The answer is nobody really knows.  However, there are two main reasons why I’m not selling my shares.  First, this isn’t a surprise.  Over the past seven years, since Mr. Jobs was first diagnosed with a rare form of pancreatic cancer and underwent a liver transplant, he has taken three leaves of absence for medical reasons, most recently beginning last January.  During these periods Chief Operating Officer, Tim Cook, has managed day-to-day operations.   Based on the decline of his physical appearance I wouldn’t be surprised to find out that Mr. Job’s role in Apple’s daily operations limited throughout that period.

Second, the past seven years have been an incredibly successful period for Apple’s business and stock price.  Apple’s stock has been a ten bagger since 2004 and net income is up an even greater percentage.   Mr. Cook was managing Apple during much of this period – he had to have played an important role in that success!

It is clear Steve Jobs has been a huge inspiration and a driving force behind Apple’s phenomenal success, and that can’t be replaced.  However, I’d bet his core philosophies and vision is so ingrained in the Apple culture that in his absence the company will maintain and continue it’s phenomenal record of success.

It is not only the size and volatility of recent market swings that points to hedge fund managers as the volatility culprits.  In Saturday’s Weekend WSJ there was a very interesting article titled: Too Flustered to Trade: A Portrait of the Angry Investor written by Jason Zweig.  Mr. Zweig details online polling data collected by a team of psychologists from Decision Research between August 9 and 15.  The polling data suggest that small investors are angry, worried, and during the recent market turmoil they have made few if any changes to their portfolios.  It hasn’t been small investors who’ve sent share prices south and the polling data also suggest they won’t be starting any new wave of selling.   Another group of investors who have been inactive recently are long only institutional managers.   Speaking from experience, traditional equity portfolio managers rarely see much value in making portfolio changes during periods of such drastic volatility.  It’s the hedgies who have been piling in and out of stocks –mostly into S&P 500 shorts.  It’s the hedgies who have driven stocks down to valuation levels similar to March 2009.  They may be right about slowing economic growth next year or European banking problems, but they are wrong to bail out of seaworthy stocks like Apple (COMP: AAPL) and Amazon (COMP: AMZN).  These two blue chip growth ships may have to endure some stormy business conditions but they have little risk of sinking.  When economic weather improves, they will be making new all-time highs and rewarding investors who have greater conviction than a scurrying rat.

The stock market has seemed to start leveling off and is back to near-normal. Other investors have started to work their way back into the market after receiving heavy losses. So, is now the time for you, or any other timid investor to start putting their money back into the market?

I will say yes. However, I would say that the time to get into the market was months ago while the stocks were down. Many people lost a lot of money and then got scared and pulled their money out before they rode out the worst of the recession. For the most part, if they would have just held their stocks their losses would be minimized.

Right now, it is important to track the stocks and funds that you want to invest in. You have to look at the big picture rather than the previous 12 months. The problem is the recession has changed the game so much that you have to look at everything rather than just the short term.

For example, in commodities, most things have always fallen in price as the weather turns cold. However, if you look at the cost of something like copper, you can see that because the recession has improved in the 3rd quarter 2009, the prices have gone up a bit since the weather has changed. In normal times, the price falls because construction tapers off for the winter. Right now, though, more houses are being built than were at the beginning of the summer.

If you are still timid about trading, try paper trading for awhile and see how you do. Once, I had heard about Citi and the rules regarding mark-to-market trading changing and knew that the stock was going to go up. Chris and I paper traded the stock (actually we did an option trade) and would have made a killing had we actually put money into the stock. Doing something like that makes you a bit less paranoid about putting money in the market.

Things to consider before you put your money in the market are things like how much risk are you willing to accept. Obviously, the more risk you can take on, the bigger the payoff or the greater the loss. You also have to realize how much you can put into the market and how to diversify.

It’s looking more and more that if you have discipline and want to save for the future, going to college may be a bad investment. A four year college degree costs too much and proves too little. It has become increasingly unlikely to be able to make up the cost of a college degree, even with the fact that college grads get paid more.

In an example for the New York Post as written by SmartMoney associate editor Jack Hough, if you look at two people from similar backgrounds each of whom save $16,594 for college. One decides to not go to college and invests his savings in a mutual fund that tracks the broad stock market. He ends up making an average pay that peaks at $32,538. He adds to his savings 5% of his after-tax income and it returns 8% a year.

His friend goes to college. He goes to public school and transfers to a private school. He ends up spending $48,286 in tuition and fees. These fees do not include room and board. He ends up spending $34,044 after grants. When he finishes school he owes $17,450 at 5% in student loans. He starts making just over $23,000 a year after taxes and peaks at almost $57K. Like his friend, he sets aside 5%. It will take him 12 years to pay off his loans. When he finally escapes from the debt at age 34, he starts investing in the same fund as his friend. He is able to make bigger monthly contributions. However, when they reach 65, the friend who didn’t go to college will have saved almost $1.3 million while the one with the degree will have less than a third of what his friend saved.

I believe that this all comes back to the fact that many people don’t think about saving rather they want to have a comfortable lifestyle while they can enjoy it. I’m not saying that you can’t enjoy things when you’re 65, but you can enjoy travel and have more ability to do so when you’re younger.

Do you think the rally has stalled?

Question:

The stock market really hasn’t moved too much one way or another for a few weeks. Do you think that the economic rally has stalled?

Answer:

I think that it has stalled for now, but that could be due to the poor reports coming out about unemployment. If you look at other factors such as retail sales (which were up for the past month) then the economy is doing a bit better in the way of consumer spending.

I think over the next few months, the rally will continue but it will be more gradual.

On September 15th Ben Bernanke said that the recession is basically over in a statement that rang so loudly, the stock market shot up like a weed after a rainstorm. Well, it was just over half a percentage point for the Dow today, but up is up, right (I really just wanted to use an illustrative language today and that was what came to mind also)?

So, on top of Bernanke’s statement about the recession being over, there was also new data to come out that said consumer sales were up. Sales rose in the past month the most they had risen over a single month in three years.

All of this news put together made for a pretty good day on Wall Street, but the statement about the recession being over was what made headlines that day. So, do I feel like the recession is over or that it may as well be over?

I think we may have seen the bottom. All indicators are pointing to the fact that we have bottomed out. The Dow Jones Industrial Average is well above the lowest point of the year and the overall stock market is doing well. Job losses have slowed down (although unemployment continues to increase). Consumer spending is starting to climb back up, homes are beginning to pick up in sales (and in return the amount of existing homes on the market is finally beginning to decline), and new construction has started once again on projects all across the country. Even auto sales have been kind of stirred after the Cash for Clunkers program.

But before we can all pack up our briefcases and drive to TGI Friday’s for Happy Hour, we have to remember something, it’s not over until it’s over and there are plenty of people out there who don’t have jobs and can’t pay their mortgages. I hate to be a buzzkill for those who felt like celebrating when Bernanke said the recession was basically over, but there are so many things still going on not only in the U.S. but all around the world that show the global recession is not over and that it will be a long road to go down before we actually see the end (and by the end, I mean economic growth like we were seeing prior to the beginning of the recession).

Where are you putting your money?

Question:

Recession! That’s a word that people are really turning a deaf ear to. However, there are a few things that we all still need to remember and do while the market is still down and the economy is nursing it wounds.

Money is the biggest issue. It’s something everyone wants, so where are you putting your money these days?

Answer:

Right now, analysts are warning against putting your money in the stock market, they’re warning against putting your money in real estate, it doesn’t seem like your money is safe anywhere. However, if you put your money in a mutual fund that tracks the market on a whole, perhaps you may just beat inflation for the time being. This may have to do for some of us who don’t have the time to micromanage our portfolios and watch every move the market makes.

People are angry at Ben Bernanke and I can understand why. This is the same guy who has led us on a crazy ride and given us all a tough lesson on how to not manage an economy over the past few years.

If you want to see all the things that Bernanke has said over the past few years, then watch the video above. It’s rather insightful into how he thought and what he thought about our economy leading up to the recession.

Federal regulators today made a rule permanent that was originally just an emergency rule that was meant to reduce abusive short selling during the stock market’s largest drops. The SEC announced that the action was targeting those who do “naked” short selling, which was expected to expire on Friday.

Regular short selling is basically when investors bet against a stock. They borrow a company’s shares, sell them, and buy them back when the stock falls and returns the stocks to the lender (and keep the difference in price). Naked short selling occurs when those sellers don’t borrow the shares before selling them and just look into covering their positions after the sale has occurred.

The SEC emergency rule includes a requirement that the brokers have to buy or borrow securities to actually deliver during a short sale. They have also been considering several new ways to rein in the rush of regular short sellers that have been trying to cash in on the fall in stock prices.

The five SEC commissioners voted in April to put forward for public comment five alternative short-selling plans. One option is restoring a Depression-era rule that prohibits short sellers from making their trades until a stock ticks at least one penny above its previous trading price. The goal of the so-called uptick rule is to prevent selling sprees that feed upon themselves — actions that battered the stocks of banks and other companies over the last year.

Another way to stop the increase in short sellers would be to ban short selling for the remainder of the trading session when a stock declines 10% or more.

The SEC and their staff are working with stock exchanges to make short sale data and volume publicaly available through the websites of the exchanges. This should result in an increase of the amount of information currently required according to the SEC.

Source

What do you think the new unemployment numbers mean for us?

Question:

A few days ago, some really unimpressive unemployment numbers came out. The figures showed that unemployment was actually on the rise rather than falling like people thought they would. What do you think the new numbers mean for us and the economy?

Answer:

I think that the unemployment numbers will fluctuate for awhile no matter what is happening on “Wall Street.” The stock markets have been on a rise (even though it has hit a bit of a  plateau recently) and consumer confidence numbers are also up (along with consumer spending). It will just take time for employment numbers to catch up.

It’s looking more and more that if you have discipline and want to save for the future, going to college may be a bad investment. A four year college degree costs too much and proves too little. It has become increasingly unlikely to be able to make up the cost of a college degree, even with the fact that college grads get paid more.

In an example for the New York Post as written by SmartMoney associate editor Jack Hough, if you look at two people from similar backgrounds each of whom save $16,594 for college. One decides to not go to college and invests his savings in a mutual fund that tracks the broad stock market. He ends up making an average pay that peaks at $32,538. He adds to his savings 5% of his after-tax income and it returns 8% a year.

His friend goes to college. He goes to public school and transfers to a private school. He ends up spending $48,286 in tuition and fees. These fees do not include room and board. He ends up spending $34,044 after grants. When he finishes school he owes $17,450 at 5% in student loans. He starts making just over $23,000 a year after taxes and peaks at almost $57K. Like his friend, he sets aside 5%. It will take him 12 years to pay off his loans. When he finally escapes from the debt at age 34, he starts investing in the same fund as his friend. He is able to make bigger monthly contributions. However, when they reach 65, the friend who didn’t go to college will have saved almost $1.3 million while the one with the degree will have less than a third of what his friend saved.

I believe that this all comes back to the fact that many people don’t think about saving rather they want to have a comfortable lifestyle while they can enjoy it. I’m not saying that you can’t enjoy things when you’re 65, but you can enjoy travel and have more ability to do so when you’re younger.

Jon Najarian is expecting an “explosion” in the financial markets. He said that if the government relaxes the mark-to-market rules for 12 to 18 months, then “you could see financials move 100% in a matter of hours.”

The news didn’t give any hope to investors or people waiting for the economy to pick up.

Then again, his negative outlook on the future could be due to his decline in profits at Berkshire Hathaway Inc.

Berkshire barely broke even in the fourth quarter because of losses on derivatives contracts tied to the stock market.

Profit fell 96 percent, the fifth straight quarterly decline, and Berkshire’s net worth tumbled $10.9 billion in the year’s final three months.

Net worth per share fell 9.6 percent for the whole of 2008, only the second decline since Buffett began running Berkshire in 1965. It fell 6.2 percent in 2001.

Berkshire generates about half its results from insurance, including auto insurer Geico Corp, but operates more than 70 businesses that offer such things as carpeting, ice cream, paint, real estate services and underwear.

Source

JPMorgan says we haven’t seen the worst of it yet.

I think that we have seen the worst (as far as the financial markets are concerned). Perhaps the stock market will fall some more, we all KNOW more jobs will be lost.

So, what do you think? When do you see the economy getting back to “good.”

The news is good for the markets, and may cause temporary rallies in some of the financial sector.

The stock market has been volatile with every new news story that comes out. It almost seems like if someone sneezes on Wall Street, stocks will move…but this news is truly good news for the market.

Since many people aren’t building anything new or doing anything to use up stock piles of metal.

The cuts would save the company between $700 and $800 million a year.

So many people are losing their jobs right now, and this is just one of the several making headlines. Between this, the near collapse of the auto industry, and all the stock market ups and downs, this has been a generally bad week for the economy.

Since the beginning of the year over 1.2 million jobs have been lost in the U.S. The stock markets, however, are taking the news easily. Usually, it seems, when bad news comes out it takes a dive, but so far today, trading is up.

In a way I feel like a broken record. Every month, for 10 months straight, the same news comes out about unemployment. Since July I feel like I have been the bearer of bad news. Besides the stock markets going up a little today, there isn’t a lot of good news floating around to report.

With that said, in the final hours leading up to the election, both candidates are promising change. McCain is doing his usual song and dance and Obama has reverted back to the message of change and hope…the message that inspired voters to get him on the presidential ticket.

The stock markets are also holding their breath to see who will be elected tomorrow. Today was not a huge swing in either way with the Dow closing five points down, while the NASDAQ ended up five points.

Try InTrade! InTrade is a website where you can basically “bet” or “invest” in future events. Returns are based on how likely the event is to happen, as well as how soon.

For example, Friday for every $86 you “invested” on Obama winning the presidency you would get $100 if he won. McCain was around $13.

Now, I will not participate or condone gambling on current events, but it is pretty fun to read about and watch!

For the most part I put people on a safe path towards a desired yearly return with an acceptable risk level based on their comfort level and financial goals. However, I am constantly reminding people that investing is about profiting, so why are they limiting themselves to just one market. Everyone knows something: a hobby, a trade, a skill, a way of life. However, not many people have the confidence to pursue this type of investment. Alternative as it might be, sometimes the best investment for people is not the stock market, but in a carefully laid out investment in themselves.

It’s no secret that one of the most profitable investments is starting a business. There’s an old saying “Those with wealth invest, those with knowledge create.” People usually find themselves on either end of the spectrum, some even in the middle. The point is, why are you not investing in one of the best vehicles for your dollar?

The sad fact is that most people either do not have the drive to motivate themselves to start a business or lack the knowledge in the field of business they wish to enter. True, starting a business can be a daunting task, capable of sucking away most of your time. Estimates range that a new business owner’s weekly workload can average around 50-70hrs, leaving little time for social events or anything else that is not properly time managed correctly. This leads to the fact that 80% of new businesses fail within their first year of operation.

If 80% of new businesses fail in their first year, then why is it a good investment? Simple, one net worth can grow tax deferred (or tax free in some cases) a multiple of times within a very short period of time. It’s like picking a stock at $1, and having it go to $20, but you’re in control of how high it can go. Most businesses fail due to poor planning, time constraints, or even a business owner trying to tackle everything on their own and not having enough time to effectively handle even one part of their business correctly. Stress, financial strain, legal matters, taxes, employees, are among other things that can bog down a business in the beginning.

With most investments, more reward means more risk, but with a business, the risk is usually limited because you control it. You decide each move, each play, and as such control the outcome of your investment return; the trade off is that you must make each decision not someone else. With a business, you are trading the ability to make more by correctly leveraging off of yourself and other people (employees), versus making a limited or lesser amount by “correctly” selecting the best company to “invest” in. Too often people have gotten burned in the market because even though they did the correct due diligence on a company and found a sound investment, the market “reacted” differently than what made fundamental sense. The end result is a loss when you should have had a win. With a business, you decide, because the health (net worth) of your business is directly related to the fundamental factors affecting it, not by the rapid selling of trust funds, or liquidating board’s members with enormous option packages to cash in.

Just remember that if done correctly, starting a new business can become a well oil-machine. Providing a continual net worth increase and making your every dream become a reality, being only limited by our drive and imagination. The wealth that can be ascertained with a business is comparable by few other investments making it a worthwhile venture to consider.

What I’ve found out is that it’s not real money. A stock price is only a best guess at what the stock is worth. The way I understand it is that if you buy an overvalued stock, say at $25 a share and it falls to $10 a share, $15 of your money vanished, but the price, or best estimated value, of the stock is really all in the mind.

So, this entry is mostly me just thinking out loud about what exactly is happening to the "real" money people put into stocks. I mean, if I have a $20 bill and buy a stock, the stock falls to $10, where does the other 10 tangible dollars go? Perhaps I’m over thinking the stock market, and its something that just happens.

I’m not meaning to cause alarm, because some of you have much more to worry about in these troubling times, but here’s some tips to keep your identity safe in the mean time.

Shred all documents. I bought a cross cut paper shredder from Wal-Mart for $20…prior to that many of our personal documents would be torn into maybe 4 or 8 pieces and thrown into the trash. That was obviously not the best option.

Never EVER respond to an email asking for personal information, by now most people know this. However, there are some emails that can look particularly legitimate. For example, the IRS is looking for your information via email and you filed online. They won’t ask for personal information through an email. Call them instead to make sure.

And one little thing you can do: Cover your card number when you pay for something in a check out line. I’ve seen people try to take pictures of my credit card number, but I keep the numbers covered with my index finger and always scan it myself. At the same time, I have to trust wait staff at restaurants, perhaps I shouldn’t (recently a waitress in a Memphis restaurant was caught with a scanner that would scan and save card numbers).

Just remember this is still going on, even if your mind is elsewhere. Keep a watchful eye on your credit.

Here in town, gas Thursday was at $3.99 a gallon. The national average is just a little above that at $4.05. When gas is as expensive as it is, it doesn’t matter $0.05 or $0.10 more or less expensive. The total when you fill up your tank is still WAYYYY more than it should be. I have to fill up the tank in my car next time I go out, which is becoming less and less.

I would like to see oil prices keep going down because that means more disposable income for us. Well, more money we can put into savings every month.