Money & Investing - Banks.com

U.S. Treasuries are trending higher right now as investors look toward bonds as a way to make money. With the stock market in turmoil, and returns falling in that investment vehicle, many are turning to the bond market. CNN Money reports on the decision by some to engage in the U.S. bond market:

Finding little in the way of return on investment in other markets, investors have placed conservative bets on the bond market. Recession fears and credit crisis anxiety have sent stocks falling in eight of 11 sessions thus far in November. Likewise, bonds have risen in seven of 10 sessions. …

Bonds may continue to rise for the rest of the week, which will bring a number of other economic indicators that are expected to be equally as disappointing. Investors likely will continue to buy up bonds as a safe-haven investment as stocks look for a market bottom.

With the U.S. heading for recession (or already there), investors are starting to look for instruments that are offering any return — even the relatively paltry return of government debt. But they are banking on safety. Government debt is considered amongst the safest of investments, and with worried investors, it is no surprise that bonds are finding popularity.

However, as demand for U.S. Treasuries grows, the yields will slip. Already bond yields on the 10 year note have dropped to 3.63% from 3.66%. And as more people demand them, it is likely that the yields will fall further. As far as your investment portfolio is concerned, it might not hurt to add some of these safer investments to help bring some balance — and some gains.

Disclaimer: I am not an investment professional. Nothing in this piece or on this Web site should be construed as investment advice. Before making investment decisions, do your own research and/or consult with an investment professional. All investment comes with the risk of loss. You are responsible for your own investment decisions and any loss that may result from your decisions.

Things have been a bit wild on the stock market lately. A lot of that has to do with the fact that the global economy is in recession, including official recessions in Europe and Japan. The G-20 meeting this past weekend hasn’t been helping matters. While leaders made pledges and commitments and came out saying a course of action has been agreed on, the fact of the matter is that there is very little substance to come out of the meeting. And, quite frankly, when that many people come out of a summit as satisfied as they are, it is a sure sign that very little indeed was actually resolved on and can be done practically.

One top of that, the newest incarnation of the Secretary Paulson’s TARP program is meeting less than enthusiastic response from investors. After all, Paulson hasn’t seemed to know what to do and has been changing his mind regularly. And if there is something that the stock market abhors, it’s uncertainty. So, while Paulson has a plan now, the way things are going, he might have a new plan later.

Could the new TARP plan be bad for investors?

But uncertainty isn’t the only thing in it. The new TARP plan, in which the government buys stock rather than making loans, could serve to cause problems for investors. Investing Blog makes the case against the TARP plan:

For example lets use a figurative company with 100 shares for a total market cap of $100. This XYZ company could then dilute, or create 10 new shares, for a total share count of 110. Each share would now be worth 10% less in that the 110 shares are still worth what the 100 were previously. If you owned 10 shares of stock you would own just 9% of the company when you owned 10% the day before. One share of stock would have a value of roughly $.90, opposed to $1 prior to the dilution. …

Many of the Federal government’s purchases will likely be preferred stock which does not hurt shareholder equity but instead opens more doors for taxpayer money to be lost. When a company declares bankruptcy the lineage for repayment starts first with debt owners, then preferred shareholders and then common stock holders. Before the change in the TARP program, taxpayers would be the first to be paid as they were debt holders. As of the new change, they’ll be either second or third in line rather than first, and judging from history it is unlikely that preferred shareholders will get their full value if they get anything and common stock holders will likely get nothing.

It appears as though volatility will be the norm on the stock market for quite some time.

Right now, as the price of oil continues to drop, the energy sector is struggling on the stock market. Today that’s no lone feat; the broader market is falling as well. However, oil prices are sending energy stocks lower, and that means that an entire sector is having problems.

Brighter future for alternative energy stocks?

Even though alternative energy stocks are dropping along with the rest of the energy sector, there is hope that they will gain in the future. It is true that lower oil prices make alternative energy less desirable (the urgency to wean us away from fossil fuels is reduced). However, by many estimates, the current problems faced by oil are due to a bursting commodities bubble. There is plenty of speculation that an energy crunch is on the way, and that oil prices will have to rise in response to that — although it may take the next two decades for this to be realized.

What this means, though, is that at some point the energy sector is likely to rebound. And alternative energy stocks are likely to rebound as well. Indeed, Barack Obama’s victory in the election is seen as an indication that alternative energy is about to play a bigger role in satisfying America’s energy needs. This means that alternative energy stocks may be a good choice right now. After all, they are very low and represent a good buying opportunity. It is, however, important to consider your options. Some alternative energy investments won’t pan out. For the future, though, I personally like JA Solar (JASO) and the Wilderhill Clean Energy ETF from PowerShares (PBW).

Disclaimer: I am not an investment professional. Nothing in this piece or on this Web site should be construed as investment advice. Before making investment decisions, do your own research and/or consult with an investment professional. All investment comes with the risk of loss. You are responsible for your own investment decisions and any loss that may result from your decisions.