Fortune Watch

During every correction, I encourage investors to avoid the destructive inertia that results from trying to determine: how low can we go; how long will this last? Investors who add to their portfolios during downturns invariably experience higher market values during the next advance— particularly if they focus on Investment Grade Value Stocks (IGVS).

IGVS valuations have been trending upward for nearly a year; Market Cycle Investment Management portfolios are eclipsing the all time highs achieved in 2007, and income Closed End Fund values have risen with surprisingly high yields still intact. The investment gods are smiling once again— but not on everyone.

Corrections are as much a part of the normal market cycle as rallies, and they can be brought about by either bad news or good news. (Yes, that’s what I meant.) Investors always over-analyze when prices become weak and over-indulge when prices are high, thus perpetuating the “buy high, sell low” Wall Street lunacy.
Read (more…)

I think it was the immortal Ben Hogan who quipped: I can put “left” on the ball and I can put “right” on the ball— “straight” is essentially an accident. Most amateur golfers would make a slightly different observation. We can hit the ball left or right with no problem; we just have no idea when either will occur.

As to straight, most of us refer to that phenomenon as “the dreaded straight ball”— and it’s this lack of straight that makes it so critical for us to master the art of working the ball. We need to understand how to move the ball left or right, consistently, on the golf course, under pressure, but without ever aiming out-of-bounds or into a lateral.

Yeah, sure, just like that.

It is doable though, and Ehow.com is a great place to start. There, at “work-golf-ball” is a simple five-step tutorial that anyone should be able to master with countless hours of range work. Of course it’s more difficult on an actual golf course, with those red and white stakes, trees, bodies of water, marsh grasses, and back yard barbequers.

To become a lower handicapper, work the ball we must— unless your name is Moe Norman. Making the shot go higher or lower than normal is another of those ball working skills that you need to master to save strokes. Mother Nature really appreciates it when you maneuver the ball below Live Oak branches and over environmentally protected “no search” zones.

Read (more…)

A couple of days ago, I watched a short interview with the legendary investor Warren Buffett on an investment news channel. The interview was conducted shortly after the annual general meeting (AGM) of Buffett’s company Berkshire Hathaway. Buffet said many interesting things—as he always does—but the really educational part of the interview was the contrast between the world that Buffett inhabits and the world that his interviewer seemed to come from.

It was like listening to members of two different species talk. If a fly (which lives for perhaps a few hours) and a tortoise (who can survive for a hundred years or more) had a conversation, it would probably sound like Buffett and that interviewer.

At one point, the interviewer asked Buffett to comment on how his companies would cope with the downturn. Buffett replied that things were certainly down at the moment but he expected them to be OK in three to five years. I could see that the mere mention of a time scale like three to five years had derailed the interviewer’s thought process. Coming as she did from a world where three to five hours or at most three to five days is the standard unit of time, the idea of an investor talking in years seemed to have thrown a spanner in her works.

Next, she pulled out the day’s newspaper and drew the old man’s attention to a news item that US unemployment was up to 700,000. She wanted to know what he thought of the news. Buffett said that he was sure that five years from now, the employment situation would be much better than it was today. Again, this epic timescale put an end to that line of questioning.
Read (more…)

Until now, the official line is that the two Madoff sons, Mark and Andrew, only worked on the market-making side of the business.

Dad’s business — Bernie Madoff Investment Securities — was not their domain, they say, and thus they have nothing to do with the fraud. For a long time, people have suspected this wasn’t true, but a story in offers the best evidence yet. Far from just being in the back office on the brokerage side of the business, the sons were salesman for the Madoff fund:

Dalton Givens saw the warning signs.

Madoff’s sons wined and dined Givens, then a senior vice president of Wachovia Securities, at a steakhouse in Charlotte, N.C., to try to persuade Wachovia to invest in Madoff’s hedge fund.

Givens, now retired from the firm and living in Boonville, said he took a few sniffs and didn’t like the aroma.

Read the whole thing >

This is new. There have never been reports of the sons going out to sell the fund, let alone wining and dining bankers. Obviously, if they thought the fund was legitimate, then there’s nothing wrong with selling it. But obviously their involvement is more than they’ve let on, which means everything else they’ve said should be suspect.

“Absolute Truth” well science maintains there is there is no such thing like that, but from the current global financial crisis it is evident that there is no absolute free market. Truth is always relative, just like freedom.

It is important to look for positive points to find a way out of the financial crisis, apart from philosophic controversy.

All countries, whether separately or collectively, are working hard to contain the crisis, or at least to reduce losses, despite the gloomy picture of the global economy and the pessimistic atmosphere blanketing the entire world.

Although it is difficult to speak about positive points while the entire world is facing such a crisis, there must be some positive aspects.

The first of these positive effects is that the financial crisis ushers in an end to the domination of the sole magnate in international financial relations, which was a major cause of the crisis.

Wall Street was the world’s most powerful investment house, just a few months ago, where investments used to pour from the East and the West. Now Wall Street means bankruptcy, and investors in fear of losing their money do their best to avoid it.

At present, there are regions in Europe and Asia, including the Gulf region, emerging as hubs of huge investments, which will bring about more stability to the world financial system. This shift is important for restructuring international relations in the post-crisis stage.
Read (more…)

As the growing number of foreclosures and the value of stock portfolios hit bottom, news reports from the US of the financial fallout are growing increasingly dire.

Layoffs, foreclosures, cutbacks – there are plenty of grim economic stats out there this holiday season. Here’s perhaps the grimmest one of all: Calls to National Suicide Prevention Lifeline hotline have soared by as much as 60 per cent over the past year.

Mental health experts say the sour economy has turned what usually manifests as seasonal blues into a full-blown crisis. The fear of losing one’s job and pressures caused by a downturn in business, demotion or pension plan cutbacks can be bad for mental health and therefore increase suicide risk.

“Fear is the No. 1 emotion we’re hearing. People are feeling hopeless and helpless because of the economic crisis, and many feel that things aren’t going to get better. Now many of the calls are from people who have lost their home, or their job, or who still have a job but can’t meet the cost of living.”

A 90-year-old woman in Ohio shot herself while being served an eviction notice. A 45-year-old businessman in Los Angeles murdered five members of his family before turning the gun on himself, saying in a suicide note that he had done so because of his troubling financial situation.

While these stories put a human face on the toll the financial crisis has taken, the Director General of the World Health Organization this may only be the tip of the iceberg. As people struggle to cope with losing their homes or livelihoods, she said, “It should not come as a surprise if we continue to see more stresses, more suicides and more mental disorders.”
Read (more…)

Though investors have endured some pretty terrible Dow performances in recent weeks, including another 300-plus point on Friday, the downward spiral has not gone far enough to halt trading on Wall Street.

New York Stock Exchange rules currently call for circuit breakers to interrupt trading only in cases of extreme drops of more than 1,100 points. Such breaks, established after the Black Monday crash in 1987, are intended to help investors step back and assess what is happening.

The thresholds for market timeouts are set quarterly, using the Dow’s average closing price for the previous month, and activate in increments of 10, 20, and 30 percentage point drops.

For the current fourth quarter, if the Dow drops 1,100 points before 2 p.m., trading stops for an hour. If such a drop happens between 2 p.m. and 2:30 p.m., trading halts for a half hour. After 2:30 p.m., the 1,100-point threshold expires.

There is also a 2,200-point mark. If the Dow falls by that much before 1 p.m., trading stops for two hours. Between 1 p.m. and 2 p.m., a 2,200-drop causes an hour halt. After 2 p.m., trading ends.

If the Dow falls by 3,350 points, trading stops for the rest of the day.

The circuit breakers have been activated twice, both times in late afternoon trading on Oct. 27, 1997, when the Dow eventually closed off 554 points, or 7.2 percent. Trading that day was halted under previous triggers, which were later revised in 1998. The current triggers have never been hit.
Read (more…)

To be a good investor it requires financial intelligence that you should constantly improve. You have to start reading a lot of books and magazines, the great idea can come without even knowing. Inform yourself from local, national, even from global news. Any information you get from TV or newspaper, you need to learn something from it, keep your mind open. That’s how you start to become a good investor.

Successful investing requires three components, money, time and discipline, the chances are that you have the first two and have to work on the discipline part.

Investors who analyze the company can better judge the value of the stock and profit from buying and selling it. Your greatest asset in stock investing is knowledge (and a little common sense). To succeed in the world of stock investing, keep in mind these key success factors:

– Analyze yourself. What do you want to accomplish with your stock investing? What are your investment goals?

– Know where to get information. The decisions you make about your money and what stocks to invest in require quality information.

– Understand why you want to invest in stocks. Are you seeking appreciation (capital gains) or income (dividends)?

– Do some research. Look at the company whose stock you’re considering to see whether it’s a profitable company worthy of your investment dollars.

Read (more…)