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

Well, well, another interesting day of trading while the world sits and waits for our dreaded employment numbers to be announced. Some are expecting the numbers to be the worst since World War 2. However, it probably won't matter, because our market has become so interested in "projected numbers" than what the actual number dictates. For example, Target announces earnings with a 4.1% drop in sales, but the stock goes up almost 3%, having the announcement better than market expectations. On the flip side, Wal-Mart announced an increase in sales of 1.7%, but because this was below market expectations, there stock goes down 7.5%. The market is becoming more concerned about the numbers relationship to expectations instead of the actual performance of the number itself. It can be very, very frustrating.

So even if we do see a horrific number for employment, unless it's the worst since World War 2, I'm sure the media will spin it off to be a positive sign, and somehow millions of people out there will buy into it. Not me, I expect the number to be very bad and as a result it reminds me of just how big of a mess we're in.

After the close, Chevron warned of probable lower earnings due to the large drop in gasoline prices. I'm sure they're doing just fine as they made mounds of cash the past two years off our $4.50+ gas prices. Still, this news could bring some more negative sentiment for energy sectors during trading tomorrow.

CITI BAILOUT
A big announcement today, was that Citi has agreed to participate in mortgage adjustments for distressed housing loans. Are you serious? I don't mean to sound unsympathetic as I am aware there are many people suffering. However, this move will support the 90 10 rule. Probably, only about 10% of the people receiving this help have actually a legitimate case to argue of their current position, while the other 90% will be bailing out people who bought out of greed and poor choices. One of the great principals this nation was founded on was a free economy. It is also known as the American dream. You can do whatever you want to do with enough work. Another element of the American dream is failure. Without failure, we have no successes. Call it survival of the fittest, yin and yang, or whatever. The point is not every business is meant to succeed, just as every choice isn't suppose to be the right one. If we don't learn from our mistakes, how will we change the future?

I could go on for hours about this, I just feel that this move (and whatever else is to come) undermines the people that were patient and worked hard for what they have. I mean, heck, if I knew the Government was going to bail me out, I would have bought three houses, knowing eventually, the Government would bail me out. If you take away accountability, you take away that spirit of free economy that originally made this country what it is. So, I'll get off my soapbox, that's just my feeling on the situation.

So to summarize this move, bankruptcy courts can alter the loans based on certain conditions. These being:

1) Only mortgages entered into prior to the date of enactment of the bill would be eligible for the treatment. All loans, and not just subprime, are eligible.

2) Borrowers have to show they made a “good faith”(What does "good faith" entail? Who knows.) attempt to work with the lender before considering this bankruptcy provision. Bankruptcy cannot be the first option, and borrowers have to prove it wasn’t.

3) Bankruptcy judges can strip away a lender’s credit or rights if they violated the Truth in Lending Act or other state and federal laws.

Many are still against such moves, but it will be interesting to see who else joins the wonderful bailout club. I would expect this to probably cause some optimistic trading tomorrow, especially in home builders and maybe some REITS. I don't know what this will do for financials, considering in the end, this will be reducing their investment. I see it as bad news, but you never know how the media will spin it.

As I have received many emails with questions about Lending Club, I was able to talk to one of the Directing managers of the site today, who answered several of mine and your questions about the program and their success. I plan on writing a post about it this weekend, sharing some of the numbers he gave me, but all in all, it was a great call and really increased my confidence in the company. I realize the risks of consumer lending, but after the call, I am a lot more comfortable with the underwriting and screening process and now believe I have a really good chance of receiving close to my 10.5% targeted returns. Definitely worth looking into.

Well, the end of the week rally could be in session tomorrow, very much depending on employment numbers. I really do think this number is going to be very, very bad and only getting worse. I would expect the market to react negatively to the number, but with the help of the Citi announcement and market manipulation, who knows, maybe somehow we'll end in the green. Happy Trading and we'll see you tomorrow.

Finally, we saw more than average volume return to the market today, as the fear for increasing unemployment as well as worsening economic conditions took the wind out of buyer’s sails. To be honest, I believe the market should be reacting like this every day, considering the mess we’re in. It’s still hard to say whether this will begin the next crash, as Obama hope still lingers, but it indeed made a statement that the bear is still out there.

Everyone is talking about the upcoming jobless reports coming out Friday. Some analysts are saying that this month we could see a jobless count of 670,000 for December (today’s ADP report showed that we slashed 693,000 jobs in the private sector). I personally feel that we will be even worse than that number and have a lot more to go. We haven’t even begun liquidating the retailer positions. Once more of these big retailers go down, we should see some absurd unemployment numbers. In fact, in regards to that subject, North Carolina had an interesting experience this past week. North Carolina, being headquarters for a lot of major commercial and investment bankers had some problems with their unemployment office. It seems that their unemployment computer service was overloaded, because over 50,000 people were trying to access it at once. After fixing it and adding room to the server, the server was overloaded a second time due to over 70,000 simultaneous requests. The actual phone number to call was down as well. I believe the reality of our situation is slowly beginning to settle in with people.

I wanted to share an article from the Boston Globe dealing with commercial real estate. Myself being a big proponent of SRS, I thought it would be appropriate. It said, “If you think selling a home was tough in 2008, be thankful you weren't trying to unload an office building.
Sales of Boston-area commercial properties plummeted 86.5 percent last year, with about $1.35 billion in property changing hands compared to $10 billion in a red-hot 2007, according to the global real estate firm Jones Lang LaSalle.

The drop-off portends a turbulent 2009. Now, real estate investors don't have data to guide them in pricing properties in the soft economy, making it less likely that buyers will come forward out of fear of overpaying.

"Its a huge challenge right now for investors to figure out if they're getting a fair price," said Lisa Campoli, executive vice president at commercial brokerage Colliers Meredith & Grew. "During the last downturn in the 1990s, we had the S&L crisis and some banks went under, but there wasn't the global lack of confidence we're seeing right now."

Commercial real estate is the latest sector to be hit by the deepening recession, with the fallout just now sweeping through Boston and other markets. Rents are starting to fall sharply as vacancies pile up.

The impact is especially severe in New York City, where there is a large increase in space available for subleasing, a key measure of weakness in the office market. Available sublease space in Manhattan has increased 43 percent from the end of 2007 as foundering financial companies have rapidly shed jobs and floors of offices.” All over the country real estate is dying. Just remember, most of these properties that are dying have very high leveraged loans on them. Eventually, this should come back to haunt the banks again. This is why I still can’t even closely be comfortable with buying financials right now.

As a result of the -2.72% day for the Dow, almost all of the shorts were up today. SRS had a moderate 5.5% up day as hopes for more Obama bailouts keep investors a little confident in some of these REITS. Don’t ask me why. FXP had some enormous gains, closing over 15%, as China continues to have problems with their businesses. The element that is killing China is their enormously large work force. I mean, just to give everyone jobs, they need to be exporting into almost every nation. As demand is going down, this is killing their employment. Their unemployment number may be higher than our actual population. Also, if any of you have dealt with the Chinese culture you will know that when times get tough, they close the door to spending COMPLETELY. Here in the US, we love to use our credit cards, and dig us into more debt. With the Chinese culture, most people choose to save than to spend. This lack of spending and lack of exports should bring a lot of hardships for their country and businesses.

I wouldn’t be surprised to see this sell off continue tomorrow. As more negative employment numbers come out and other sore economic data, I don’t see a lot of optimistic buying going on. We could rebound a bit either tomorrow or Friday, but I still feel the bear is here right now. The only thing keeping me from putting all my chips into the short side is Obama and his list of bailouts. I’m going to let that ride out a bit, plus I’ve got enough currently in SRS, SKF, FXP and EEV.

I also wanted to clarify some things with my Lending Club investment. The times that were given in my portfolio is when the loan is set to begin, not mature. So my money will be tied up longer than I originally anticipated. However, I will still be shooting for that 10.5% return, it is just going to take longer. Anyway, I love looking into these different investment opportunities. If you know of some that have worked for you, please share. Have a great night everybody, keep up the pace. Happy Trading and we’ll see you tomorrow.

Another day of nothing much but bad news hit Wall Street today, but it seems as if the hope of Obama and his plans for a new (much larger) stimulus plan seems to be keeping the market a float, even in the midst of continual turmoil. He is also warning that our deficit is nearing 1 trillion dollars. I'm sure another round of almost a trillion in bailouts will help that. That number could be doubled or tripled by 2010. As the new congress was sworn in today(mostly democrats), it seemed as though new life was breathed into financials in hopes for new USS (Uncle Sam Support), which in turn made it a big day for banks and commercial REITS and a bad day for my SRS. As frustrating as it may be for me, I have to stick by my gut, my knowledge of the real estate market, and the hope that eventually, fundamentals will move the market again, because despite what some people think and in my opinion, our current economic condition has definitely not been fully factored into this market. We’ve been given a lot of emotional morphine to dull the pain the past couple months, but there are definitely troubled times ahead.

This shouldn’t be news to anyone, as everyone has been announcing warnings the past couple days. The Fed, Corporate Execs, Obama, some analysts, and about every legitimate website. Bank of America’s CEO wrote a letter to executives warning them of their poor performance results of 2008 and urged them (including himself) not to take bonuses this year. Well, at least some companies aren’t totally greedy. AIG, learn by example.

Alcoa also announced today that they will be cutting anywhere from 13,000 to 15,000 jobs to help guard from their recent hardships. This sent their stock crashing into after-hours and may have contributed to the down market as a whole in after-hours as well. The job cuts that should continue the first half of 2009 should be pretty horrific. It is scary to think of how high the unemployment rate will hit before beginning to recover. All I know is very little businesses are making a lot of money right now. I mean over $7 trillion of household wealth was wiped out by Q3 2008. That’s 11%. Some expect this number to have almost doubled just by Q4, bringing the total loss to about 20%. That decrease is going to have serious effects on our small and large businesses, especially luxuries. And some people feel we aren't even near the bottom.

Even as the market may cheer a bit as Obama is sworn in, in hopes for some more help. If Obama does end up passing his possible $850 billion stimulus plan, it is going to be quickly squelched by the $13 trillion loss in household wealth. This is why I don’t find much hope or optimism in these talks of bailouts. They're just lost tax dollars.

In addition to decrease in wealth, there will also be a decrease in spending. We are in a recession, a dollar made is a dollar saved right now. Very few people are finding a lot of extra cash to take to the mall every month. As worth of houses have been slashed and IRA accounts cut in half, people will be extra frugal in saving the next few years. By doing so, this will lower the monetary flow of the markets and bring more turmoil and frozen lending to the market. No one is being convinced to spend money right now. Even with a stimulus checks, much of that goes to paying off debt and savings.

It is very clear that problems are not retreating anytime soon. There will definitely be buying opportunities in the market. As I have said in past posts, I like energy and commodities. The dollar has experienced a surprising recent boost the past month. I don’t expect this to continue and see a lot upside still in Gold (GDX), Silver(SLVR), Oil(DIG), and agriculture(POT). Alternative energy is also on my radar (STP). During these harsh times, I expect to see a big boost in popularity in E-commerce. I see companies like Amazon and Overstock almost doubling their customer base the next couple of years. Sure, transaction volume will go down per person, but when the market does come back, they should be front runners in my book. Also, people are going to have to shop somewhere. That’s why I stick with Wal-Mart, Payless Shoe, and Old Navy brands for retailers. Discount retailers should still be doing sales.

Well, everyday becomes more interesting and a bit more scary. I just get this weird feeling like one day the market just may crash. I know the signs aren’t here at the moment, but the market is still very sensitive and the signs don't necessarily have to be here. On another note, no loans have defaulted on me yet in my Lending Club portfolio. Only a week and a half remains until all my invested loans are to begin and I am hoping I can maintain near that 10.5% return I opted for when I began. I believe my first loan payment is due in 3 days, so I will take a new screenshot and update you on what happens from there. I hope everyone is finding their own successes out there. It should be on heck of a year. Happy Trading and we’ll see you tomorrow.

Welcome back for everyone that was enjoying the past few weeks traveling or spending time with the family. While you were gone, there wasn't much you missed in the market. Just a few more record low index numbers and a bit of buying, kind of paradoxical isn't it? At any rate, it is good to finally be getting close to normal volume numbers as people are slowly staggering back to their lonely offices. Here in my office building, I am slowly seeing more parking spaces open up, less competition for the elevators, and almost no line for the lunch counter. We are truly sinking into this recession.

It was a disaster of a day for autos as their December numbers all came out. It’s funny, because even with the numbers reported, they were “better than expected” numbers for some analysts, somehow making some think this was a “positive day.” I’m glad these people aren’t my fund managers, because there is nothing to cheer about the numbers that were given today. Here are most of them for your review:

Daimler (Mercedes) -23.5%
Audi -9.3%
Porsche -25.5%
BMW -36%
Ford -37.4%
GM -31%
Honda -35%
Toyota -37%
Nissan -30%
Kia -39%
Chrysler -53%

Sure, but everything is fine, right? Whatever the case, after these reports, don’t ask me how Chrysler survives to February. Even with the bridge loans, with those amount of losses in one month, I see a very slim chance of keeping them a float. I see them going under very shortly. The companies that surprised me were the Asian autos. Usually Toyota is among the top sellers, but they were down more than the American autos. Either way, I’m steering very clear from autos, no matter what analysts say about them.

I continue to stick strong with my inverse etfs. It is good for investors to know that these are big momentum movers. There has been some negative articles written up about some of these leveraged etfs and that you can’t make money over time. This is not true. I have made very good money from them and plan on making a lot more. They are strong momentum movers. Bears have not had momentum since almost mid November. As soon as that momentum is back, we should see some serious strong gains in the inverse etfs. Yes, trade them with discretion, but please know YOU CAN MAKE MONEY WITH THEM! A lot of it if you time it right. I try not to stay in them very long, and buy and sell on the bumps, but they can be very rewarding. The critics of these funds are those that bought at the wrong time. I mean if I bought SKF at $250, I would be cursing them too! SRS would have had a very big day, if it were not for the gains in home builders (due to another better than expected number, still bad), we probably would have seen a 10%+ day today, instead of only 3.8%. No worries for me, because SRS is still my favorite for beginning 2009.

The traffic at retail centers for post holiday season has been horrific. I am lucky to see more than 20-30 cars in front of department stores. Even worse, when I am in the actual stores, there are no lines at the registers. Sure, people are still looking, but who’s buying. In my opinion, we are in for one of the worst years for retail bankruptcies in US history. As these retailers close, it is going to kill the bottom line of these REITS and property owners. Then to top that off, these 5 year conduit loans that were bought from 2001-2005, that were also leveraged 80-90% at 5% interest rates are all coming due, and where are they going to get financing for all these properties that are now 20-30% vacant? Commercial real estate is in for a horrible year in 2009. SRS is $150+ in my book. It may take until February after the Obama cheers settle down, but it’s coming in my opinion.

I was successful in my first Lending Club loan today. This program is one of many I will try out on this site and give you any success updates I find, as I like getting creative, with discretion, to try and spread out my risk and returns. As a trial, I allocated $200 to loan. The interface is very user friendly and I was able to do everything in under five minutes. I selected my target return I was aiming for (10.5%), and it automatically generated loan suggestions for me to use with a balance of A-D rated loans. I did a maximum of $25 in every loan, spreading out my risk and my final portfolio looked like this:


So as you can see, all the loans are due within 2 weeks, so I will know by then whether I am successful in my returns. So far, I love it. Hopefully, I can average out with at least an 8% return, the returns are the key. Slowly, I will put more money into it if I find success. You can sign up as a lender or borrower very quickly at Lending Club. I will continue to keep you all informed.

So we push on with volume back into the market. I still believe we are going to have bearish tendencies in this market until we get closer to Obama’s move in date. I think it’s a bit early to start cheering for that. Even so, I’ve got my SRS and FXP ready to go and am also looking to get into either SKF or FAZ, as commercial banks are bound to go through another round of hardships with these commercial loans. Good evening all, Happy Trading, and we’ll see you tomorrow.

As volume is slowly returning back to the market, we experienced our third day in a row of green trading as the market ended up almost 3% at Friday's close. Many are cheering this three day streak, hoping it is a sign for new beginnings for Wall Street and that maybe we can see positive growth after seeing the market get demolished in 2008. However, as I say time and time again on this site, I believe this "hope" is more like a prayer, as in my opinion, it's a long shot for anything positive to come out of 2009. Let's examine the facts.

Everyone is talking about the biggest thing in 2009. Obama taking over the presidency. Sure, this event is bound to stir up some positive movement (which maybe is behind this recent rally, a bit early in my opinion, but maybe), but I don't care if it's Gandhi, I can't see one man turning around this economic crisis anytime soon. Sure, the damage can be lessened, but there will be pain and struggling. That's what comes with a cyclical economy.

The market cheered Friday, as Obama spoke of a strong, aggressive stimulus plan to be passed ASAP. People think that as soon as he takes office, money will be handed out to everyone. Even if it is, to an extent, that money is going to have to come from somewhere and it's certainly not coming from tax dollars, as no one is making money these days (except bankruptcy attorneys). So even if new money is printed to support the economy, that event in itself will eventually take a toll on the economy.

I wanted to share a portion of an interview that CNBC conducted on Friday with Martin Feldstein, a very well respected economist that has seen much in his days. In times like these, we really do need to listen to these old dogs, who have seen times near to the ones we are currently in. I do feel like these times are like none other we've been in, but I also think there is wisdom to be learned from mistakes of our past. This is what he said:

"I think we'll be lucky if by this time next year we see the economy having hit the bottom and starting up, and that's still going to leave us at a very low level of economic activity even if the turn has come at that point," Feldstein said during a live interview. "But there's no guarantee that all of this put together is going to achieve that."

Government will have to change the tax structure for capital gains and corporations while also exercising caution against inflation, added Feldstein, an economist at Harvard and president emeritus of the National Bureau of Economic Research.

"We are facing an economic downturn that is worse than anything I have seen in the post-war period," Feldstein said. "American households have lost more than $10 trillion of net worth in the stock market and housing prices. They are cutting back on their spending...Where's the demand going to come from?"

He also addressed the severe problem of these home mortgages and that a process needs to be taken to get these loans re-written. Either way, he feels we are a long way from even hitting bottom! These are why I like these old guys, they stick to facts. They are not easily wavered by the emotional wind that blows the markets. In the end, fundamentals will show through.

This coupled with the the lowest manufacturing data we've received since 1980 (ISM index hit 32.4 on Friday) still makes me a bear in 2009. Sure, I plan on buying some stocks here shortly, to take advantage of some short term Obama gains, but overall, I don't see us out of the trenches yet.

This is a great time to get into this market and prepare to make some money. If you aren't in, I would encourage you to consider tracking it and think about getting in soon. If you don't have an account, Zecco.com is a great place to start as they offer free monthly trades and incentives for new investors. A lot of money will be made in the next three years. As for an update on my mission with Lending Club, I have submitted an application for a lender (they have a reviewing process to make sure my credit is good enough). As I start lending, and hopefully make some good gains, I will keep you all updated. Keep up the comments, I enjoy hearing other voices in this market. Have a good weekend and we'll see you Monday.