"Be fearful when others are greedy. Be greedy when others are fearful."
-Warren Buffett
Intelligent Speculation
for the small investor
My name is Phillip Lyon and I have created this website to help the small investor. My investment philosophy is to invest in undervalued stocks that also have a speculative aspect. My website contains free stock picks and stock market commentary so check back often and tell your friends about my site.
Current Market Volatility
The stock market has become very volatile and irrational over the last year. I contribute some of this volatility to the uncertain economic climate. However, in my opinion a big cause of the huge price swings in the market is the tremendous growth of hedge funds and their need to generate short term returns.
Hedge funds make most of their money by being able to generate positive returns (they take a big percentage of the gains they make: 20 percent or more). The investors who accept these large fees expect hedge funds to deliver gains regardless of what the market is doing. Consequently, this puts a lot of pressure on hedge funds to outperform the market.
When the economy is expanding and the stock market is going up every day it is a lot easier to make money in the stock market. A rising tide lifts all boats so to speak. When the economy is heading for a recession and the stock market is going down it becomes much harder to generate positive returns. This is a big reason for the volatility in the stock market and other asset classes such as commodities. Hedge funds and other short term investors are chasing after quick gains in a very tough market. (more…)
Sectors to Buy and Avoid
Small caps and technology stocks have taken quite a hit over the past few months and I think now is a good time to start looking for bargains in these sectors.
There has been a rotation out of these “riskier” stocks with the threat of a potential recession looming but the selloff has been overdone. Some companies that I follow have lost over fifty percent of their value from their highs last year in spite of improving fundamentals.
Financials and home builders have seen quite a rebound from the lows they made earlier this year but I think it is too early to say the worst is over for these companies. I think there is going to be further losses due to the risky lending practices that have taken place over the last few years. The housing market is no where near a bottom and foreclosures are going to continue to increase. I would avoid these stocks.
I would also avoid companies that rely on discretionary income such as retailers and restaurant stocks. Consumers are cutting back on their spending and I don’t see that changing in the near future.
Whatever you invest in you should be more concerned with the fundamentals of the company than the stock price. Over time a company’s stock price will ultimately follow the improvement or deterioration in fundamentals.
Payday Loans
The economy is headed for a potential recession, we may already be in one, and the job market is starting to stall. In addition, the credit markets have become extremely tight due to the lax lending standards that have taken place over the last few years and are now resulting in defaults. Consequently, it is not a good time to be a borrower. If you unable to obtain credit and you are thinking about taking out a payday loan you should think twice.
Payday loans, also known as payday advances or cash advances, are small short term loans that are intended to meet a borrower’s expenses until his or her next payday. These loans have interest rates that range from 300% to as high as 1000% on an annualized basis. Borrowers who cannot meet their initial payments can get extensions for these loans but they have to pay an additional fee. Borrowers who continually miss their payments and continue to get extensions can end up in a debt cycle that they can’t get out of.
If you are thinking about taking out a payday loan consider other options first. Try to get a loan from a credit union or a cash advance from your employer. Also, make a budget and look for unnecessary expenses that you can get rid of. If you have no other choice but to take out a payday loan make sure that you pay it off as soon as possible. Also, make sure that you read the fine print and know the situation you are getting into.
The Net Fool
For those of you who are interested in stock market advice and making money online you should check out TheNetFool.com. The Net Fool focuses on investing as well as reviews of GPT websites. GPT (Get Paid To) websites pay users to do certain tasks. The Net Fool offers new posts on the stock market on Mondays and reviews of GPT reviews on Wednesdays. Check it out.
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MicroCap Speculator
If you want analysis and commentary on microcap stocks you should check out MicroCapSpeculator.net. MicroCapSpeculator has analysis of stocks that trade over the counter and on the pink sheets, exchanges that I don’t cover, as well as microcaps that trade on the major exchanges. MicroCapSpeculator also features analysis of the gold market.
MicroCapSpeculator recently developed a stock blog search engine that will search through 120 hand picked financial blogs (my site is included). You should try it out if like to get insight on stocks from financial blogs.
Want to Make Real Money Investing With Play Money?
How would you like to make real money investing with play money? You can at UpDown.com. You get one million dollars in play money and you make real money by beating the return of the S&P 500. To determine earnings, UpDown considers your portfolio performance in the current month, the length of your track record, and your performance since you started. If you can consistently beat the market you can earn more money. You also make money for writing analysis and referring people. UpDown pays out monthly via Paypal.
I started last month and my portfolio earned 11% while the S&P returned -2.3%. I earned $3.89. That is not much but the top earner has earned over $1900 since he started in September of last year (only five months). He only has a return of 5.5% since he started but he has written a lot of highly ranked analysis. The second highest earner has made $1870 in the same time frame. He has a return of 160% with only three analyses. That is pretty good money just for trading play money.
I think UpDown should pay out more for performance than analysis because a well written analysis is worthless if it can’t make you any money in the market (the top money earner only has a sad 5% return with all his highly rated analysis). You can also get your buddies to give you a high rating regardless of whether your analysis is actually good.
If you are interested in joining UpDown I would appreciate it if you sign up through my referral link. Also, if you decide to check out UpDown and then sign up I would appreciate if you come back to my site and sign up through this link:
http://www.theupdown.com/create-account.do?_refer=31970
Prince of Wall Street
The Prince of Wall Street is an informative stock blog that focuses on value investing. The blog also mixes in commentary, Wall Street gossip, and adds some humor to its posts. The Prince of Wall Street is one of the better looking stock blogs that I have come across and it is definitely worth checking out.
Some recent posts that I found interesting are Technical Trading is Bogus, Here’s Why (a sentiment I share), Platinum Equity’s Purchase of Covad (which gives a more in depth analysis of the DVW deal I mentioned a month ago), and Money Never Sleeps Pal (which reports a sequel to the movie Wall Street is coming out).
I would like to thank Prince of Wall Street for adding my site to its favorite sites for 2008.
The Stock Market in 2008
Last year I made the prediction that the “market will end the year essentially where it began or down on the year. If the market is up on the year I don’t see it being up very much.” My prediction proved to be prescient as the S&P 500 finished with a 3.53% gain, the Dow with a 6.43% gain, and the Nasdaq with a 9.81% gain.
If you take away the Santa Claus rally at the end of the year, which has now quickly evaporated, my prediction of flat growth would have been proven correct. This is in contrast to most of the stock market prognosticators who where predicting another strong year (15% or greater) even though there were signs of a slowing economy and the housing bubble was beginning to deflate.
This year I have noticed that not many commentators are predicting how much the market will gain or lose this year. I guess they didn’t want to eat any more crow like they did last year. They are mentioning that the stock market is in for another volatile and challenging year. I agree. (more…)
Value Investor? Want to Share Adsense Revenue?
Value Investing News is a community driven value investing news site. You can submit links to news items, bid up stories to the front page, bid down stories, and make comments.
The feature that distinguishes Value Investing News from other stock news aggregators is you are rewarded for the success of Value Investing News by sharing in the Adsense revenue.
If you are interested in submitting stories to Value Investing News click here. I am currently registered with Value Investing News and I think it is a good site.
Timothy Sykes Stock Blog
If you base most of your stock making decisions on technical analysis you should check out the stock blog of Timothy Sykes. He provides his personal trading decisions along with trading advice.
He is also the author of An American Hedge Fund which details the wild ride of the hedge fund he started. It has many good reviews so it should be worth a look.