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Yesterday the stock market ended up, after a wild ride. Although stocks ended on a weekly loss overall, it was encouraging to see that Friday ended in an overall gain, though quite modest. Cara Ellison reports on what helped pull the stock market up yesterday:

A few factors provided that catalyst: the price of crude fell modestly, and the government delivered upbeat economic data, including a surprising rise in orders for durable goods, which helped offset ongoing issues in the financial sector.

Indeed, lower oil prices have also been helping the US dollar as well. Generally good economic news has been providing a measure of support, and there is hope for a rally in the stock market, despite the latest national bank failures.

At the end of the week, here is how the stock market stands:

• Dow: 11,370.69
• NASDAQ: 2310.53
• S&P 500: 1257.76
• Russell 2000: 710.34

Gains made on Tuesday and Wednesday were erased dramatically on Thursday, leading to the overall loss for the week. But Friday marked a valiant rally, helping to limit the weekly loss.

Financials were among the biggest losers, as one might expect at this point. Fannie Mae and Freddie Mac were especially hard hit, along with Wachovia and Bank of America. Investors are looking for the bottom, and every week brings fresh hope that the bottom has been reached. Of course, only time will tell. Other sectors fared better, though, with chemicals companies and communications companies doing a little bit better.

For the next week, investors should be on the watch for additional economic data, as well as considering the fundamentals of their investments.

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.

Tags: stock market, stock market news, investing blog, stock market week,
economy, investments, oil prices

After a brief hiatus from the The Four Pillars of Investing by William Bernstein, guided by Get Rich Slowly, we’re getting back into it. Today we’ll look at the psychology of investing.

Pillar Three: Investing Psychology

Bernstein points out the following about investing:

“You are your own worst enemy,” Bernstein writes. The number one impact on your investments is you. He explains that diversification and indexing are the most reliable methods to obtain long-term investment success.

“If indexing works so well,” he writes, “why do so few investors take advantage of it? Because it’s boring.” Many people believe investing should be exciting. But that’s not the case.

I like this point.

I also like how the book points out that you should avoid “herd behavior” and instead focus on long term investing strategies that will benefit you overall.

Another psychological investing issue is the idea that it is too hard to get started. Many would-be investors get scared off because they aren’t sure how to begin. Others think that they need a lot of money to get started. However, the important thing is to start investing. Now.

Some good places to get started in investing include these less risky investments:

• Cash (high yield savings, CDs, money market, etc.)
• Index funds
• Balance mutual funds
• Retirement accounts

Getting a handle on the way you think about investing can help you make more solid decisions. You can understand the challenges that you have, and work on overcoming them to create a better investment strategy.

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.

Tags: stock market, stock market news, investing blog, psychology investing,
investment portfolio, investments, pillars investing

Today we’ll continue our series on looking at The Four Pillars of Investing by William Bernstein, and reviews by J.D. Roth at Get Rich Slowly. Last time, we looked at how important it is to understand the theory of investing. Today is a look at the importance of the history of investing.

Pillar Two: Know the History of Investing

George Santayana said, “Those who cannot learn from history are doomed to repeat it.”

This is also true of investing. One thing that Bernstein does in his book is look at the history of investing, so that you can get a better idea of how investing works, and what kinds of debacles (and booms) have been seen in the past.

The financial markets have been around for centuries. Looking at the follies and triumphs of the past can help us gain a better understanding of where we are right now — and where we are headed in the future. Bernstein offers a tour of some of the events in markets past that can teach us lessons today.

It is true that such events as the South Sea Bubble and the Tulip Bulb Bubble are both fine examples of what can happen when speculation gets out of control, and investors become too enthusiastic. We saw similar problems with the Tech Bubble and, quite recently and devastatingly, with the Housing Market Bubble.

Investors who are well versed in history know that hysteria is not something to base a long-term investment strategy upon. Learn the history of investing. Study those that earn and those that lose. And make better investing decisions because of it.

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.

Tags: stock market, investing, investing blog, investment strategy,
housing market bubble, investments, history investing