Retirement Guys: Shopping for bargains on Wall StreetWritten by Nolan Baker Mark Clair | | firstname.lastname@example.org
There is pushing and people yelling everywhere you look. The phones are ringing; the computers are humming, and everyone’s running around looking for the best deal. You might be thinking this is Toys “R” Us on Black Friday, but it’s just another day at the stock market exchange.
Just in time for the holidays there is a lot of financial news to be thankful for. The Great Recession appears to be over and financial forecasts for the future look a lot better in several areas. Just in time for the holiday shopping, the stock market has turned around and had a very nice rally to put the stock market on track for another positive year. Consumer confidence is once again growing. We are still cautiously optimistic, but it is great to see some more positive news lately.
Recently, my wife and I, Nolan, took our boys to watch Santa come into town at Levis Commons and enjoyed the shops with a nice cup of Starbucks and hot cocoa for the kids. The retail stores are ready to go and the Department of Commerce reported retail sales have increased for four months in a row. The holiday deals are almost everywhere a shopper looks.
You might even be crossing off items on your list this weekend shopping at the stores or online. Even old Saint Nick is in a jolly good mood.
Unfortunately, when it comes to buying investments on Wall Street, many investors will miss out on current opportunities. It amazes us how many people will go out in the middle of the night and stand in line in snow, rain, and just downright cold weather to save 30 to 70 percent off Christmas presents, yet many of these same people will avoid buying stocks when they are on sale. Instead, the average investors’ emotions of fear and greed, get the best of them buying when prices are high and selling when prices are low. Before this happens to you, we are here to help educate you about getting your financial list together for the holidays.
Just like you get your store list put together and know exactly where you are going to go, map out what you want financially. The stock market is divided into large, medium, and small companies and two different types of investment styles, growth and value. And though many stocks have a blend of both growth and value opportunities, each style of investing can do better at different times. Morningstar, an independent company that provides stock market analysis and research, says, “Growth is defined based on fast growth (high growth rates for earnings, sales, book value, and cash flow) and high valuations (high price ratios and low dividend yields). Most of these portfolios focus on companies in rapidly expanding industries.” Think of growth companies like the hot new toy that every kid wants. Hot new toys can either change the industry or end up at the bottom of the toy box by Easter.
Value companies can be the ones that have gone through difficult times or they could be companies that other investors have simply ignored. Morningstar says, “Value is defined based on low valuations (low price ratios and high dividend yields) and slow growth (low growth rate for earnings, sales, book value and cash flow).” During many periods in time, in the long run, value stocks have outperformed growth stocks. Value investing can take some shopping around to find the deals, it means going where usually everyone else isn’t at.
We, as The Retirement Guys, believe there are still plenty of opportunities to take advantage of in the stock market right now. We love some of the growth companies out there and we are always looking for the great values. Diversification, although it doesn’t guarantee against loss, can be a good method to build a great portfolio for 2011.
From our family to yours, Happy Thanksgiving.
For more information about The Retirement Guys, tune in every Saturday at 1 p.m. on 1370 WSPD or visit www.retirementguysradio.com. Securities and Advisory Services are offered through NEXT Financial Group Inc., Member FINRA / SIPC. NEXT Financial Group, Inc nor its representatives provide tax advice. The Retirement Guys are not an affiliate of NEXT Financial Group. The office is at 1700 Woodlands Drive, Suite 100, Maumee, OH 43537.