Gripped by fear of a new recession, the stock market suffered its worst day Thursday since the financial crisis in the fall of 2008, the markets are definitely gripped by gear of a new recession The Dow Jones industrial average fell more than 500 points, its ninth-steepest decline.

The sell-off wiped out the Dow’sThe remaining gains for 2011 were wiped out. It put the Dow and broader stock indexes into what investors call a correction — down 10 percent from their highs in the spring.
“We are continuing to be bombarded by worries about the global economy,” said Bill Stone, the chief investment strategist for PNC Financial.

The day was reminiscent of the wild swings across the financial markets that defined the financial crisis in September and October three years ago. Gold prices briefly hit a record high. Oil fell even more than stocks — 6 percent, or $5.30 a barrel. And frightened investors were so desperate to get into some government bonds that they were willing accept almost no return on their money.

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Back in the day when relatively few non-professionals even thought about investing in corporate stocks and bonds, a focus on company financial statements was the gospel of conservative (meaning safer) investment theology.

Investment gurus studied Profit and Loss Statements, Balance Sheets, and endless footnotes to determine which businesses were most likely to continue to grow, prosper, increase their dividends, etc. Then, they assessed the quality of “management” before forming conclusions about the economic viability of the enterprise.

The quality of the numbers being analyzed was audited by well respected financial analysts while scores of research MBAs from throughout academia studied business and economic trends within company relevant markets. Sectors of businesses were also put under a fundamental microscope to further fine tune future stock market trends and performance expectations.

“Top-down” or “bottom(s)-up”, fundamentally sound companies were identified, classified, categorized, and fantasized over in much the same way as was being done by the very technicians that the fundamentalists laugh about at cocktail parties.

Certainly, it was presumed, the most financially sound companies would be the most resilient in the face of whatever surprises the economy, global politics, and the weather had to offer. Companies that had “grown up” profitably would have what it takes to continue in the right direction.

Clearly, both schools of financial thought have generated libraries full of useful (and questionable) information that marauding bands of Wall Street product advertising agencies can use against one another in their glossies.

Neither approach should be totally ignored; neither approach should be totally accepted; and neither approach has what it takes to do what its advocates want you to believe it can do — predict what’s going to happen next.

More recently, the analytical elite have reinvented themselves with fundamental analytics sub-divided by capitalization levels, sectors, countries, hemispheres, and more. The supply of data is endless — so much so we are expected to believe, that only very special Wall Street affiliated super computers can make enough sense of it all to really “know” which stocks are worthy of investment.

Frankly, I think they have all traveled way off course in their pursuit of some fundamental nirvana, pretty much to the same extent as their friends in the technical arena. No matter how long the train of growing profits, or how strong the balance sheet, every business has to adjust its model to outside influences to survive long term — and so does every investment plan.

There are a few fundamental fundamentals that demand as much serious attention as the fundamental technicals mentioned above, starting with long term profitability and current financial ratios. (If you haven’t looked at both, you are a speculator, not an investor — no buts, end of discussion.)

Dividend payout history provides information (indirectly) about the quality of a company’s management, products, business model, financial acumen, profitability, and respect for its shareholders. Don’t believe the growth company baloney; if they are not paying you a dividend, they are absolutely overpaying your senior employees.

If you are thinking: “what about start-ups, IPOs, emerging markets, commodities, etc.”, don’t. Those are speculations, not investments. This is not a judgment that all speculations are bad — it’s simply a warning that you must sift through the euphemistic descriptions and figure out what kind of bets you are being asked to place.

Profitability, current assets vs. current liabilities, market share, product mix, and regulatory environment are other key fundamentals that are fairly easy to get your head around — and pay particular attention to the latter.

Very few politicians act as if they know anything about business, capitalism, markets, etc. Very few theoreticians (particularly research economists) seem to know anything about actually running anything for real: business, government, investment portfolio, whatever.

And this brings us to MPT — the fancy new scourge of the financial markets.

Mortgage refinancing can offer long term advantages to the borrower. However, in case you are expecting immediate short term gains, it is not an option to consider; you will definitely be disappointed. Refinancing your mortgage is the fact of getting money from new mortgage loan to pay off the old mortgage loan. It works out to be beneficial in certain circumstances and otherwise in some other circumstances. So, you need to assess whether the entire process is going to benefit you or not before launching into the process.

Mortgage refinancing is considered an ideal option if it is going to give you a comparatively lower interest rate. And it also provides you a chance to switch over from variable or adjustable mortgage rate to a fixed mortgage rate. And the advantages are plenty if you are going to continue staying in the home on which you take the mortgage loan. You will have cash in your pocket and also be able to lower monthly payments.

Refinancing is an important financial decision that can lead to major problems; unless you have good reasons to do so, it is not recommended that you refinance your home. Substantial reasons need to be cited for you to consider remortgage advice. So, when is the right time to go in for mortgage refinancing? The ideal time is when there is a dip in the home loan interest rates you may opt for refinancing your mortgage loan

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Technical Analysis — Blinded By The Math

Without too much of a stretch, it could be documented that the Investment Grade Value Stock (not just “value stocks”) bubble of 1987 was caused by investor focus on company fundamentals. It would be a piece-of-cake to prove beyond any doubt at all that blind faith in technical analysis created the dot-com bubble at the turn of the 21st century.

More recently, blame for the late 2007 through early 2009 “financial crisis” could easily be nestled down at the feet of big government, misguided regulators, and maniacally creative Modern Portfolio Theory (MPT) practitioners, not to mention their ROTF-LOL institutional mentors. What’s next?

Pick a day, any day, where the DJIA is up or down by more than 100 points. Take a look at the “most advanced” or “most declined’ listings and note the shortage of plain vanilla common stocks. What you see is a pari-mutuel spreadsheet listing of the most popular derivative betting mechanisms, adjusted day-to-day, depending on the direction of their wagers.

With index ETFs significantly outnumbering the companies whose prices they are attempting to keep track of, isn’t it even less likely than in the past that technical analytics can be useful? Aren’t these numbers simply the result of demand for casino-esque sector funds and their seemingly limitless varietals?
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A Stock Market sell off may be about to begin which could take the Index lower  for the full year. These six reasons demonstrate why one of the most impressive stock market runs may have ended:

1. Markets can’t rise all the time. This probably is obvious to most people. A significant is what a market requires to go higher for a market which has more than doubled in two years. Recent economic news shows that support to be lacking. The S&P has risen to more than double from 683 in March 2009 to almost 1,400 two months ago.

2. Corporate earnings have been pressured by an economic slowdown and margin drops. Many companies in the retail, transportation and manufacturing sectors counted on low commodities prices back in 2009 and 2010 to help profits. That help is gone. Oil has rallied from below $50 in mid-2009 to almost $100 recently. The price is down from $110, but it is still historically high. Prices on cotton and many agricultural commodities have also risen in the same period. The result: The cost of making and moving goods is higher, and margins on items like clothing have dropped.

3. Consumer sentiment has faltered. Recent data from from the Conference Board said “Consumer Confidence Index, which had declined in May, decreased again in June. The Index now stands at 58.5 (1985=100), down from 61.7 in May.” Many retailers have posted slow same-store sales. Activity at the world’s largest retailer, Walmart (WMT), has been down on a same store basis for its U.S. operations.
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The “Bargain Stock Monitor” is one of three market statistics used as performance expectation analyzers for portfolios that are designed and managed using the Market Cycle Investment Management (MCIM) methodology.

It is derived from the month end Investment Grade Value Stock Index (IGVSI) “watchlist” screening program, which identifies IGVSI companies that are trading at least 15% below their 52-week highs.

The “15% down” break-point allows you to keep your eye on “Bull Pen” items. (You really need to be familiar with the selection rules to get the most from the BS Monitor – chuckle – and from the Watch List program.)

The fewer IGVSI equities at bargain prices, the stronger the stock market and the more “smart cash” you should be accumulating in the equity asset allocation “bucket” of your investment portfolio. As the list of bargain stocks grows (indicating market weakness), portfolio “smart cash” should be finding its way back into undervalued securities.

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George Washington Taxpayer owns 10 acres of land, four miles from the South Carolina coast, just a driver or two from the renowned Kiawah Golf Resort. Recent assessments (even in this dismal housing market) are solid seven figures, and the 25% or so of value mortgage has been overpaid every month for around ten years.

George and Martha have a totally clean credit rating, more than enough visible reported income, plenty of liquid, unencumbered assets, and a second building on their property that is used as an office for their very own, very private, very small business corporation.

The business has been “in the family” for more than thirty years, directly and indirectly employs about twenty other individuals and small businesses, and produces substantial, taxable income. It also pays rent and salaries to the Taxpayers.

George called Notquitesoquick Mortgage, LLC to re-finance his still barely “jumbo” loan — thinking, with a solid credit score, pretty impressive total documented income from all sources, a history of over paying, what could possibly go wrong?

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Adding the phrase “like a girl” to the end of whatever you were saying was a put-down, an insult, something to come to fisticuffs over. Little boys the world over hated being told that they, for example, “threw like a girl.” I’m not defending the statement, I certainly don’t agree with its intent, but hey, that’s been the case from the playground on up.

As far as women are concerned, investing belongs in the same category as childbearing, socializing, fundraising, community organization, and consensual leadership. It’s something that women may approach with trepidation, but the reality is they can be darn good at it.

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Caring for our pets can sometimes stretch budgets, we love our pets and are willing to do anything for them. Yahoo! Finance’s Farnoosh Torabi has rounded up some ways to save money on the care and feeding of our fluffy friends–from buying less food, choosing adoption, and learning some do-it-yourself grooming techniques.

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