Stock Market Investment Ideas

The Game Is Changing





Inside Investing Daily

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Thurs., March 8, 2012

You’re Being Taken For a Sucker…
by Jared Levy, Editor, Option Strategies Weekly

Editor Jared Levy

Don’t believe me? Think I’m being dramatic for effect? Nothing could be further from the truth. Before I show you how “overlay codes” fit into all this, see if you agree with any of these statements…

You pay your bills and honor your debts — but other people are laughing at their creditors and declaring personal bankruptcy — some are even skipping mortgage payments, becoming squatters in their own homes and daring the banks to come take the house away.

You pay your taxes, through the nose — but other people, who happen to be millionaires (even billionaires), get away with what would be tax evasion and treason for you. (Sneaky deductions and a clever accountant can do wonders.)

You worked hard for everything you ever earned — but other people seem to have the magic touch for getting handouts from their Uncle Sam for the flimsiest of reasons. (Need a $100,000 “loan” for a deadbeat business from the SBA? Sure thing… Need a college loan? Of course we’ll spot you the cash… Need a free cellphone? No problem… Need free housing? No problem… Need free health care? Again, no problem…)

It seems Uncle Sam has plenty of your money he likes to “redistribute to those in need.”

I could go on — but you know what it’s like out there. Every day, in obvious (and less obvious) ways, you are being lied to… taken advantage of… ripped off… and made to look like a fool.

It’s not entirely your fault — but let me go on the record and warn you right now — as a good citizen, you’re especially vulnerable.

Because some believe your ethics make you an easy target.

Listen, I know you prefer to take people at their word. You’d rather believe and hope for the best in people. And you always want to give them the benefit of the doubt. And that is a great and noble way to live.

But here’s the thing, it can also be dangerous financially.


The Game Is Changing
by Andrew Snyder, Editorial Director, Inside Investing Daily

Andy-Snyder-100x100

Dear Reader,

It is another big travel day. I am headed home. It won’t be easy though.

We travelled from Cafayate to Salta last night. The drive takes travelers through a gorgeous canyon… but the road has a tendency to wash out. I spent a good portion of the trip wondering what the odds were that the road would slip into the riverbed (like it did just two weeks ago) at the very moment we were atop of it.

We made it, so the odds were either in our favor… or we got lucky.

Next, I’ll hop on a cross-country flight to Buenos Aires, switch airports and settle into an 11-hour flight back Washington, D.C.

From there, the only thing that separates me from home is a quick train ride, a shuttle bus and a two-hour trip through the Beltway’s rush-hour gridlock. No problem.

It will give me plenty of time to ponder the finer things in life… like what in the world does the stock market look like when the money flowing out cannot keep pace with the money flowing in.

We are entering a period all economists dread. We will very soon have more folks sucking money out of the system than stuffing money into it.

Get this… a decade ago we had 10 new workers entering the workforce for every person who reaches retirement age. Now, it’s the exact opposite — for every 10 folks who reach the senior citizen mark, we get just one new addition to the workforce.

This is a big deal, but few folks realize what’s happening.

It should worry you, especially if you are depending on the younger generation to push asset prices higher.

What’s worse is young Americans are scared of the stock market. A recent study showed some 40% of the folks between 18 and 30 years old say they “will never feel comfortable investing in the stock market.”

Who can blame them? They spent the last decade watching as their parents got slammed by one market fiasco after the next.

If young investors don’t see the value in the stock market, they won’t put their money into it. That means the supply/demand curve will shift and making a buck with traditional strategies will get harder with each day.

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Right now your retirement account may be hemorrhaging money — and you’re the only one who can stop it. More than 72 million Americans are seeing their savings disappear thanks to the greatest investment fraud in U.S. history.

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As always, we need to ask… what’s the solution?

I think it is simple. Take off your blinders. Just because America’s demographics are lousy, doesn’t mean the situation is the same everywhere. Now is not the time to be a xenophobic investor. There are opportunities everywhere… even here in Argentina.

And what’s more important to understand is the U.S. market won’t simply disappear. There will be all sorts of opportunities. But finding them will be more challenging than ever.

A broad “buy the market” strategy won’t work. That’s one of the reasons I dislike ETFs. They are a path to mediocrity. As the market contracts, it will become a stock picker’s market. We’re already seeing a break to the recent correlations. The trend will get stronger with each new quarter.

I’m optimistic. We’ve been ahead of this game change. We have an unconventional strategy in place that lets us take full advantage of the trend.

I say bring it on. We’re ready.

From the Inside,

Andy

P.S. I recently put together a report that outlines over two dozen of my favorite unconventional techniques. If you would like to see it, click here.


Chart of the Day
by Adam English, Associate Editor, Inside Investing Daily

If you have kids, do them a big favor as soon as possible… Teach them about opportunity costs.

Higher education is still the best way to find success in America. Unfortunately, you have to use it (and pay for it) the right way.

Student loan debt in the U.S. will cross the $1 trillion mark this year, if it hasn’t already. Americans have taken on more debt for their futures than they have through credit cards.

That sounds like a pretty good thing. Americans, long viewed as greedy gluttons who buy high-end cars and luxury goods on credit, are actually playing the long game.

Unfortunately, we’re doing it in a very shortsighted way…

Change in Mortgage Debt Chart

According to a report released by the New York Federal Reserve Bank, about 10% of student loans were delinquent in the third quarter of 2011. That puts the figure at about $85 billion.

That figure doesn’t include the estimated 47% or student loan borrowers that are in deferral or forbearance that did not have to make a payment.

The average student loan debt swelled to $25,250, a 5% increase within two years.

Many of the students who will graduate this year entered colleges as the economy tanked. In spite of a big boost in federal financial aid, the cost of education has soared.

With 2010 graduate unemployment at 9.1% there is no guarantee of any way to pay off the debt. A deferral is possible for six months for public student loans, but interest still accrues.

Of course, I’m not going to say you should tell your kid to be a plumber, although they are always in demand and are better paid than most undergrads. High school graduates without college educations have an unemployment rate over 20%.

However, you should talk to them about the school they want to go to and how they want to focus their efforts.

Debt loads on students vary wildly from state to state and school to school. In Utah, an undergrad averages $15,500 while in New Hampshire averages $31,050.

On a school-by-school basis, the range is $980 to $55,250. The overall number of students who graduated with loans was anywhere from 2% to 100% of the student body depending on the school.

For their sake and yours, talk to your kids about opportunity costs while you discuss colleges.

The difference could be $55,250 or more… plus deferred interested over five years… and no chance of any reduction through bankruptcy.

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