Providing For The Common Defense

April 9, 2008
By seadmin

Let’s see, so far this week we’ve seen record gasoline prices; poor corporate earnings; high-profile downgrades; more investment bank writedowns; an IMF prediction of recessions, and of course, a whole lot of red on Wall Street’s trading screens.

Oh, did I mention that all of this has happened just in the past few days?

My point here is that we are by no means out of the woods when it comes to running away from this bear market. Yes, there will be big up days like the one we saw on April 1, but for every big day like that, there likely will be a bevy of days filled with a lot of bad news and a lot of red trading screens.

I think the real key technical level here for the S&P 500 is 1,320. As long as we hold above 1,320, we should be able to fight back toward the 1,400 mark. If we are able to shed some of the fear that still exists, we may even move back above the 200-day moving average (red line), which I think would really get us out of this bear market.

Unfortunately for the bulls out there, we are not there yet.

Until we are, my advice is to remain very cautious and to make buying decisions with the utmost caution — and always, always, always put a stop loss on every position you take.

A stop loss is the only way to protect your money if things turn south, and lately, south is the direction this market seems to be most comfortable heading.

Keeping Up With The Hiltons

"In today’s world, everybody wants to be a star. And many people will do whatever it takes to feel like a star. We all want (no, we need) the big house, the nice car, the augmented body parts, the purse dog, the adopted Third World kids…"

Wow, what a great quote from an article by Charlie Mangano of Minyanville.com.

In this humorous and insightful piece, Mangano talks about how people feel the need to always keep up with the Joneses — or in this case, keep up with the Hiltons — by spending money they don’t have.

To achieve a star-status lifestyle, many people go into way too much debt. Often, this debt is achieved at the expense of things like savings and investments. Unfortunately, I see this everyday where I live in Southern California.

My feeling is that if you can afford luxuries, by all means go for it. But if you have to go into major debt to look stylish, then you are just a wealthy wannabe with poor fiscal judgment.

Now, if what I just said hits too close to home, I recommend you smarten up and start making better decisions. Only you can take charge of how you use your money, so please start doing it wisely.

To read Mangano’s piece in its entirety, click here.

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