Archive for January, 2005

Not just earnings

Saturday, January 22nd, 2005

This AP article offers numerous reasons for US stocks recent decline. Naturally one problem is the earnings we see coming out:

While results have been far from bad, fewer companies are beating expectations than in past seasons, underscoring the idea that 2005 will be a year of more humble returns.

But there’s more. Interest rates are expected to climb (though financials have seen the same decline as the larger market despite being more senstive to interest rate hikes).

Investors are nervous because this is a transition year with earnings growth expected to decline from double digits to single digits. Investors also don’t like rising oil prices.

So we’ve got a number of things dragging markets down. As i always I like dividend stocks, but during volaile times, everyone likes them. In addition to investing more in global equities, US investors are looking for dividends:

Since the year began, investors have shown a distinct preference for higher-quality issues, especially those that pay dividends, said Jack Ablin, chief investment officer at Harris Private Bank in Chicago.

Stock market investment blog anniversary

Saturday, January 22nd, 2005

Jan. 12, 2004 marked the first stock market investment blog entry. Naturally, I started with zero readers.

Now, one year later, this blog averages 250 unique visitors a day! Thank you!

They say practice makes perfect, and I believe I’ve come a long way since my early blog entries. I’ll try to keep writing more relvant and more interesting interesting articles about stock market investing as long as people keep reading!

Stocks vs. bonds in 1985 and 2005

Wednesday, January 12th, 2005

I;d like to share this interesting article: Bond market may give stocks stiff competition (Interest rates are key to safest place to put your money) By Scott Burns of the Universal Press Syndicate.

It starts with a history lesson: 1985 was a good year for investing. Many people chose bonds yielding 9-12% over stocks which were up 32.2% (for the S&P 500) because bonds are safe.

Now that bond yields are wyay down, we have to be careful:

Two things. First, valuations are likely to be reasonable in 2005 even if long-term interest rates climb to 6 percent. If interest rates remain the same, 2005 could be another good year for the U.S. stock market.

Second, the caution light is on. We need to watch interest rates very, very carefully.