Money & Investing - Banks.com

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, there is a bit of worry in terms of investing in the stock market. We’re in a bear market, and that has some people a little concerned about where they put their money. In some cases, there is some outright panic. However, I have long been an advocate of a measured approach to investing, and I have often recommended that now is a good time to buy. (Of course, it is important to choose your investments carefully; just because something is cheap doesn’t mean it’s a good idea.)

Fortune’s Captain’s Blog over at CNN Money has some interesting ideas for investing in the bear market. Here are my favorites from the bunch:

1. Consider Obama stocks. Now that Obama has been elected, it makes sense to assume that some stocks are going to benefit. Some of the Obama sectors that are likely to see a boost sometime in the next year or two are likely to be technology and clean energy. The policies that Obama favors also favors some of these stocks.
2. Look to the dividends. Now might be a good time to switch to companies that pay dividends. Some of the dividends are being slashed right now, but at some point, when the market recovers, dividends will find their way up again.
3. Frugal companies. Many companies are cutting costs right now. Take a look at which companies are scaling back a bit, and consider those. However, be warned: This may not work if the cost cutting, rather than inspiring admiration, instead inspires panic about the solvency of the company.
4. Earnings. The ability of a company to grow earnings is important. Even if earnings aren’t growing as fast as they used to, a company that manages to avoid a loss in this climate is one to consider.

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.

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.