February Recap

The month of February has been up and down for the stock market, and through all the temporary optimism, we've been deposited right back where we started the month.

Market Watch:

Today, Dell (DELL) is blaming the economy for a slowdown in sales. This announcement comes on the heels of a slow GDP growth last month and Bernacke's continued fears of a recession or continued stagflation. The major indices are down around 2% a piece. The only winners on DollarBuilder's watch list are FirstSolar (FSLR), Kohls (KsS), and Kraft Foods (KFT).

In Play:

If you had the good fortune to pick up UltraShort Dow 30 Proshares (DXD) this week below $55.00, you are probably enjoying your buy right now. Sectors showing strength for the month included agriculture and energy. Our pick, Potash Company of Saskatchewan (POT) is up 13% on the month and 17% since we recommended it. We believe the current valuation to be a bit high, but believe this stock will continue to outperform the market in the near term.

Our Poll:

Please take a moment to vote in the Presidential Poll found down and to the right on this page. We are trying to gauge Tuesday's voting as accurately as possible. Voting will be suspended Monday night at midnight.

Politics and the Economy: Part III

Today begins our polling for the Democratic presidential race. Voters at SodaHead don’t seem to think that Barack Obama has a chance against either John McCain or Hillary Clinton. Obama has proposed a $210 billion job creation plan and wants to promote fair trade. Clinton is being pushed by conservative pundit Ann Coulter. Which candidate do you think would be best for our economy? Vote in the poll down and to the right!

Market Watch:

Yesterday saw big gains for all of the major markets. The Nasdaq showed the greatest gain in percentage points, with tech stocks leading the way. Other strong sectors included financials and consumer cyclicals. Interestingly, the agricultural sector was down and the energy sector was mixed. The day was certainly a shuffling of dollars already in the stock market. This is in line with DollarBuilder's observations about overall market trends.

Today, all of the major indices are down, with the Nasdaq being the biggest loser in percentage points. Bad news from the Fed on the economic front seems to be the main reason, as Fed Chief Bernanke says that the economic outlook for 2008 is worse and worse. Agriculture is the strong sector for the day, with financials down sharply.

In Play:

Hopefully you've been able to make some money during this recent mini-rally. If you're looking to continue to do so, I hope you had the opportunity to take some profits on UltraShort Dow30 ProShares (DXD) in the past few days. DollarBuilder believes that a 10% discount of this stock's current valuation would be a bargain under current market conditions.We also believe that gold will soon be a strong play as a part of your portfolio. However, we consider the current valuation to be a bit high. Now would be a good time to start learning about trading gold.

Dollar Bill did not own any shares or short positions in any of the stocks he's mentioned at the time of publication.

February 12, 2008

Market Watch:

All the major indices are trading up today, but the Dow is the definite leader. The Oracle of Omaha has decided to infuse more capital into the hands of bond insurers. MBIA Financial (MBI) and AMBAC Financial (AMK) are both trading down 10% on the day. Buffet's offer was only to insure municipal bonds, which do not cover the risky debt these corporations hold.

Still, the rest of the market is pushing on strong with financials like Capital One Financial (COF), Citigroup (C), and Washington Mutual (WM) leading the way. Other sectors showing strength today include agriculture, construction machinery, energy, and mining.

Question and Answer:

Tannim asked: Why is Monsanto up? France just banned one of their major GMO crops there. Astroturf-san Inc. should be hurting right now.

At DollarBuilder, we believe that the current forces driving the market are more holistic. The entire agricultural sector is drastically outperforming the market right now. As a result, almost all members of the sector are benefitting. In addition, because of high corn and Round-Up sales, today Monsanto boosted its earning projections for the second time in as many months.

In Play:

Hopefully you've been able to make some money during this recent mini-rally. If you're looking to continue to do so, I hope you had the opportunity to take some profits on UltraShort Dow30 ProShares (DXD) in the past few days. DollarBuilder believes that a 10% discount of this stock's current valuation would be a bargain under current market conditions.

We also believe that gold will soon be a strong play as a part of your portfolio. However, we consider the current valuation to be a bit high. Now would be a good time to start learning about trading gold, though!

Dollar Bill did not own any shares or short positions in any of the stocks he's mentioned at the time of publication.

Politics and the Economy: Part II

With 50% of the vote, DollarBuilder names Ron Paul as winner of the 2008 Presidential Poll! We realize that an advertising affiliate, SodaHead, has comments with very different opinions about Ron Paul. However, those are not necessarily the positions of the affiliate itself, as any registered user can post on their site.

We will now shift our focus to the Democratic race. Senators Barack Obama and Hillary Clinton scored in a statistical dead heat when placed against all other candidates. In our next poll, we will have the two Senators facing off in a one on one battle.

Market Watch:

Today the stock market has been trading mixed. There are a number of big name mergers on the table, guiding the market upwards. However, credit worries hit another financial, American International Group (AIG), creating tension in the market.

Our analysis shows that more money is leaving the financial sector today and heading towards agriculture. Potash Corporation of Saskatchewan (POT), Syngenta (SYT) and Monsanto (MON) are up nearly 4% on the day.

There is also strength in the semiconductor and solar sector. Suntech Power Holdings (STP) is up nearly 9% on the day, while First Solar (FSLR) is up almost 7%. DollarBuilder believes that the agricultural sector will continue to outperform the market in the short term.

Dollar Bill did not own any shares or short positions in any of the stocks he's mentioned at the time of publication.

Politics and the Economy

Today, DollarBuilder will begin polling on politics and the economy. We will conduct a series of polls concerning the presidential candidates and the economy. First up it's donkeys and dollars vs. elephants and the economy.

The race for the Democratic nomination is heating up, with Senators Barack Obama and Hillary Clinton neck and neck in delegate counts and the national polls. On the Republican side, Senator John McCain is leading in delegate counts and Governor Mike Huckabee and Representative Ron Paul are still contending.

The question for today is: Which presidential candidate would be best for our economy? Why?

Feel free to sound off in the comments section and to vote in DollarBuilder's presidential poll to the right and down below! The two candidates receiving the most votes in this poll will compete in a runoff next week, where the winner will be selected by you.

In Focus: Potash Corporation of Saskatchewan Inc. (POT)

Today begins the In Focus series where we take a closer look at selected stocks. The first stock we're profiling is Potash Corporation of Saskatchewan Inc. (POT). Feel free to request a stock to be profiled on our site.

The Basics

Based in Saskatchewan, Canada, Potash Corporation of Saskatchewan Inc. (POT) describes itself as an "integrated fertilizer and related industrial and feed products company." Currently, POT accounts for 15% of global potash production. The company produces its potash from 7 mines, six of which are located in Saskatchewan, and one is located in New Brunswick. Potash is used primarily as a fertilizer in agricultural production to resolve a potassium nutrient deficiency, but it is also used in soap and glass manufacturing.

Financials

As of February 8, 2008, POT is trading at a P/E ratio of 40.2. With a market capitalization of 43.6 billion dollars, it is second only to Monsanto (MON) in the agricultural products sector. The company posts quarterly dividends with a present annual yield of 0.26%. During the 4th quarter of 2007, the company earned 1.16 per share, more than doubling earnings from the previous year and beating expectations.

Our Verdict

We currently rate Potash Corporation of Saskatchewan (POT) as a buy. The agricultural sector is positioned to have a strong showing against the volatile market of the next few months. Demand for fertilizer should remain strong regardless of economic conditions. POT also holds 22% of the global potash capacity and 55% of the excess global potash capacity. Essentially, they hold 75% of the world's potash reserves. As long as farmers need potassium supplements, POT is positioned to grow. Potash Corporation of Saskatchewan (POT) has exceeded earnings predictions 5 of the past 8 quarters. Major firms have upgraded the company in the last month, including Morgan Stanley and Citigroup.

We declined to rate POT as a strong buy for a few reasons. POT's P/E ratio is a bit higher than other similar companies in the sector. We believe that POT is currently overvalued versus the market. Waiting for a low somewhere below the 50 day moving average for this stock would be worthwhile.

In Play: Ultrashort Dow30 ProShares (DXD), the only stock I've recommended, is up over 11% since last Friday. The Dow itself is down almost 600 points. The time for profit taking is soon approaching, though.

Dollar Bill did not own any shares or short positions in any of the stocks he's mentioned at the time of publication.

Part II: Where is the money going?

When dollars are leaving the market these days, they're really leaving for a while. Still, there have been and will continue to be mini-rallies on the way to the bottom. There have been two sectors that have been outperforming the market significantly during these mini-rallies. These include agriculture and mining stocks.

Let's take a look at a few plays during the market's last mini-rally lasting January 22th-February 1st (The market was up 8% during this time):

Agriculture

Syngenta Ag (SYT): up 14%

Monsanto (MON): up 22%

John Deere (DE): up 24%

Potash Corporation of Saskatchewan (POT): up 38%


Mining

Aluminum Corporation of China (ACH): up 24%

Alcoa (AA): up 26%

Companhia Vale Do Rio Doce (RIO): up 32%

These companies aren't just going up with the market; they're pulling the market back up! If you want to be on board with winners during the mini-rallies, take some time to research these stocks. Again, the ability to predict the peaks and valleys in today's volatile market can not be understated in this volatile market. If you choose to enter the market at this time, make sure you're buying stocks at their lows and that you understand all risks involved. Do not make investing decisions solely based on the information provided to you on this site.

Tomorrow, we'll start a new segment called In Focus where Dollar Bill profiles in details the stocks he's been mentioning. If there are any stocks you would like to see profiled on this site, please let us know in the comments sections.

In play: Ultrashort Dow30 ProShares (DXD), the only stock I've recommended, is up almost 11% since last Friday. The Dow itself is down over 500 points. The time for profit taking is soon approaching, though.

Dollar Bill did not own any shares in any of the stocks he's mentioned at the time of publication.

Where is the money going?

The money in the stock market is leaving the financial sector, but after yesterday's 2.9% loss, we're sure that it's leaving other places, too. One might be quick to say that the investment pulled out of American markets is going to other markets, but the huge losses in China and Japan tell us otherwise.

Of course, lots of money is leaving the stock market and being put into gold, bonds, and other interest bearing accounts. This risk averse strategy is also a low-yielding one, though.

Even more money is leaving the stock market in another way. It's disappearing into thin air. When I first started trading, it took me a while to understand this concept. The main point to remember is that the stock market is based on speculation. A stock's value might increase or decrease 50% between the time you go to bed one night and the time you get up the next morning. Value can increase or decrease without a single transaction.

It's kind of like buying a baseball card. You might buy the card for a dollar and hope that over time it'll be worth five. The next day, you might wake up to find out people believe there are only a few like it in the world and offer you ten times your money for it. You might also wake up to find out that people believe that baseball cards support terrorism and your card might not be worth a penny anymore until people believe something else again.

Right now, more people believe that stocks are going to be worth less in the future, and so they're selling their stocks now. Even with that general sentiment in the market, there have been a number of mini-rallies. If you're in the market right now, profit taking during the mini-rallies to free up cash for investment a few months down the line is probably a good strategy.

I've been watching the mini-rallies, and I can tell you where the money is going! Generally, in a bear market, investors run to so called "recession proof" stocks for safety. These stocks generally include consumer staples, strong tech stocks, agriculture, mining, energy, and stocks with a strong international component.

This is no normal volatility, though! Consumer staples are suffering. Let's take a look:

Kroger (KR): down 18% in two months.
Pepsi (PEP): down 17% in less than a month.

Tech stocks are suffering even more. Take a look at two of the long time leaders of the sector:

Apple (AAPL): down 38% in two months.

Research in Motion (RIMM): down 37% in three months.

There is, however, a way to make some green during the mini-rallies! I have two lists of stocks that I want to describe to you. One is called "Contrarian" and the other is called "Safety". The Contrarian list contains all the financials, consumer cyclical stocks, and others like Home Depot (HD) and General Motors (GM) that have been battered pretty heavily. The list called safety includes stocks from the sectors of agriculture, mining, and energy.

Without fail, whenever the "Contrarian" stocks are up, it is at the expense of the "Safety" stocks. When the market hits these mini-rallies, the "Safety" stocks are scoring huge gains.

Tomorrow, I will tell you which safety stocks are most successful right now.

I will leave you with a word of caution, though. The stock market is in a contractionary phase right now, whether we like it or not. Even buying stocks that should rebound during mini-rallies is risky. It is difficult to predict what the temporary lows are. You may be think you're getting a real bargain, when in reality, the market has a long way to go down before the best of the stocks pull the market back up. See you tomorrow!

In play: Ultrashort Dow30 ProShares (DXD), the only stock I've recommended, is up 9% since last Friday. The Dow itself is down almost 500 points. Now that's smart investing!

Dollar Bill did not own any shares in any of the stocks he's mentioned at the time of publication.

Discipline Leads to Dollars

On Sunday, I gave you some information on the financial sector. My prediction on Sunday: the huge short-term boom in financials would not last!

Let's take a moment to examine what the four stocks I've mentioned have done in the past two days:

Bank of America (BAC): down 5.6%

Capital One Financial (COF): down 12.3%

Washington Mutual (WM): down 19.4%

Etrade Financial Corporation (ETFC): down 13.9%

Well, what happened? A UBS downgrade of American Express (AXP), Capital One Financial (COF) and Discovery Financial Services (DFS) was issued yesterday. Analysts warned of a moderate consumer-led recession and the likelihood of rising unemployment, with higher credit card losses leading to lower earnings through 2009. Merrill Lynch downgraded Wells Fargo (WFC) and Wachovia (WB), saying loan losses may increase.

There will be better deals in the banking sectors later on. Just hold tight!

In play: Ultrashort Dow30 ProShares (DXD), the only stock I've recommended, is up 6.5% since last Friday. The Dow itself is down almost 350 points. Now that's smart investing!

Come back tomorrow, when I will tell you where all of the money leaving the financial sector is going!

Dollar Bill did not own any shares in any of the stocks he's mentioned at the time of publication.

Phil Says: "Six More Weeks of Winter!"

When I was a kid, I always wondered if a groundhog could really predict the seasons. As an investor, I think about 'ole Punxsutawney Phil in a while different light. Think about the economy surrounding that groundhog. Think about the hundreds of people who pour into that Pennsylvania town each year, the thousands who buy memorabilia, and the millions who tune in to the shows that carry the scoop on what Phil had to say this year. Those millions see advertisements which keep the shows on the air. Those advertisements inform people about products that they then buy. Amazing!

Winter may only be six weeks longer, but I predict that the market's volatility will go on a lot longer than that. What's happening in the market right now is something of a "mini-rally". This is the perfect opportunity to sell shares of any stocks you own that make it into the green. This rally will not continue indefinitely!

Sometime within the next 4 quarters (6-12) months, there will be some great bargains to be had. If you want to learn about the great bargains of the last few weeks, look no further than financials. The market has rebounded about 8% from it's low. Here's what some big financials have done:

Bank of America (BAC): up 36% from low on 1/22/08

Capital One Financial (COF): up 52% from low on 1/22/08

Washington Mutual (WM): up 103% from low on 1/9/08

Etrade Financial Corporation (ETFC): up 139% from low on 1/8/08

Man, I sure wish I knew that those stocks had hit rock bottom! My portfolio would be up a whopping 83% in 3 weeks!

Here's the good news: these stocks still have not hit rock bottom, and you will have the opportunity to see even bigger profits! These corporations are rising on speculation. The speculation is that the housing market has hit already hit bottom, most loan defaults have already been realized, all loan insurers are financially sound, and that the Fed's rate cuts will provide adequate liquidity. None of these assumptions are true! Conditions resulting from the sub-prime mortage mess and volatility in the great market will hamper financial stocks one again, and it will get worse before these stocks can maintain their gains. Stay tuned!

In view: Last time, I recommended Ultrashort Dow30 ProShares (DXD) as a short term buy. On Friday, if you bought DXD at around 10:00 AM (ET) you would have paid about $53.90 per share. Just an hour later, around 11:00 AM (ET), you could have sold your stake at around $55.60 per share, a 3.15% premium! CD's take almost a year to reach that return rate, and you could have made that in an hour! Personally, I am still waiting for the Dow to reach 13,000 before purchasing Ultrashort Dow30ProShares as a long-term investment strategy for a bear market. That said, there is money to be made every day!

Dollar Bill did not own any shares in any of the stocks he's mentioned at the time of publication.

Watch your wallet grow!

If you've come here for tips on money management, this site is for you! I will give you stock tips and the strategies to deal with today's volatile market. Each day, I will give you market briefings and money making ideas. From stocks to bonds to selling that old Happy Meal toy on Ebay, I'll let you know the secrets that will help you weigh down that wallet of yours with green!

Here's a freebie:

This very minute, the Dow Jones Average is at 12,700. The recent Fed cut and news today that Microsoft (MSFT) wants to scoop up Yahoo (YHOO) for $30 a share has kept the market rolling along back on the upswing. This will not last! Non-farm payrolls went down 17,000 in January.

This is what I will be doing. I am watching for the market to break 13,000 within the next week. At that time, I will buy a stock called Ultrashort Dow30 ProShares (DXD). This stock is an ETF that moves at twice the inverse of the market. So, if the market shifts 5% one way, this stock shifts about 10% in the other way.

When the market shifts 20% downward, Ultrashort Dow30 ProShares will swing 40% upward!!!

-Dollar Bill

Dollar Bill did not own any shares in any of the stocks he's mentioned at the time of publication.