Rocky Ride To The Poor House

It has been a rough couple of months for the stock market the Dow fell from its high of just over 14000 down to under 8000 at one point! What a vicious drop that was... by far the worst I have traded through in my career. So what should you do now?

Well things certainly aren't looking that good with the overall economy, but the real question is how long can this downturn last? 6 months? A year? 2 years? Either way you need to consider your time horizons for your investments. Being that I tend to hold on to a position for over a year I am not worried. In fact, now is one of the best entry points I have ever seen. The valuations of stocks have come down so much that even with companies making less money then in previous years there are plenty of companies out there worth investing in. Sure it could get worse, but I think we have already put in the bottom on this downturn.

Of course if you follow the blog I kinda start to sound like a broken record, but it is important to understand. First of all don't buy all at once, as you can tell from the recent volatility in the stock market putting all your money in at once just doesn't make any sense. If you scale into a position and have a long time horizon you will do fine.

My personal recommendations at this point are ESLR, GOOG, RY, SU, ORA and YUM...

Google Is A Screaming Long Term Buy

As I watched Google fall over 5% today I couldn't help but think there was some force pulling it down. I mean with the market up so much you would think that beaten down GOOG would shine, but just the opposite. Now in after hours Google announces a major partnership with NBC Universal to run TV ads. This stock has come down from $747 hard to find itself at nearly $420. With just a 27 P/E ratio this stock has literally never been this cheap! It really boggles the brain to even think about it. They have almost 13 billion in cash and are still raking in the money. Sure they are not smashing the park out of the numbers from last year, but you have to consider the law of large numbers and the fact that Google is throwing money in a lot of different places. They have the money to burn and they are taking advantage of that so they can reap the benefits in the years to come. I don't know about you, but I am going to be buying some Google, these price levels are just an unbelievable entry point.

The Google Checkout Effect

With the drop in Google's stock price over the past few months the question of how much Google Checkout could help the results next quarter comes to mind. After all, Google was literally giving it away for free for the past year, and it was one hell of a expensive promotion from the sounds of it!

Google stated that as of December 2007 they had signed up over 100,000 merchants and millions of users. Starting at the beginning of February Google began charging 2% + $0.20 per transaction. Just think of all that revenue that will now be added, instead of subtracted from Google's bottom line. These figures of course will continue to grow as more and more merchants see the benefits of signing up for Google Checkout.

Just listen to these statistics, Google says web shoppers who’ve signed up for Checkout are 10 percent more likely to click on an ad that features a Checkout button and 40 percent more likely to make an online purchase once they reach a site. In other words, if an online retailer uses Checkout and spends ad dollars on Google (GOOG), it improves the chance that shoppers will make purchases on it's site. These kind of stats are what will not only help retain Google's advertisers, but gain even more. Plus, have we already forgotten about the Yahoo disaster and how it will effect Google Checkout?


Is that enough reason to be bullish on Google? That is up to you to decide, but I think that Google is a global growth story that has really just gotten started. As the demand for instant information across the world drives their growth we will begin to see the true potential of one of the best long term stock picks out there.

One of the benefits of being a long term investor is the ability to focus on the future, especially in markets like these. If I wouldn't have been in certain stocks before this whole subprime meltdown started I wouldn't be able to identify these stocks as potential buys at these levels. Just because the entire market drags everything down doesn't necessarily mean these stock deserved to go down. Are companies like Google done growing their businesses, or is this just a readjustment of risk...

Want more Google? Check out this post...

Is Wall Street On Sale?

If your a long term investor, it is times like these that you need to be taking advantage of. The markets have just been terrible to start the year, losing everyday but today if your stocks are in the Nasdaq. As an investor you need to ask yourself, "does my stock have anything to do with Housing or a US bank", because if not the story behind when you invested in the first place hasn't changed. It might have simply been taken down artificially along with the rest of the market. Going on sale if you will...

The markets go up and the markets go down, the past week or two almost every thing has been going down though, no matter what sector. Try to focus on the future, the housing problem and the banking mess is only going to last so long. Global growth will trump any minor slowdown that we have here in the states in the long-term. Plus, the fed cutting interest rates is only going to bring the bulls back, especially if we get a quarter cut this next meeting.

Companies like Google, Boeing, Yum, Royal Bank Of Canada, and Vasco are all looking good at this level. Boeing (ba) is at a 52-week low even after it "blew past an order record it set two years ago, selling 1,413 commercial jets in 2007 while delivering 441 planes, its best showing in six years." Google (goog) unveiled several more partnerships at the CES (Consumers Electronics Show), but the market doesn't want to hear any good news at this point. Yum Brands (yum) is China the safe way, Royal Bank Of Canada (ry) has a fat and safe dividend yield. Vasco Data Securities (vdsi)is almost back to where it was after the last earnings fall. The bears have taken over all of these, and many more quality stocks. This historically means we are thankfully near the bottom.

It seems at this point though that we do need The Fed to act. If they don't we will get hammered again, whether we deserve it or not. I this that is half the reason the markets have been so jittery, no one really knows for sure what The Fed is going to do and that means fear...

Take advantage of this volatility, and pick up some of your favorites stocks on sale! Remember, you are buying over time, build a position in a stock, not buying it all at once. Another tip for market dips is to buy your dividend paying stocks. As a stock goes down it's dividend yield goes up, which means that you can get more cash or stock dividends for your dollar than you could have at a higher stock price. As a long term investor you should be owning these type of stocks for their steady dividend income.

Don't let panic cloud the future fundamentals...