cigarettes, eat your vegetables, stay mentally and physically active, take your vitamins, exercise and reduce your stress levels. Stress kills!

If you are already close to the retirement age; make a clear plan for the next few years with a calculator in hand. Sell all the junk you don’t need. It’s surprising how much money you can make that way and you will feel better when your closet and garage are empty. Stop buying junk and start saving like there is no tomorrow. Get rid of useless second cars, boats, trailers, summer homes etc. if you are not using them. Pay off your debt; especially credit cards. Put your savings to work by investing them to something that will give you good return, but since your are close to the retirement invested safely. 

Try to find a second source of income if possible. Something that you can do on the side like; selling stuff on EBay, making something by hand that you could sell. Write book and sell it. Do consultations on your field of business etc. This second ‘job’ should be something you truly enjoy doing not just a job. You will need something challenging and interesting to keep you going once you retire. 

Sell your home and downgrade it; you may not need as big of a house or apartment any more. All this can easily save thousands of dollars that will be very handy once you retire. Most folks have no plans what so ever. A good plan is half the battle.

There is a way to retire rich, but it takes a lot of planning and doing. If you are from a rich family then it’s a different story, but if you are on your own, then you must be very smart in order to retire wealthy. One mistake is that especially when it comes to investing and stock trading people expect huge returns or they have no good plan as how to make the market to work for them. You must be patient with the market. Don’t spend your hard earned money on stock recommendation letters that promise you something that sounds too good to be true. Find a turtle that delivers positive returns year after year.

Actually it doesn’t take that much growth to have a nice nest egg at retirement if you have the luxury of time. For example…. actually why should I do it for you? Go ahead and  calculate for yourself how much money you need to save to retire in style (millionaire) and maybe you will learn something in the process. This Yahoo site has a ton of financial calculators. It even has a ‘How to become a Millionaire’ calculator.

Good luck with your quest for money and happiness. Don’t forget the happiness part it is more important than money. Too many people work for long hours for years practically killing themselves trying to become wealthy to be totally disappointed once they reach the riches. Enjoy the trip; you may or may not reach your monetary goals, but you will have a certain amount of time on this great earth; use it wisely by enjoying it as much as possible RIGHT NOW.

How to get on an ongoing signal? 2008.

Sometimes it takes a long time between signals or we may want to increase our stake. Also I may sell 1/3 or 1/2 of our portfolio from time to time to make sure that we have some profits if the markets behave strangely. And if after we sell some of our stake the markets start going back up again we may want to buy into it again. 

Getting back in is the most dangerous time, but properly done it can be accomplished with fairly small risk. 

First I would do it with QQQQ and not QLD or QID because these two ultra funds can move too fast. If QQQQ turns down while you go long your losses would be only a few percent. 

Then you must know that what the market’s trend is. Secondly make sure the market is not overbought and ready to go down. 

This is one way to enter. Try to buy dips: Stochastics are at the bottom and ready to brake upwards preferably from below 20. MACD is going up and RSI is way below 70. If it all looks good place a market order; especially with QQQQ ask and bid prices are usually pretty close to each other. With some other stocks the spread can be a quite large. 

Then set a stop loss at the low of the previous day or the day before depending how much you want to risk. Now you know your risk, which shouldn’t be more than a few percent. 

After you have gotten a few percent profit on this new trade, you can risk this profit by buying more of QQQQ or even some other ETF. But don’t buy QLD because if it will go down as does the QQQQ and you will have a double loss. Diversify; go with some hot country or area ETF, like Brazil or India etc. This way just maybe if QQQQ sinks the other ETF will protect you long enough that you can get out without a big loss. You can see more on the ‘What to Trade’ page.

You should look at these trades not as two individual trades, but a combination trade in which one trade protect the other. At the end of the trade; it’s the total profit or loss that matters, not what happened to each individual trade. 

You can use hourly or daily charts for this. Don’t bet your farm on these trades. Do it in a few increments. This following website has several good samples of how to set up a proper stop loss. Study them all and practice them first on paper before putting any money on the line. 

www.incrediblecharts.com/trading/stop_loss_orders.php 

And here you can find the current hot sector or country:

www.bloomberg.com/apps/data?pid=invest_mutualfunds&Sector=0&ListBy=5Y&From=1&Term=2 

Are 1000 % returns attainable at the stock market? 2008.

2008. Yes they are, but once in a blue moon. I know you are like every other fool out there looking for a perfect trading system that makes minimum of 1,804% or $64,897 every 7 days, and you will not settle for a newsletter that promises less than a few ten baggers a month.

I will be very happy for you when I receive an email from you stating: "Timo you can keep your lousy system because I have just been accepted to a Super Duper Quantum Subatomic Extremely Secret Super Black Box Trading System. They promise me that I will double my money every two weeks. And it cost me only $999 a year". 

Trust me; I will be very glad for you if you find a system like that, and actually I want you to let me know as soon as you double your money first time; I will close shop and join them too.

I used to be one of those fools who spend my hard earned saving by the thousands to practically useless stock newsletters. I read about vague predictions and different waves that could go up or down. I spend hours every day going through useless trade literature and watching hugely bloated egos on TV talking from the both sides of the mouth. Year after year I ran after the latest undiscovered stock gem email advertising teasers that promised an easy ten baggers by the bucket full.... to be disappointed yet once again.

Finally I realized that when a newsletter promises unattainable results that means that their real results are so bad that in order to lure you in they must promise these 1000 % gains. You will never ever see this kind of promise on any respectable newsletter. So the main lesson of this article is: if it sounds too good to be true it is.  

Also most newsletter gurus are not there to help you, but to make money with their publications! That is a critical point to realize. Yes, there are many good and honest analyst too, but many publishing empires just keep pushing new letters out like there's no tomorrow. Just think about it; how can they discover so many new secret investment systems every year? 

Right now we are still at the infancy of Internet stock recommendation letters and that is why so many of them are raking in millions of dollars. The audience (us) is not yet able to tell what letters are there just to make money for themselves and which ones are for really to help the little guy. Because we are totally ignorant about stocks we are happy to get any help… even if it’s bad help.

Also we have been brainwashed by their constant advertisement to believe that it actually is possible to make 1000 % month after month. It is not! Stop wasting time and your money on these useless investment letters.

I am not trying to blame the stock newsletter publishers for our losses. If you are stupid enough to invest your hard earned money to an email hot tip of some undiscovered Nigerian gold mine; you deserve to lose your money. You are always responsible for our own money and losses!

Hot tips alone, but even reading good newsletters and watching finical news on TV can be confusing enough. How may times this has happen to you; Your favorite source says: “Now is the time to invest” and you decide to do so, but then you read one more newsletter and it says: “Now is time to be cautious”. Now you don’t know what to do. You decide to check one more source and it say market may go up or down… by now you are like deer in head light, unable to do anything.

This is simply because no one really knows what the market will do at any given day. That is the honest truth. Yes, technical analyst (TA) can give you some idea what may happen, but it cannot tell you anything certain.

The best systems follow the trend and go long and short according to a trend. No system will ever get the exact bottom or the top, but a good trending system can take a nice slice of a trend. These slices do ad up and after a year one can have substantial profits.

Do you still want to waste your money or be disappointed by all these too good to be true newsletters, or have you suffered enough yet? Your life - Up to You!

The difficulty of being a stock analyst. 2007.

One big problem that the stock analysts face especially in media is that the audience expects them to say/predict something new or shocking. If an analyst talks same boring stuff over and over again, the audience is going to tune out. So that is why once an analyst is invited to TV etc. he or she must come up with something really worthwhile or they are not going to be invited back. 

There is a constant competition on the media as to who is the best 'talking head' this week.  So every analyst is trying to outdo the next analyst, and that's why the truth gets often ignored... the whole reason an analyst goes to a TV program is not to help the investors, but to gain fame and subscribers to their newsletters or services. 

This happens to  many  analyst and also movie and TV stars, that they have a good streak of a few blockbusters and they become too sure of their star power, and the ego takes over and their performance usually drops. 

This can happen to a financial adviser too. He or she has a good year and became too sure of their powers... and then everything goes haywire; they make all the wrong moves and the results drop. This happens all the time in financial worlds. Most of the time the best traders and newsletters stay out of the limelight as much as possible. It pays to stay humble and constantly learn your craft what ever it might be.

Ayn Rand wrote in Atlas Shrugged

 ‘Watch money,’ she said. ‘Money is the barometer of a society's virtue. When you see that trading is done not by consent, but by compulsion -- when you see that in order to produce, you need to obtain permission from men who produce nothing -- when you see that money is flowing to those who deal not in goods, but in favors---when you see that men get rich more easily by graft than by work, and your laws no longer protect you against them, but protect them against you -- when you see corruption being rewarded and honesty becoming a self-sacrifice -- you may know that your society is doomed.’ 

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