Disclaimer: The following is strictly the opinion and findings of the writer, and is in no way intended to reflect the opinions of any other party.
Points to remember if you're invested in the stock market, and you think you're losing your shirt. In particular, I'm watching the financial sector, especially the sub-prime. But what follows, for me, applies to the market in general:
PANIC RESULTS IN IMMEDIATE REALIZED LOSSES. If you've done your homework, and the companies you've invested in are losing value, but strong, it's now time to sit back, think, and give the unrealized losses a chance. You don't have much more to lose in this case, and you have everything to gain. If not in Net Asset Value, then from dividends. Remember that dividends are based on profits, not NAV. In other words, look at the number of shares that you own, not the dollar value. Some companies, like Novastar Financial Inc (NFI), are required to pay out a minimum 90% of profits to the shareholders. NFI alone has consistently paid out $1.40 per share in quarterly dividends for some time. What a deal for a stock trading under $5 per share. There are never any guarantees, but if you're looking for guarantees, you're in the wrong place. Remember, the lowest risk investment is really the highest risk investment. What? Say that again! Yes, because the lowest risk investment historically can't keep up with inflation, and the value of your dollar decreases. But if you really feel the need to sell now, go ahead and let the big boys win. It's your choice. You lose if you believe every piece of hype that the big boys throw down the pike. They can, and do win, when we let them manipulate the market, and our decisions. We, the small timers, can't really stop them from affecting the market, but we can certainly profit along with them.
INDUSTRIES WHICH HAVE A GREAT EFFECT ON OTHER INDUSTRIES TEND TO GET BAILED OUT WHEN THEY'RE IN TROUBLE. Yes, Uncle Sam is even already working on plans to help homeowners pay their mortgages, which puts money in your pocket if you're invested in this sector. You wouldn't turn down a higher income tax return from the IRS, would you? But even the companies themselves are taking steps to avoid future problems, and some insiders are taking advantage of the panic by increasing their holdings themselves. Why not, they have just as much right to reap the benefits as we do. But, one should at all cost, avoid buying on margin. People have killed themselves over Margin Calls from their broker. Take what you can afford and be happy. Then, avoid watching everything like a hawk. It only breeds panic, and REALIZED LOSSES. Just one more note on this, old Lee wasn't by himself during the Chrysler dilemma. The Feds always seem to find the money somewhere.
I USUALLY STAY TO MYSELF, SIT BACK, LISTEN, AND SIMPLY REACT ON WHAT I THINK ARE THE BEST PERCEPTIONS FROM EVERYTHING I'VE SEEN, HEARD, OR READ. You may already wish I were doing that right now. But another blogger influenced my decision to go ahead and write something, by believing that I may be able to have some positive influence, and by reminding me, however indirectly, that we can all help each other. I'm not a English major, and we don't have to be. I still don't even really know what blogging means. But, if anything we say can be mutually beneficial, the more power to us!
