The Next Hot Stock is In Your House

Being a successful investor means picking the right companies. Who could have guessed how big Microsoft (MSFT) would become in August 1987? Did you correctly predict Apple (AAPL) would explode upon the scene in July of 1997? Or how about General Motors (no longer GM, now GMGMQ)? Did you start buying put options four years ago because you saw the writing on the wall?

If so – then you’re probably wealthy beyond belief, and there’s little reason for you to be reading this.

But if you’re like the tens of thousands of people out there, from their early 20s to their late 70s, who would like to do something with their money, but haven’t a clue where to look, read on.

When I first started investing, roughly a year ago now, I was simply sticking my paychecks and tips I was earning as a waiter into an account with Sharebuilder and trying to read up on the latest hot-stock trends.

I didn’t know any better – most of us don’t! If we get a phone call from some brokerage firm telling us that stock XYZ will double in price in the next two months, but we’d better hurry, some of us might buy! (Note: I didn’t buy Helix Wind (HLXW) when Bellwether Research called me, pitching that stock).

After all, what’s the option? Learn about the stock markets and investments?! That sounds incredibly boring – right?

Wrong.

This isn’t just your money we’re talking about. The money only represents the hours you put in at the office, or the time at the construction site. The money represents the years you spent furthering your education, or the years you spent working to support a young family. Your money isn’t what defines your life…but it’s a representation of your efforts.

You owe it to yourself, and your future financial stability to learn at least a little about personal investments. I’m not saying that everyone should manage their own money. Most people (including myself) don’t really have the time that it would take to nail down all there is to know. But before you blindly hand over your hard earned cash to a money manager (think Bernie Madoff), take a little time to read up about the markets.

Where to Start

I didn’t know jack about personal investments when I first started buying stocks. The first company I put money into was actually several years ago, and it was a real estate investment trust (REIT). The company, whose original name no longer exists, is now called Bimini Capital Mangement (BMNM) and I have lost about 96 percent of the original $85 I originally put in. Whoops!

Fast forward to summer 2008, when I was earning “real” money and wanting to invest it for the future. I spent a bunch of time on the Motley Fool website, picking through the latest top picks that the Fool and its members were recommending. I settled on Melco Crown Entertainment (MPEL), a Macau-based casino company as my first investment.

And then all hell broke loose. That first investment was only about $600, but we all know what happened to the stock market in the latter half of 2008. Suffice to say I was a bit surprised, but still determined to make investing work for me.

If you go back and read some of my older posts, you can follow along as I’m buying into other companies and adding to my positions, even throughout the worst of the recession.

These days, those original investments are pretty much even. Some are down a few percentage points, some are up a few. But that wouldn’t be true if I hadn’t continued to add to my positions when the price dropped.

I haven’t picked the next Microsoft or Apple, but along the way I learned something about investing.

The Goose with the Golden Egg is on Your Nightstand

I read all about Best Buy (BBY) on the Fool website, but I hadn’t ever purchased the stock. Anyone who knows me very well knows Best Buy is essentially my biggest weakness. I can’t enter those stores unless I leave my wallet in the car! But even though I loved the stores themselves, I hadn’t translated that into owning stock – owning part of the company.

In November of 2008, Best Buy hit a 52 week low of $16.42 a share. Today the company is trading at $32.08 – nearly a 100 percent return, despite the ongoing recession.

I didn’t buy into the company then, and I still haven’t yet – buying my house is consuming most of my money these days. But I’m still keeping an eye on the company. The stock is still 34.5 percent below its 52 week high, and I still believe in their business model.

Let’s look at another company I know and love - Hewlett-Packard (HPQ). I have owned an HP computer exclusively for nearly a decade. I personally have never had any problems with their computers, be it a desktop or a laptop (I’m typing right now on an HP laptop). But even though I knew all about the company, and I used and loved their products, I have never bought any of their stock.

In November of 2008, Hewlett-Packard was trading at $29.34 a share. Today the company is trading $37.85 a share – a nice 28 percent return. There have been two dividend payouts from the company, for 8 cents/share as well.

I haven’t bought into HP yet, although I’m keeping an eye on them. I don’t believe in Dell, and no one I know that uses a Dell likes the computers. The mainstream isn’t going to buy an Apple, simply because most don’t know how to use a Mac – plus they’re significantly more expensive. Sure, there’s Lenovo, Sony, Acer, etc. for competition, but HP has a good share of the public mind. Plus the current share price is still 23 percent below its 52 week high.

Okay, one more example, just to prove a point.

How about the auto industry? We all know that the Big 3 American manufacturers have been sunk by the recession. Chrysler, GM and Ford have all been hammered, and even the foreign manufacturers have been hit as well. It’s a terrible time to own vehicle stock, right?

Not so fast…

I have never owned a Honda. My first car was an ’84 Mercury Grand Marquis, followed by an ’84 Oldsmobile and then a ’02 Nissan. But I have long been a fan of those cars and their reputation for being incredibly long lasting.

Oh, and they get notoriously good gas mileage too – right? In fact, whether you’re a diehard Ford person or not, have you ever really heard anyone complain about their rice-burning Honda? I know I haven’t.

But even though I liked the company – and I’m looking at a Honda for my next car purchase – I have never translated that into owning part of the company.

In early December of 2008, Honda (HMC) hit a 52 week low share price of $17.35. Today it trades at $26.30 – almost a 40 percent gain! And dividends? You betcha! There have been two dividend payments from the company since then.

So What’s the Point?

My point is that your best bet for finding quality, sound companies to invest in are to investigate the things you use and love in everyday life.

Are you glued to your iPhone? Then maybe you should buy Apple stock. Or maybe you could do a little research and see that there’s a small cap stock called Arm Holdings (ARMH) that makes the microprocessor going into every single iPhone, along with a slew of other leading phones. You would also see that Arm Holdings is up almost 75 percent since January 2009.

Are you, or is your girlfriend/mom/wife a huge fan of Coach (COH) handbags? Do you hate shopping at the mall while dozens of girls pawn over the latest Coach this and that? Are you amazed that there is never an empty seat to rest because other guys are impatiently waiting on the women in their life? Then you may want to look into Coach as an investment. The stock is up over 91 percent since November 2008!

Do you have wireless internet in your home or apartment? Chances are if you do, you have a NetGear (NTGR) wireless router. NetGear is usually a bit more expensive than competitor Belkin, but the company is better known and generally more trusted (I own a NetGear router too).

Guess what? Since October 2008, the stock is up almost 65 percent.

I could go on and on with examples, but I have other things to do with my Fourth of July weekend. I hope this illustrates to you that searching for the next great investment, and next year’s hot stock, doesn’t have to mean combing through piles of financial reports.

Take a look at your life. Who makes that toothpaste you love? Johnson & Johnson (JNJ) - up 21 % plus dividend). Where do you pump your gas? Exxon Mobile (XOM) - up 21% plus dividend). How about your snazzy new LCD TV? Sony (SNE) - up 61% plus dividend.

The next hot stock may already be in your closet/kitchen/bathroom, waiting for you to uncover its potential! Starting looking and start investing in your future!

Why Small Cap Stocks?

In investing, you'll run across companies that are considered "blue chip", "large cap", "small cap" etc etc. In basic terms, this has to do with the financial size of the company.

Cap is short for capitalization which is a measurement of economic size and is equal to the number of shares outstanding times the share price. For example: at closing time on July 19, Verizon (VZ) had a share price of $29.66 and 2.84 billion shares outstanding giving it a market cap of $84.25 billion. This is a large cap company.

So why do I try to look at small(er) capitalization companies?

Potential.

Much like the 10 year old with a 38 inch vertical has a lot of potential in high school basketball, a good small cap company has a lot of potential going forward as well.

Plus, basically every large cap company today once started out as a small cap. Let's look at Ford Motor Company (F).

While the American auto-makers, including Ford, have certainly seen their market cap fall in the past year, Ford's market cap as of market closing on July 19 was $18.15 billion. Compare that to 1982 when Ford was merely a $815 million company. As you can tell, that's quite a difference - a nearly 700 percent difference!

That's not to mention Ford's peak in 1999 at $73.02 billion. Every $100 invested from January 1 1982 when Ford was a small company would have returned you over $5000 if you sold in early May, 1999. That's the kind of potential a small cap has!

So do you think you'll ever see 5000 percent gains from buying Microsoft (MSFT) and Apple (AAPL) stock these days? Dream on. While both companies have earned great returns for their investors over the years, you won't see enormous wealth growth from owning Microsoft stock.

To really pursue growth, you have to uncover the small stocks with great potential.

Let's start with a basic definition. Small cap is roughly between $250 million to $1 billion. The edges on that definition can be blurred a bit, but that will give you range to start with.

Let's look at Research in Motion (RIMM), the maker of the BlackBerry devices. In early 1999, Research in Motion was a small cap company with a market capitalization of $490 million. Today RIMM has a market cap of $44.22 billion, representing a return of over 3800 percent. Yes - for every $100 invested in early 1999, you'd now be sitting on $3800+.

Of course investing in small cap companies will open you up to more risk than investing in the sturdy stalwarts like Microsoft, Johnson & Johnson (JNJ) and General Electric (GE). But you won't see the potential for big returns with said companies.

Not to mention, guess where Microsoft started out in 1986? Yep - a small cap! It's simply risk versus reward.

Investing in small caps works best if you have a longer investment horizon - hence why I suggest getting started young. Being younger, I have (hopefully) many more years of earning and investing in front of me and I can rebound if an investment takes a dive.

But to truly ride an investment out of the park, you'll have to dig around a bit. Simply throwing money at a company because their current market cap is $300 million won't do you a lick of good.

Find a small cap company with good fundamentals like a dedicated and invested management/ownership team, a strong balance sheet and good forward earning potential. Only then can you hope to turn $100 into $23,000+ like the early investors in Microsoft have.

These days I'm investing in a number of small and large caps. It's always wise to keep some money in a safer, more stable company like Microsoft, Johnson & Johnson and General Electric (I don't own shares in any, but not because I wouldn't like to). But you should keep some money ready to pounce when you find a small cap company that you like and which has potential.

So why small caps? Because I don't want to work all my life, and with that kind of potential, I may not have to!

*Note* All historical market cap information came from using the WolframAlpha engine. I had a heck of a time trying to dig it up otherwise.

Why AOL & Microsoft Stocks Will Sink

I believe that being successful in the stock market is much more than trying to predict the next trend.

I believe in finding a solid business with a core group of people running the company who have been there a while and have a vested interest in the future success of the business.

I believe that finding a company that pays a dividend to its shareholders and who has continued to pay that dividend for a long period of time is perfect for a buy and hold situation. Even better if they have continued to raise the dividend!

That being said, I'm going to make a bit of a prediction here.

I'm betting that Microsoft's share value will drop because of a botched search engine foray.

I'm also betting that once Time Warner spins off AOL, that company will flop as well.

Let's start with Microsoft.

It's no secret that Microsoft has been lagging behind Google and Yahoo for sometime in the search engine market.

They're also a distant third in online ad revenue behind Google and Yahoo.

Microsoft still has its nearly ubiquitous operating systems, although Vista was not nearly as well received as they would have liked.

But the future of computing is online, and Microsoft knows that. They've been trying to purchase Yahoo, or at least parts of Yahoo for a while now. A partnership between the two companies is probably the only way for Microsoft to have a chance at Google.

Online operating systems are already here, and cloud computing and software as a service (SaaS) are rapidly growing businesses. Microsoft wants to secure its place online, so what better way than to...do what they've already done.

Microsoft is gearing up for its big release of a new "decision engine" they're calling Bing. While it employs some new technology from Microsoft's purchase of Powerset, it mostly looks like a fancy Live Search.

They made the announcement and guess what happened next...

Google made an announcement of their own.

Google released information about Google Wave, an online tool for personal communication and collaboration on the web. It looks truly amazing, and I'm anxious for the opportunity to play around with it. It's a brand new HTML5 application, and it's open source! Google wants developers from around the world to pitch in and make this thing incredible. In fact, I'm so excited...

Oh wait, wasn't Microsoft saying something?

Google has gotten VERY good at playing their trump card at the perfect moment.

Sure, Microsoft has a new "decision engine" that will be available June 3, but look what GOOGLE is doing.

One of the most telling aspects of Microsoft's impending flop is the lukewarm response the Twitter community gave it.

Twitter has a list of trending topics that are hot throughout the community at any given moment. The day Microsoft made it's big announcement, "Bing" only reached #3 from what I saw, and by the end of the day, it was at the bottom of the list.

Microsoft is allegedly putting a lot of advertising money into promoting Bing. Something to the tune of $80 million, from what I've read.

That's a lot of money to throw at what looks to be a slightly jazzed up version of Live Search.

Microsoft isn't going to be competitive in the search engine and online advertising revenue market with Bing, and we're going to see that reflected in the share price of Microsoft(MSFT).

Now on to AOL.

Let's be clear here...AOL is not currently a stand-alone company nor can you purchase shares of just AOL.

Time Warner and AOL formed a partnership in 2001 and it has largely been regarded as one of the bigger corporate blunders in recent times.

Today it was announced that AOL will be spun off from Time Warner, and AOL will be left to pursue it's own business strategies.

That's like cutting off a diseased leg and throwing it to the wolves - telling your leg it can find its way to a new home.

AOL revenue has been lagging for years, and it will not survive for long by itself. Internet subscribers at one point provided $528 million per month in cash flow to AOL. That number is now 76 percent lower.

For the company to stand any real chance in the online ad revenue, or any other online business venture, AOL will need to be creative, and quickly.

Remember Bebo? It tugs a bit at my memory, but I'm sure AOL remembers it clearly.

That was AOL's attempted foray into the social media realm last year. It only cost them $850 million to find out that Bebo was NOT the next hot site.

They probably could have found that out by asking the collective teenage children of the company employees.

It's unclear right now how the corporate structure will be at AOL. I suspect it will be a public company, but the spin-off won't happen until the end of the year, Time Warner says.

If you do have the opportunity to buy AOL stock, don't. While Microsoft can recover from a blunder in the search engine business, AOL will not tread water for very long without thinking like MacGuyver.

The Stock Market and Your Money: Protecting Your Assets When Your Sanity is Lost

Okay, maybe the title of this post is a little dramatic, but I wanted to grab your attention.

Did I get it?

Wall Street has had an interesting week so far...we're just about par for the course with all 3 major indexes (as of Thursday night) just North of even.

These days, I'll take par for the course. If my holdings are staying put in value, I'm okay with that. But the trouble is I'm not making any money that way.

Or am I?

There are a number of ways to make money in a flat market or an up and down market. Many of them are far beyond my technical ability to understand or explain, and some simply aren't appropriate for the average investor. Options are a great way to make some money if you anticipate the stock price staying within a certain range, but not all investors have the kind of risk tolerance needed for options.

That leaves us with stocks that pay a dividend.

I know I write about dividend stocks a lot, but that's because they can be very nice to own. The company essentially pays you for each share of stock you own - sharing their profits with you!

When looking for a company that pays a dividend, also look to see how long they have paid it, and whether the amount has increased or decreased over time. Your best bet is to find a company with a long history of paying it's shareholders a dividend and a long history of steadily increasing the dividend.

Be careful though - too high of a yield percentage, and you may be looking at a company that can't sustain it's payments. When a company cuts it's dividend entirely or drops the yield, you'd better expect a drop in share price too.

My favorite dividend stock for a while has been Enterprise Products Partners (EPD). They are by no means the be-all and end-all for dividend stocks, but they have paid their dividend since inception and have been steadily increasing the yield.

Right now, for every share you own, you're paid $0.54 per fiscal quarter. Not too shabby. That means that for every 100 shares you own of EPD, you earn $54 a quarter.

Of course that's assuming we aren't going to reinvest our dividends - but we are. The trading company I trade with - ShareBuilder - lets me automate my dividend reinvestment. This means that every quarter, the dividend cash I'm given automatically buys more shares of the company.

Next time I may own 104 shares of the company, and next quarter I'll get an even larger dividend.

Reinvesting your dividends also helps you with dollar-cost averaging. This basically means you spread your investment in a particular stock over a period of time. That way, if the price dips you get in at a sale, and if it rises, you're adding to your position while it's strong.

Some people say this is simply a scheme by the brokerage firms to charge you a fee every time you invest - and there is some truth to that. But I'm not suggesting you do quite that. Reinvesting your dividends should be automatic, and free.

Let's take a look at another well known company with a solid dividend: Johnson & Johnson (JNJ). They have been paying their dividend every quarter since 1987. That seems pretty reliable to me. The current yield stands at over 3.5%, and they have posted very steady gains throughout the years.

While I wouldn't suggest you divert your entire portfolio to a company like Johnson & Johnson, they are a safe, dividend-paying company that isn't going to go out of business anytime soon.

I have three final thoughts regarding the not-so-distant market future.

1.) AT&T and Verizon's plan to get into netbooks is not going to end well. I'm young. I know what I like and what I don't. I feel as though I have a fairly good grasp on what people my age like and are willing to buy (or have their parents buy).

Netbooks are not one of those things.

Why? Because I would rather have a laptop. They aren't that much larger in size, and once you factor in the cost of the monthly payments on a netbook, the price is similar.

But netbooks are limited machines. They are essentially designed to use the internet - not to compute. We like our iTunes. We like our MSN Messenger.

Yes, I'm fully aware of SaaS...that's software as a service (Think: Akamai [AKAM]). We may reach the day when iTunes and our virtual music libraries are entirely online. We may reach the day when all of the programs that we run are simply run in cyberspace, without the need for mega-computing power. But when we reach that day, we'll be beyond netbooks.

2.) I still very much like gold plays. You can read about my ideas concerning inflation in my other blog post, and I still believe they are a solid play. The stock I'm watching - Yamaha Gold (AUY). Not only do they seem to be a very solid gold producer, but they also pay a dividend!

*gasp* My favorite!

The yield right now isn't extraordinary - .38% - but it's better than nothing while you watch the stock price increase while the market falls.

What's that? Oh yes - today as the market dropped 1.54%, 1.68% and 1.89% respectively, Yamaha added on nearly 5 percent. They have a beta of .75, meaning they will move in the opposite direction of the market. If you feel like we're heading downward, this might be a move to look into.

3.) I'm very short on OpenTable (OPEN). It's an IPO right now, and you probably can't get your hands on it yet, but I'd bet my bottom dollar we'll see that share price come back out of orbit.

Why?

Because it shot up some 60 percent right out of the gate. And because the market share in the U.S. is limited in their industry - in fact you could say the recession is causing restaurant closures and cutting into potential market opportunities.

And I'm short on it because they had some trouble establishing themselves in Europe. I believe they opened in France, Spain in 2006-7 ish, and they closed their business their the next year. That's not what I want to see from a company I'm thinking about putting money into.

And lastly, I'm short on OpenTable because of the current economic environment. We're in a recession. People aren't eating out as much. Restaurants are dying off, with just the strong ones and the value-oriented ones surviving. Business isn't exactly booming at the places still standing - although I wouldn't be surprised if companies like Shari's and Denny's are doing well.

It's not that I don't like OpenTable itself. I just don't like it's share price at $31.89.


As always, any suggestions made regarding the stock market and individual stocks are my own ideas and personal opinion. Always do your own due diligence before investing any amount of money. And good luck out there!

Wall Street's Near Future: What to do About Personal Finance

When it comes to managing my own stock portfolio, I'll admit to some serious head scratching.

Trying to predict the stock market with any real accuracy is an exercise in futility.

It's kind of like predicting the weather where I'm from in North Idaho. You can scan the horizon, take measure of the clouds, see what others are saying and kick the dirt around a little bit. Your timing may not be perfect, but hopefully you can stay dry on your next outing.

The markets are a similar beast. You can scan the quarterly earnings, take measure of the 30 day trends, see what Warren Buffet is buying, and kick around the statements from the C-levels in the companies. Your timing may not be perfect, but hopefully you can pick out a safe investment or two that will bring you healthy returns.

Right now I think we're going to see some further rain clouds.

I've been saying it for a while now. The 30% gains we saw from the "bottom" in March were based on almost nothing. The economic news isn't good - it's simply not quite as bad as it's been. I think investors are looking for something a little more solid, and so am I.

So where does that leave my portfolio?

Well I actually maintain two separate accounts. One has my buy & hold money, and the other has my active-trading money. The buy and hold account is staying where it is. After watching the market drop off last week, I regret a little bit not locking in the gains (or at least the creep back towards even!), but it's my buy & hold account for a reason.

Some of the stocks in that account have an amazing dividend that I will happily sit back and collect every quarter (Enterprise Products Partners [EPD]). Others I simply like what I see in the future (Melco Crown [MPEL]).

My other account is what I'm interested in these days. I mentioned before that I'm looking into gold stocks (AUY). I also like Taseko Mines (TGB) as a copper play, but I'm not sure if I'm ready to buy that yet. In the near term, I'm short on financial stocks. (Short meaning I see the stock price dropping or staying at the current level)

I still like Wells Fargo (WFC), but I'm going to wait a little bit before getting back in. I see Citi (C) and Bank of America (BAC) staying low for a while.

I also am short on home builders. The housing market is starting to adjust and we're seeing the pace of purchases pick back up - but that's because prices are incredibly low. I don't think many builders will be back to major work anytime soon.

For now, I would suggest stocks with a beta around 1 or lower (meaning the stock will follow the market, or if <1, it will head the opposite direction).

I also am looking for companies that offer products that people will always buy. Johnson & Johnson (JNJ) is a very solid company with products that are always in demand. They also have a wonderful dividend yield of 3.54%!

A sense of patience is probably prudent these days. I think the market is probably going to head lower for a month or two. With earnings reports behind, there isn't much economic news to focus on, other than the weekly/monthly jobs reports. It might not hurt to simply leave your cash in a high-yield savings or checking account.

Don't have a checking account with a nice yield? Try ING Direct. I use them to stash my stock market cash before deciding to invest it. They offer checking accounts with an APY of up to 1.65%.

That APY might help keep you dry while you eye the sky for the next clear and sunny day.

As always, any individual stock mentions are purely suggestions and personal opinion. Doing your own due diligence is a must for any sort of financial investment.

Are the Stock Markets Downward Ho?

Well I think my gut was right...we're starting to see the downward trend again across the markets. Why? Because the upward trend was based on nothing but cheerleading and hope.

Hope that the half million jobs lost last month wouldn't have as much of an impact as the 600,000 lost the month before. Hope that the government could continue to print money and bail out companies like AIG, GM and Freddie/Fannie. Hope that the losses posted by company after company the first quarter somehow could slide by unnoticed.

Well, they've been noticed.

I can look at MGM as an example. Here is a company that saw it's stock price skyrocket over 700 percent from March 2009 to early May. How many 7 baggers did you have in your portfolio during that period? The funny thing is that I knew the stock was oversold. This was a multi-billion dollar company that was trading as low as $1.81/share.

There was bound to be a bounce.

And then it kept bouncing, and bouncing and bouncing, breaking $13/share on May 11. Meanwhile, I live in Vegas and all I'm reading in the newspapers is how perilously close MGM is to declaring bankruptcy. They battled in court with their financial partner in the CityCenter project just to keep construction going! They were forced to cut one of their condominium towers in half due to some faulty construction! Was nobody else getting this news?

Today I watched as reality sunk in to the stock price. It fell nearly 30 percent today during normal trading hours, and another almost 11 percent after hours. As of 8 pm EST, it was at $7.75. Had you bought at $1.81, you would still have a nice return, but this is a much more realistic valuation of the company at the current moment. I like MGM as a company, and I wish I had bought their stock when I first considered it. But right now I think it's a bit volatile for my taste.

I turn also to my most recent purchase: Wells Fargo (WFC). I mentioned in my previous post that I felt Wells Fargo and I were going to be a long term thing. My gut ended up telling me otherwise. I bought around $19 a share, sold it at $25.75 a share and then watched it RISE to over $28/share on May 8 AFTER the stress tests revealed the bank would need to raise billions in capital to cover itself.

Talk about crazy. How on Earth did Wells Fargo's stock rise when the Fed announced the bank was essentially too weak? I don't pretend to be any sort of market expert, but that just seemed counter intuitive.

Well lo and behold, reality sunk in this week. The stock has sunk over 14 percent across the past three days, and in after hours trading, ended up at $24.06. I'm glad I got out at $25.75! What will tomorrow bring? At this point, who the heck knows!?

I'm not a negative person, and I don't like to watch my portfolio value sink lower either, but it's nice to see the prices come back down from orbit. MGM Mirage and Wells Fargo are but two examples of stock rebounds that were based on hopes and dreams.

Now comes reality.

With the incredible amount of money being printed in the U.S. (and in many other countries across the globe), we are going to run into severe inflation at some point. Oil prices just broke $60/barrel, and in case you haven't been watching you're local Shell station, prices at the pump are starting to rise too. The gas station by my place has gone from $2.06/gal to $2.24 in the past couple of weeks.

Inflation will also devalue the dollar, and will make it harder for those of us who still have jobs to be spending on the economy and helping it recover. We already aren't buying new cars (sorry Chrysler, GM) or new plasma screen TVs (sorry Sony, Panasonic, utilities companies)...think we'll splurge on $5 loaves of bread?

I'm not writing this to be a harbinger of doom. I don't believe in that junk. I'm not stocking up on bullets and bottled water. Yet. But I am turning my attention to some stocks that may help me ride out inflation.

Traditionally precious metals like gold have been favorite refugees for investors, and I don't think this go-round is any different. I'm keeping my positions in the medical/health industry (AOB), the gaming industry (MPEL), the steel industry (GSI), the oil industry (GLBL, EPD) and the technology industry (ACTU, ITLN). But I think I may just diversify some more and make my next purchase a golden one.

I've been looking at Yamaha Gold (AUY), but there are some other interesting companies out there worth taking a look at. Vista Gold (VGZ) and Western Goldfields (WGW) could hold some promise. I also like Taseko Mines (TGB) as a copper play. I've been watching them for a long time - I wish I would have gotten in at $0.75, but even at $1.35 it still looks attractive.

As always, these are only suggestions. Doing your own due diligence is a must. I think there is some real potential out there in the stock markets, but I think it'll take a combination of patience and rational thinking!

Updates Updates

It's now been about seven months since I made the transition from N Idaho to Las Vegas. I'm still alive...

Much as I have seen some wild, crazy things here in Las Vegas, we have also seen some wild, crazy things happen in the stock markets. I've held onto my shares of GSI, MPEL, AOB, GLBL, ITLN through it all. I've added to my holdings, sold off shares of other companies, and picked up some new ones.

I added Wells Fargo (WFC) as a new holding and re-introduced myself to NovaMed (NOVA).

It's been a frantic six months, and I've watch my portfolio sink deeper and deeper into the red. But you know what happened? Things started to turn around. Despite the economic conditions, the US stock markets have risen substantially over the past 6-7 weeks.

Shares of companies that I've owned for a while are returning to normal, and I just sold NOVA again for a clean 35% gain. Wells Fargo and I are going to be in this for the long haul, however. They have a very nice dividend (which I'm reinvesting of course) and I think it will pay off nicely.

Looking forward though, I'm not sure the current bullish trend will sustain. There's a remarkable amount of negative economic news out there, and yet the markets have continued to rise. Chrysler went bankrupt, and the GDP fell by 6.1% - more than expected. Yet the market rose.

Where can we go from here?

I'm afraid down is the answer. The latest job loss report is expected this week, with another 580,000 jobs gone in April. While this would be the fewest since October, more than a half million tax-paying, grocery-buying, vehicle-driving Americans will have lost their jobs. The continued unemployment IS having an impact on our country - it just seems the markets haven't recognized it yet.

We also have the results of the bank stress tests coming out this week - assuming the Fed doesn't delay again. Goldman Sachs should be fine. Wells Fargo is also a likely safe one. B of A has already been warned by the Fed about their status. It will be interesting to see how much information they make public, and just what that info is. My guess is we'll hear mostly "good news" because it's in the government's best financial interest to keep the bull market going.

There was a very interesting commentary on MarketWatch last week that I would encourage anyone to read. The title is Sell in May and Go Away. The basic premise is that the bull trend isn't sustainable and we'll see another large drop in the near future. That is also my gut feeling.

I hope I'm wrong. I would love to watch my holdings to pare their losses and continue to see my portfolio value rise. I'm just not sure we're there yet.

That being said, if/when stock prices sink again, I've got my eye on some stocks I'd love to hold! If I can get them on sale - even better.

Last thought....click through the comments on the MarketWatch article. On page 7 (roughly), there is a decent technical comment from john qp that may give you a more technical insight. Don't worry if you don't understand Elliot Waves... you don't need to to get the general gist.

By the way, I was recently approved for a mortgage loan, so I've been house hunting lately! The Las Vegas real estate market has been positively hammered, so I may soon be a home owner!