stock market

Stock Market Up to Start Week

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And this week (shakes magic-8 ball) the stock market will start up! The financial news sites are all going with: because oil prices are rising. I keep telling myself I won’t write any more posts about the stock market volatility that’s going on right now, but it’s hard not to when there are so many stories out there telling you why now is the time to buy, or now is the time to sell, or how there is a recession coming, or how there isn’t, and, “Hey, squirrel! Let’s sell and buy!” Today. the U.S. stock market happens to be up. The Dow is up over 200 points, or 1.38 percent. It is still down for the year, but don’t look now, another week or two like this, and we’ll be right back where we started in January. What do they say, “A lot of sound a fury signifying nothing?” As always, daily volatility tends to be a function of computer trading algorithms rather than actual investor sentiment. The truth is that things are still dicey. The Fed doesn’t know if it should or should not raise interest rates again… sooner or later…. For extra fun, the inflation numbers look …

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Dow Down 300 Points for Today and…

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5 year dow chart

Your daily reminder of what this morning’s 300 point drop in the Dow Jones index looks like on a 5-year chart. Remember, your time frame and risk tolerance are what matters. If those have changed, talk to your financial advisor, or re-evaluate your current asset allocation. If you are currently investing for a shorter time frame, you should know, and accept that this kind of volatility is very likely to continue while the stock market shakes out its “too fast” run up from the Great Recession to now, as well as global instability such as the American election, structural issues in China’s economy, and whatever is going on in Europe this month. Also, this is the first time in a generation the oil industry and the economy in general has seen oil prices this low. It’s no wonder people aren’t really sure what to do. And, last, but definitely not least, don’t forget that most of this is computers trading amongst themselves. Stay smart and keep sight of your goals. Don’t overreact to short-term market news and events.    

What Happens When My Stock Goes Down?

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waterfall falling stock price

Yesterday I wrote about how Apple stock could be considered a dividend stock by some investors. Later that day, after the stock markets closed, Apple reported its first quarter results. (Apple, like many companies uses a fiscal year, instead of a calendar year. The first quarter for Apple runs from October to December.) The results were met with disappointment by the markets and the stock is down this morning. This triggered an email from someone asking if Apple was now a bad stock to own or buy, and that felt like the beginnings of an article I’ve been meaning to write for a while. Remember you should not be buying individual stocks until your retirement plan, college plans, and savings plans are fully funded and on track. What Happens When a Stock Price Falls? One of the most difficult things for non-professional finance people to grasp is the difference between actual losses and paper losses. An example can be helpful. Apple stock was trading at about $100 per share yesterday when I published the post about the dividend yield moving past the psychological 2 percent dividend yield mark. Although I didn’t buy any stock on that day, let’s pretend I did. …

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Stock Market Reality Check and When To Panic

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10 years invested in SP500

I’ve written a few articles recently about the start of the year stock market freak out and about not panicking when the stock market makes sudden moves. In response I’ve heard from people about if there ever is a time to panic, and if there isn’t, if there is ever a right time to sell. The problem is that there is some knowledge missing from these questions. So, here is a reality check on the current stock market situation, and some advice on when to panic and when to sell your stocks. Long-Term Diversified Portfolio Let’s start from the beginning. There are a lot of different kinds of investing. When people forget this fact, it often causes them to make incorrect decisions. Remember, every decision you make should be consistent with your investing strategy and financial plan. So, for those of you investing for the long-term, particularly for retirement, with a decade or more to go, your reactions should be very different from someone who is investing for other reasons, or for a shorter time frame. As a long-term retirement investor, your strategy should be to construct a well diversified portfolio that matches your return needs with your risk tolerance. …

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Market Volatility Continues as Beginning of 2016

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Market Volatility Continues as Beginning of 2016 1

I’ve written a few articles now about the volatility in the U.S. stock market, especially as it pertains to reacting to China’s stock market (and the time before that too). A few years ago, the trouble was Greece, if you can remember that far back. Sometimes, it seems like last month is ancient history to market watchers. I’ve also written about how overreacting to bad news isn’t wise, but, what is really going on with the stock market, and what should real investors think? America vs The World Stock Market First, it is important to notice the difference between the American stock market reacting to news about the U.S. and the American economy, and reacting to the news and stock markets of other economies. While world economies are more intertwined than ever, the circumstances in China are not the same as they are here. While the Chinese economy is stuck in a tricky place thanks to ongoing government intervention, and rising debt loads, the U.S. economy actually could probably use a bit of government help. The markets don’t like uncertainty, though, and a lot of what you are seeing in the stock market today, and other days, is nothing more than …

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China Stock Market Panic – Take 2

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china crash number 2

The stock market in China is in a free fall. Everyone panic! Wait. This seems familiar. Maybe, it’s because I wrote about this same thing just a few months ago during the August Chinese stock market crash. History. Learn. Repeat. Mistakes. Bad News the U.S. Economy I wrote a nice well-reasoned article recently about how you shouldn’t let bad news force you into making rash investment decisions. Here is another way to look at it courtesy of this repeat bit of stock market news. This time we have a nice little confluence of factors. There is, of course, the plunging China stock market, but this time around we have a little extra fear in the form of a nuclear test that North Korea claims is a hydrogen bomb test. (Last time, it was Middle East instability.) Well, that doesn’t sound fun? As if that weren’t enough, oil prices are falling again, and for some parts of the stock market, that’s bad. But, should we panic? George Soros isn’t helping. He’s in the news comparing today to 2008, you know when major U.S. banking institutions were failing and the Fed had to rush in to keep the whole American economy from seizing …

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Money Investing and Personal Finance End of Year

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end of year december finance money

Here comes the end of 2015, are you ready? Are your finances and investments ready? On the one hand, the end of the year means absolutely nothing to your money. Those twenties in your wallet don’t care what year it is, and your bank accounts don’t either. The stock market goes up and down before December 31st, just like it will after January 1st. That being said, there are some end of year tax issues to be aware of, as well as some smart money moves to make before the end of the year. What To Do With Money Before Year Ends Step One: Don’t Panic. Seriously. Too many people get all wrapped up in the end of the year and the start of a new year. I think that some of that comes from the added stress of the holidays, or the vacuum left behind when they end. The reality is that you and your money are probably fine, even if you don’t do anything at all before the year ends. Yes, tax deductions matter, but probably not as much as you might think. And, yes, there are deadlines, but many of them may not apply to you. With that …

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Tech Earnings, The Economy and Stocks

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Well, this is an interesting week for investing and stocks. Many technology companies are releasing earnings this week. These companies are not more, nor less, important than other companies, but many of them have become both household names, and some of the most commonly owned household stocks. That makes the earnings more interesting to a lot of Main Street investors. Due up for earnings reports today was Twitter, which recently welcomed back former CEO Jack Dorsey, who is also still the CEO of his startup company, Square, presumably at least until he can finish taking it public. (Dorsey can then claim victory and a “big exit” for Square, which is a bigger thing than you might think in Silicon Valley.) Twitter stock is down 10 percent as I write this because things are just as bad as everyone thought. Google, now Alphabet, reported good earnings and its share prices have been climbing, same with Amazon. Microsoft is up, Yahoo is down. And so on. The big news today, was Apple stock which beat estimates thanks to growth in China, among other things. That will be business as usual for the markets, which is good news. There could have been a …

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Stocks Freak Out, You Shouldn’t

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The stock market is down big again. What is going on? Two weeks ago it was the Federal Reserve and interest rates, last week was something. Now it’s… well… A big drop in Biotech stocks comes after the least sympathetic man in all creation bought the rights to a decades old drug and then raised the price more than 5000%, then went on television to defend the increase. You remember that old Simpsons episode where they show Richard Nixon in a debate with Kennedy looking like Satan. Yeah. I was just like that. Having attracted enough attention that politicians smell air time, Congressional Democrats now want to subpoena Valeant Pharmaceuticals (VRX), which although unrelated, has recently pushed the same business model of acquiring the rights to old drugs and then driving up the prices. Biotech stocks are down across the board. Oh, plus the uncertainty around the Fed and interest rates is still a thing. Oh, and China too. Market News and Reality Here is where you can start to see the cracks in the idea that the stock market always rationally follows current new events. First, Democrats do not control Congress. Republicans do, and they do not cooperate with …

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Fed Does Not Raise Rates Market Confused

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So, this is interesting. The Federal Reserve did not raise interest rates at its September (2015) meeting. This is not surprising, per se. There were numerous international banks and organizations, plus tons of U.S. economists who worried that an increase would be too soon for a fragile economy. Here is where it gets weird. The stock market LOVES to plunge in reaction to a rate increase. Sure, it only lasts a day or two, but there’s nothing quite as fulfilling to a stock market index as dropping 200 or 300 points whenever the Fed raises interest rates. The catch is that Wall Street actually secretly loves interest rate hikes. A Federal Reserve increasing interest rates is the equivalent of a stern father taking away our credit card for our own good. The market throws a temper tantrum, of course, but it’s better for everyone in the long term. If the Fed raises interest rates, then there won’t be an inflation boogeyman. Based on all the pundits and analysts out there, it sure seems like the stock market was expecting a rate increase and all ready to throw its fit and wring its hand, probably just until the weekend, but still. …

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