Is The Market Set For a Comeback?

I just finished reading several articles on CNBC.com, one of my favorite financial sites. I found several points of interest regarding the economy and the markets current status and where we may be headed for the rest of the year. It seems several experts are now thinking that the stock market may have reached a bottom and is set to make a slow but steady comeback for the rest of this year. There was also an interesting article regarding commodities prices, where they talked about a possible burst of the bubble in agricultural products and a possible decline in oil and gold prices as well. I tend to agree with their assessments. As early as January 4th of this year I wrote about the run up in oil prices and how I didn't think they were sustainable. I don't think we'll see extreme price drops, but I do think there is room for a significant correction in oil as well as gold prices. If you check my blog entry on January 12th of this year, you'll note that I was talking about the drop in stock prices and how I thought it was a great opportunity to pick up some bargains and add to stock holdings, instead of getting caught up in the panic and selling stocks.

I still think we're in for a wild ride with the stock market, but I do believe that we are at or near the bottom. One thing I know for sure is that there are a lot of bargain priced stocks right now and I have continued to add to my personal portfolio while the prices are down. Personally I'm hoping for the market to stay near where it is, at least until next fall, so I can continue to buy stocks on the cheap. This whole downturn has allowed me to add to some of my current positions and to pick up some stocks that I have wanted to own, but considered too pricey in the past. So even though it's been a tumultuous time for me, just like everyone else, the brighter side has been that I've been able to increase my holdings substantially, which wouldn't have been possible at the higher prices before the market downturn.

Our economy is facing some extremely turbulent times, but if you're like me and you believe that it will all work out in the end, I definitely think it's time to be getting set for a market comeback. Like the saying goes, "You have to be in it, to win it."

Buying More Universal Insurance Holdings, Inc.

I've been a fan of Universal Insurance (UVE) for quite a while now. I've held shares in my portfolio as a long term investment. With the most recent drop in the stock market, their numbers have become even more attractive. While regulatory changes in the Florida insurance market have had an impact on the company's gross premiums written, I believe their expansion plans and recent actions taken to implement those plans will more than balance out any temporary setbacks.

With the current price, as of this posting, of $3.38 the stock is selling near their 52 week low, allowing for a lot of room for price appreciation. The decreased price per share also makes their dividend yield of 8% much more attractive. Since this 8% yield represents only a 15% payout ratio, the company is retaining plenty of earnings for future expansion. Add to this a return on equity of 69.30% and it looks to be a fantastic investment opportunity.

With all this in mind, I've put in an order to purchase additional shares for my portfolio. This will lower my average price per share for my total investment in UVE and at the same time increase my overall dividend yield. It will also put me in a better position to benefit from future capital gains as the price per share increases. So I'll continue to monitor their progress and provide updates from time to time on how this investment is working out.

Quarterly Update on My 2008 Investment Plan

Today was a good day for my stock account, but like everyone else I have lost money over the first quarter, at least on paper. I'm pretty comfortable with the investments in my portfolio right now and have no intentions of selling, so I have no realized losses. I have increased my dividends on a monthly basis for the first three months of the year. My cash balances in my money market account, savings and interest on checking accounts have all increased, so I have met those goals for the first quarter.

Recently I reviewed my investment plan to see if I could fine tune it even further and I switched from a monthly stock purchase plan to a quarterly one. I will still be adding money to my money market account each month, but by investing this money on a quarterly basis, as opposed to a monthly basis, I will reduce my commission cost substantially and increase interest income for the year by carrying a higher average balance in the money market account. This should boost my total return and at the same time increase my cash reserves in case I should have any unexpected expenses.

In April I will be starting a new job, which I'm really excited about! While the hourly pay is the same, I will be getting more hours and have a lot more opportunity for advancement. I'm also very impressed with the owners of this new company, I'm sure I'll be much happier working for them than I have working for my current employer. So I have accomplished a couple more of my goals for the year in finding a new job and increasing my income from my job.

Even with the turmoil in the stock market, I think this is going to be a really good year for me. I'll keep fine tuning my plan for the year and making adjustments as needed and I'm still convinced it is a fantastic time to pick up bargain priced stocks, so I'm excited to see what new opportunities arise. I'll give a brief update each quarter and let the readers know how things are going.

A Simple Fix For the Mortgage Crisis.

I think sometimes government and big business tend to forget the K.I.S.S. principle when faced with a crisis. (The K.I.S.S. principle being, keep it simple stupid.) With banks facing record foreclosures and losses on bad mortgages and home owner's losing their homes because they are unable to pay the mortgages when their monthly payments go up, due to interest rate adjustments, it's clear that something needs to be done. Obviously no one wants to lose their home and the banks and mortgage companies don't want to lose money. Clearly this problem is too big for a government bailout and it's unthinkable to ask taxpayers to pay more in taxes for such a bailout. So what would the simple answer be?

I think it would be a good idea for the banks and mortgage companies to re-write the loans instead of foreclosing and give the struggling homeowners a fixed rate mortgage. From what I've heard in the news, they all seem hesitant to do so because it would cost shareholders some profits. Well as one of those shareholders who have lost a great deal of money already, due to poor business practices and lack of corrective action, I personally would like to see them get off their duffs and start earning their fat incentive packages for a change. Inaction is the real problem here. Nothing has ever been accomplished by a lot of hang wringing and moaning. I'd rather see the return on an investment drop than to see my shares become worthless because nobody was willing to give an inch. If the deal they made on the mortgage is unsustainable, then they need to make a new deal. One that the homeowner can afford to pay. Why would you want to stick to a payment or an interest rate when it becomes obvious that it is beyond the ability of the majority of mortgage holders to pay? There is absolutely nothing to be gained and a whole lot to lose.

So, in my opinion, it would be to every one's benefit, as well as the benefit of the economy overall, to start re-writing these mortgages and extending terms and reducing and giving fixed interest rates and get rid of the adjustable rate mortgages all together.

$35 Billion Dollars of Our Tax Money Goes To France?

I know I can't possibly be the only one outraged by our government's decision to give the $35 billion dollar contract to Airbus, a French corporation, over the United States Boeing Corporation! Have these people completely lost their minds? Here we are in one of the worst economic slow downs in years and they are giving jobs and money away to another country?

I have nothing against the French, but I for one would much rather see my tax dollars go to contracts that put United States citizens to work. Haven't government and corporate policies over the last several years sent enough of our jobs out of the country? Will they not be satisfied until they have given away so many jobs and taken so much money out of the hands of hard working Americans, that we end up being the third world country? Yes we've helped a lot of the third world countries to improve their economies, but at what cost to average U.S. citizens? When there are millions of people losing their homes because they can't pay the mortgages and foreign sovereignty funds are snatching up shares in our corporations right and left, how can the government justify giving any major contracts to a foreign corporation.

I know about the bribing incident and the surrounding scandal, but that's not reason enough as far as I'm concerned. It's time for average working class Americans to let our elected officials no that we've had enough. Stop the export of jobs and tax dollars! If they do not take the actions necessary to do this, then they should be voted out of office! Let your congressmen and state senators know that it's time to create real jobs for the people who elect them. After all, they are supposed to represent us, not France or China or India but the citizens of the United States of America! If they don't want to represent our best interests then we need to vote them out of office.

Watch What The Rich People Do!

I'm sure that just about everyone who has read anything about investing has heard the expression, "If you want to be rich, watch what the poor people do and don't do it." While a simple truth in itself, the other side of the coin is just as valid, you need to also watch what the rich people are doing and follow their example. I'm not talking about the people who look rich but are up to their eyeballs in debt, I'm talking about the truly wealthy.

If you've kept up with the financial news lately, you'd think that everything is falling apart and there's no real hope for a stock market recovery. But what are the truly rich people doing? You can rest assured they are not sitting on the sidelines. With some of our nations best corporations selling at share prices well below a year ago, or even 3 months ago, you can bet they are using this opportunity to buy on the cheap. I read recently that Warren Buffet's company just purchased more shares of Kraft and Wells Fargo, both great companies selling at unbelievably low prices right now. I haven't read much about Bill Gate's investing habits, but I think it's probably safe to assume that he's in the buying mode also. After all, you can never be too rich.

Shouldn't it also be a wake up call to all investors in the United States when so many foreign sovereignty funds are beating down our door to buy huge positions in some of our largest companies? I certainly think so. Now is not the time to be faint of heart and follow the heard mentality that is gripping our investment community. Now is the time to buy, buy, buy! Have we reached the bottom? I certainly couldn't say, but one thing I'm sure of. Eventually our economy will recover and the stock market will come roaring back, just as it has in the past. So I'm going to do what the people with the real money are doing and buy everything I can afford while the prices are cheap.

Why I Don't Invest in Mutual Funds

I know I'm going against the trend here, but I no longer invest in mutual funds. When I first started investing, I held shares in 7 or 8 different mutual funds, thinking, like so many others, that this would provide great diversity and lower my risk of losses. Well I did lower my risk of losing money, however, in the years that I held these funds I made practically no money! I would have been better off at the time to simply have kept my money in a regular passbook savings account. It wasn't that the share prices did not go up, it was the expenses associated with the funds. The fees charged by mutual funds eat up a great deal of money that, to my way of thinking, should go to the investors. Yeah, there are a lot of people getting rich off mutual funds, but they are mostly the people who manage the funds and the company's they work for.

The real turning point for me was when I purchased shares in Mobil Oil six months prior to their announcement of a merger with Exxon. In those six months my investment doubled in value and I sold my shares for a nice tidy profit. The only costs associated with this transaction were my broker fees for purchasing and selling the stock. Of course I did have to pay capital gains taxes, but you have to pay those on mutual funds too. What I didn't have to pay were exorbitant management fees for lackluster performance. Like Peter Lynch says in one of his books, you only need a few investments in stocks like this to make a lot of money. So I sold all my mutual fund shares and invested entirely in individual stocks. I've had several more great investments since then and some misses too, but I sure don't miss the fees.