Stock Market Roller Coaster

I expect you like me wonder where this market is going. Right up front frankly I do not know. The stock movement we are now seeing is nothing more than emotional swings of traders and sometimes investors responding to real world events. Much of the down draft the last two weeks has been Europe news driven.  The facts there are simple, one or more countries is going bankrupt, one or more banks there is going down, and when this happens if will likely bring down some American companies as well. So when people get fearful of what is happening in Europe they head for the exits and sell everything.  On the other hand when these same traders and investors get emotional lift from good news they push the market up.  High volume stock trades are also making these moves more volatile than normal since the those computer driven trades pile on when the movement is one way or another. The fear here is if Europe really does go off the deep end where a bank or country finally does go under without Germany stepping in and keeping the losses to a minimum.

 

One can expect this type of movement to continue for some time to come as the economy is going nowhere for at least another 14 months plus, or until the election of 2012.   With this in mind as I have opined in earlier postings your best choice in investing is select dividend paying stocks and municipal bonds.  Stocks such as CTL, BCE, DUK,. HCN, MO, NNN, SO, and T are safe investments that yield 5% plus.  Note that NNN and SO have actually gained price in this market.

 

And yes for the uptenth time if you are looking somewhere to park your funds for two years, agency reits are the ticket. HTS and AGNC or good. Superb safety can be found in NLY.

 

You can buy tax free municipal bonds that 5% or more for par now. Safe GO or revenue bonds are out there. Be very cautious of any government bond fund however.

 

 If you are looking for good mutual funds I favor Vanguard.  Funds in that family that are safe investments are Wellesley, Equity Income, and 500 Index, all of which pay good dividends and offer some capital gains down the road.  Unfortunately too many people are taking their money out of stocks and stock funds and putting them in what they believe to be safe US Treasuries. Yes, you might get your original money back, but it will be worth less than when you put it in and you get nothing in interest payments. US blue chip companies are solid and cash rich in many cases and when you couple that with good dividends you get solid investments. Muni bonds protect you from tax increases and Vanguard, cheaply operated and investor owned, make for good safe keeping places as well.

 

I own all of the securities recommended above, except NLY. So I eat my own cooking.