When Fear Reaches it's Highest Point, Invest

I truly believe that when the nation is the most fearful, is when the economy (particularly the stock market) will begin to turn around. When everyone feels one way about the economy, you should try and feel the opposite of the trend.

The latest poll shows that 45% of people believe that the economy will fall into a depression. Come on. Do we still believe that this economy that has seen the DOW increase 6 of the past 8 days is going to fall into a depression? This same economy that has seen new building of homes increase 22% in the last month. People on Talkgold.com are all saying how terrible they think the economy will continue to be for years to come (Thoughts on Economy). We aren't falling into a depression. The economy is just about to start a recovery if it hasn't already.

If you recall, right before the housing collapse, the majority of the experts were saying that the housing boom will continue. People were still buying houses, stock etc. Employers were hiring like crazy to expand their businesses. Then BOOM! It all changed.

The same thing will happen with the turn around this current economic situation. It will turn around while experts and the general consensus of the economy is still negative. You watch and see.

Just a little bit of my input.

AIG Bonuses should not be taken away

So as we have heard, AIG continues to give out multi-million dollar bonuses to their executives even though the company has taking hundreds of billions of dollars from tax payers. This isn't fair, is it?

First, please understand, I don't think a single one of the executives at AIG deserve an extra penny for all the problems this company has caused this nation. They have probably been the largest culprit in this financial collapse. It was AIG's greed and lack of rules that caused so much of this mess. If it weren't for these greedy executives the economy might actually not be a disaster right now.

However with all this said, taking away bonuses that these executives were promised (in their contracts) to receive would be both illegal and unjust. They were employed by the shareholders of AIG and provided with contracts (although I'm not exactly sure of the details) that clearly stated they would be given these bonuses. Most likely the bonuses were based on some sort of incentive. It's hard to think of any incentive that they would have reached but they may simply have been based on hours worked, clients brought in, etc. This contract was issued before the whole bailout began.

Another Point. Most of these executives made mistakes, were too greedy, and took too many risks. However, these are the same executives appointed by the board of directors and/or CEO of AIG. They were the same executives that were believed to be the best qualified for the company's share holders. Greed gets the best of us. Just like it got to those of us who purchased houses that we had to foreclose on, bought stock that lost 50% of its value, didn't put enough money into an emergency (layoff) fund, or even bought a car that turned out to be a lemon. These are all risks we took. Were we all too risky? Should we not be allowed to foreclose on our homes or get out of the mortgage via a short sale because we took the risk? Absolutely not! When someone buys a house in the United States they do so knowing they have a mortgage to pay, and if they don't pay the mortgage they will lose the home due to foreclosure. On top of this, their credit rating will be negatively effected for 7-10 years. What if the government decided to end the practice of foreclosures and force all home owners to pay their mortgages off no matter how long it takes them (with plenty of added interest and late payments)? This would basicially tie all "greedy" home buyers to a lifetime of debt. This would be unfair, illegal, and unjust because it is not what the buyer understood at the time of his/her purchase.

So, let's provide these bonuses to the executives, but don't allow it to happen again in the future. With this bailout plan there should be strict new guidelines and limits for executive compensation. All future contracts that refer to bonus's should also have that fine little print that explains the incentives and bonuses may be withheld due to certain circumstances.... like this one.

Check out AIG Bailout Discussion, to see where all the billions of dollars in AIG bailout money went.

Go ahead and tell me how foolish I am now.

Are Domains Names the Best Investment?

With the economy struggling, stocks plunging, and the real estate market filled with foreclosures, everyone wants to know where they should put their money? Is it time to get back into stocks? Has the real estate market hit a bottom? Is your savings account the best bet? How about high paying dividend stocks? No, No, No, No. The place you want to put your money is in internet domain names.

Domain names are simply the website address. For example, ESPN.com, ebay.com, money.net are all domain names. The internet is growing at a rapid rate even with the decline in the economy. However it isn't even close to reaching it's potential worldwide. Developing countries are finding ways of providing internet access and affordable computers to even the poverty ridden regions. China, and India only have an extremely small percentage of their population on the net. We're not even close to reaching the potential internet population. Within the next 5 years or so I highly expect this to all change.

You can find a good amount of information on domain name investing if you are a TeamEarners.com member. More information about TeamEarners can be found at TeamEarners Forums

Anyone can purchase domains names for under $10.00 at sites like Godaddy.com, NameCheap.com, Dynadot.com etc. If you were to begin investing, I would suggest sticking with ".com" domain names as these will always be the most valued extension.

Google Cash Detective 2 - It's probably not worth it

I have seen that there have been a lot of people searching around the net for Google Cash Detective 2. Fact is, this is just another one of the e-book type programs for sale that probably won't really help you earn a substancial income online. There are literally thousands and thousands of products forsale online similar to Google Cash Detective. Fact is, only about 0.5% of these are worth the money you have to pay for them.

This product costs close to $1000.00. The thing with programs like these are that they allow affiliates to sell it, which means that 99.9% of the reviews you read are going to be positive since the reviewer is trying to sell the product for commission. It is almost impossible to find an honest review. I have not purchased the Google Cash Detective Program, so I can't provide a review. However I suggest being careful before spending $1000 on a product that you won't find an honest review on.

You can find hundreds of similar programs and e-books like Google Cash Detective at the E-Book Review Forum. These are all non motivated reviews meaning these people do not get paid commissions for sales.

How We Can Predict When the Economy will Turn Up

In my previous blog entry I discussed how the unemployment rate is considered a lagging market indicator basically meaning it can not tell the future. However there are other indicators called "Leading Indicators" that predict the future of the economy. While the leading indicators are not a tell all predictor of the economy, they have infact predicted the past 7 recessions. Also noteworthy, the fact that these leading indicators have also predicted 5 recessions that have not occurred.

So what are these indicators? Here are the 10 that make up the Index of Leading Indicators:
- The Average number of hours worked by workers in the manufacturing sector.
- The Average number of people initially applying for collection of unemployment.
- Consumer sentiment
- The difference between the short term and long term interest rates
- The amount of new orders of consumer goods and materials in the manufacturing sector
- The Money Supply (inflation adjusted)
- The S&P 500 stocks
- That amount of new permits for the building of residential property.
- The Speed in the delivery of new merchandise from the suppliers to the vendors
- The amount of new orders for capital goods that are not related to defense.

There you have it. The 10 leading economic indicators that are used to predict the direction the economy is going in. In the last update on February 19, 2009 the Leading Indicator Index has actually increased as it did in January. Does this mean that the economy will rebound immediately? Absolutely not. However it does mean that things should begin to look up.

What The Unemployment Rate Means for the Stock Market: Nothing

Well the unemployment rate in the United States has been released. It is currently at 8.1% which is the highest since 1983. What exactly does this mean for the future of the stock market? Absolutely nothing. (To see some more specific unemployment stats, check out http://www.talkgold.com/forum/r251143-.html)

Unemployment is considered a "lagging indicator" which means it follows the economic trends. If the economy is doing bad, unemployment will usually go down. It is an indicator of the economy that lags behind. So in reality, the unemployment rate could be going up as the economy becomes bullish.

The latest news that the unemployment rate is over 8% nationwide should have no influence whatsoever on whether you buy or sell your stocks. In my next entry I will discuss leading and lagging indicators, to see if we can predict when the economy is about to turn up.

Details of Obama's Mortgage Plan: Simply Not Fair

So it looks like the new plan is out from the Obama Administration to help slow down the rate of foreclosures. From the top, it looks like a great idea. However once you dig down and put some thought to it, you will realize that it is really just unfair.

The idea of the mortage plan is to encourage lenders to allow borrowers to refinance their mortgages at lower rates. This would allow more borrowers to make their monthly payments and stay in their homes. On top of this the details of the plan also state that for borrowers who make their payments on time, there will be a reduction in the principal owed by the amount of $1,000 per year for 5 years. Sure this will be great to those people who are having trouble paying their mortgage and don't want to lose their homes. However this comes only at the expense of those who don't hold a mortgage at all, hold a mortgage but aren't having problems making payments, and those who don't own homes. Why should these people who were "stupid" in making decisions by buying a home they could not afford be bailed out? What about those people who have lost 50% of their retirement savings in the stock market, or who have seen their businesses go under because of the terrible economic conditions? What about the 10% of people unemployed in California that don't own a home, or own a home outright? All these people will have to pay to help those with troubled mortgages. Where is the help for these people? The responsible people who didn't buy homes they could not afford?

The details of Obama's mortgage plan need to be heavily scrutinized, as it is the well being of the nation at risk here. Why should we help a group of people who bought homes they couldn't afford, while making others that lost 50% of their money in the stock market pay for it?

It's easy to see that there are plenty of Americans struggling in other areas besides their mortgages, simply by visiting online forums like The Investment Forum on Talkgold Everyone wants a bailout from the government, but their really isn't a feasible way of doing it.


Unbelievable!!