This used to be a simpler question some years back, but now with the advent of the Internet, the waters have been muddied. Some investors wonder why anyone would have an advisor (and probably pay for it) when you can find out anything you need for free on the internet. Sounds like a slam dunk for the argument for not having an advisor (Stockbroker).

How well do all those content writers who write in those websites really know you? What do they know of your risk tolerance? What do they know about your retirement goals? Since the answer to that question is going to be a big fat no, can you really trust what you are reading on the net? There is so much information on the internet it is a real challenge to know what information is accurate and pertains to you and your situation and what doesn’t.

So how can my financial advisor help me? The more your advisor knows about you the better. He should know all your investments, your investment goals, particularly regarding retirement, and your risk tolerance.

In order for you to make a wise decision not only do you need to know the ins and outs of a particular investment you are considering, you also have to sleep at night after you buy it. A financial Advisor can sift through all the information and present only those things that pertain to you and your particular needs, based on your risk tolerance and investment timeline. The more your advisor knows about you and your situation the better help he will be, so don’t hold anything back.

I used to get asked if it was okay to have more than one advisor and I think it doesn’t hurt to get more than one opinion but remember the old saying, too many cooks can spoil the broth. No matter what position you take on an investment you can easily find five professionals who oppose your decision and five who agree with you. That’s why it is so important that you work closely with your advisor so you can get clear and concise advice that works for you.

Keep in mind, you may not have the time needed to make the best informed decisions, but your advisor will have his finger on the pulse of the market and the economy probably fifteen hours a day or more. If you don’t have that kind of time maybe you should consider working with a Financial Advisor. Just don’t turn your brain off the moment he is on the phone. It should be a team approach with you making the final decisions.

Good luck and happy investing.

Preferred stock, a close cousin to common stock is often purchased by investors who are looking for a steady source of income. Preferred stock pays out a dividend, usually monthly, and carries a credit rating similar to that of bonds. Companies with outstanding preferred stock are required to pay their dividends before they pay out any dividends on their common stock shares. You have an additional layer of safety here, because if the company goes belly up owners of preferred stock have a greater claim on assets than common stock owners.

There are two types of preferred shares, accumulative and non accumulative. Companies are required to make up any missed dividend payments on accumulative shares before paying dividends on their common shares. Non accumulative shares do not hold the same requirements and a missed dividend does not have to be paid.

Preferred stock trade on the New York Stock Exchange (NYSE) for about $25 a share and have a trading symbol like common shares.  Unlike holders of company’s common stock, holders of preferred shares do not have voting rights. Some preferred stock are convertible into the company’s common shares at a predetermined rate. Once converted they cannot be converted back into preferred shares.

Preferred stock are good for investors looking for income and who can weather a little more volatility than is normal for bonds. Bond investors may have a difficult time structuring a monthly payment schedule with bonds, but it is easily done with preferred stock that commonly pays dividends monthly or quarterly.

Who issues preferred stock? There are many companies that issue preferred stock, companies like; Ford, General Motors, PG&E, JP Morgan Chase, and Calloway Golf, and Bank of America, to name a few. Just Google the term preferred stock and you will find companies who issue preferred shares and additional information on this type of investment.

Happy Investing.

If you know anything about mutual funds, I am sure you have heard the never ending debate regarding no load mutual funds versus load mutual funds.

Keep in mind that just because a fund does not carry a load (sales fee) does not mean it costs nothing to own it. All funds, load or no load have expenses that owners of the fund are charged. No one is going to manage a mutual fund for free. People sometimes assume that the load has to do with expenses of the fund as well as a sales fee, but that is not true. The load has only to do with the fee the investor pays to purchase the fund. If you put $100,000 in a load mutual fund, part of that 100k will disappear right off the top. Some funds are strictly back end loaded. If and when you sell any or all of the mutual fund, a percentage will come off the top before you see it.

Many people believe one should never buy a fund with a load, arguing there are enough no load funds so one never has to buy a load fund.

Having been a stockbroker, I sold both no load and load funds, and I have to say, what really accounts is your real return on your investment. If you are looking to purchase shares of a value fund do yourself a favor and compare load and no load funds. Right now you may be wondering why should I pay to own a fund if I don’t have too?

It’s all about the returns. Let me say it again, it’s all about the returns. Compare the top no load value fund with the top load value fund and factor out all expenses and sales fees (load) and see which gives you the greatest return. If the load fund still gives you the greatest return, all things being equal, then buy the load fund.

Let’s simplify it. If I were to give you .50 cents a day would you refuse? Of course not. What if I made a deal with you? If you pay me $2 a day I will give you $3 at the end of the day. Now which would you prefer, the .50 a day, or the $1 a day? I’ll tell you what, if you offered to give me $3 for every $2 dollars I gave you, I’d do that transaction all day long.

Now go back to your mutual fund selection. If fund A was a no load fund and the return after expenses and fees was a percent lower than the return of Fund B, the load fund, which one really pays you the most? It’s a no brainer; the load fund is the clear winner. Bear in mind I am just talking straight returns here and assuming both funds were similar in investments, risk profile, etc…

So before you ignore the entire universe of load funds, look to see what your real returns are after fees and expenses; you may be surprised.

Happy Investing.

If you’re thinking of investing in a mutual fund here are some important things to consider that investors sometimes overlook.

We all know that past performance does not guarantee future results, but past performance is much of what we have to go on. Perhaps you’ve found a mutual fund whose past results intrigue you, maybe they beat out everyone in its class for the last five years, or something similar. Here’s where you need to dig further and here are two important factors to consider.

You are going to want to know who the managers were when your proposed fund outmatched its rivals. Once you have their names check to see if any of them are still managing the fund today. If not, it’s a big red flag. Buying into a fund in these circumstances in almost like purchasing a brand new fund with no track record. Try to find a fund that has the same set of managers on board. Of course there is nothing guarantying the managers will stay after you buy into the fund, but it’s a good place to start.

The second thing to consider is, what investments was the fund holding when they got those fantastic returns that you are wanting?

You may be surprised to find that your income and growth fund was heavily invested in volatile tech stocks, maybe ones you do not own because of inherent risk. Do you really want to own a fund that relies on tech stocks to get their returns? Before you buy into a fund, find out what type of investments are allowed under its prospectus; it may surprise you.

If you find that your prospective fund has steady management and investments you can live with, then you have gone a long way into practicing the due diligence necessary before investing.

Good luck and happy investing.

Is there a crash coming to Wall Street? Wall Street Journal thinks so.  When your stocks tanked to new low, you probably would think that stock prices are cheaper than justifiable prices. However, when you read stocks are priced 20-times cyclically-adjusted earnings, you are not going to like it! See the article here.

The article also cautions that too many people are too bullish. Really?! When Dow sinks every day, it doesn’t look like it.

Only thing I would agree with this article is that Job market is still in bad shape. Economy would turn around only when the job market gets the life. Things may get worse before they get better. But, a crash? I don’t think so.

Are you keeping track of the corporate earnings results from home? If you are an invested in this market, I strongly suggest you keep a close eye on earnings reports. So far the earnings news from this quarter has been quite good. Some major companies such as UPS, Caterpillar, 3M, AT&T, Intel, and American Express have really topped analyst’s expectations quite easily.

What is most encouraging about the results thus far? The single most encouraging thing about the positive surprises this earnings season is that they are spread out among many different industries and sectors. If a company like 3M is surprising to the upside, it speaks well about several industries. Caterpillar and UPS have struggled for several quarters, so for them to be so upbeat is a welcome change for the market.

If you look closely at American Express and their earnings report, they mentioned that customer spending is almost back to pre-recession levels. As I pointed out in last week’s post, Intel was upbeat about business spending rising in a big way. This combination certainly speaks well for the long-term prospects of the recovery.

Make no mistake about it; there are plenty of obstacles yet to overcome. The unemployment rate is still extremely high and consumers and investors need to regain confidence in the economy and the market. In the short-term I think you should expect continued volatility as the economic news remains fairly mixed. Remember, this is a time of year that the stock market does not typically fare very well. August and September are notorious for being bad months for the market. In light of the fact that corporate earnings results are starting to come around, it may be prudent to start putting together a shopping list of stocks you may want to purchase in the fall after the market has discounted some high quality names.

Over the last few weeks the bulls on the stock market have been looking for a catalyst to drive the stock market higher. The hope was that earnings reports might be able to do just that, but in recent days the hopes had pretty much turned to fear that the news might be bad. As it turns out, Intel absolutely knocked the cover off the ball when it reported its second quarter earnings after the bell earlier today.

How good was this Intel quarter? The consensus estimate was for 43 cents per share, and the company raked in a hefty 51 cents per share. Maybe the most impressive number of all was Intel’s gross margin, which sat at 67% in the second quarter. In their conference call Intel said that demand was higher than expected in all areas of the world, including Europe. The company raised expectations for the current quarter and the year. Intel is now expecting its sales to set a new record this quarter of somewhere between $11.2 billion dollars and $12 billion dollars. The quarter was so good that the company CEO actually called it “the best quarter in the company’s 42 year history.”

Is Intel hitting a home run on the earnings front going to be a catalyst for the stock market going forward? In the short-term it is likely to give investors reason for optimism about the rest of the earnings season. The big question now will be whether other major technology companies like Microsoft, Dell, and Cisco are seeing the same types of good times. The fact that demand is so strong for Intel, especially on the business side, makes me wonder if the corporate world is starting to feel a little more comfortable about the economy. At the same time, it is completely plausible that technology could be in a period of outperformance and the rest of the market is still in the doldrums.

For now, Intel’s earnings report is only a start, but it sure is a great way to start the earnings season! Keep a close eye on earnings reports in the next couple weeks, because they will certainly move the markets in a big way!

The last few months, and even the last few weeks, has been packed with all kinds of stock market volatility. The Dow Jones Industrial Index has been jumping above and below the key 10,000 level on what seems like a weekly basis. Overall, the trend of late has been downward, but powerful short-term rallies have been present as well. What should you do? As an individual investor I think it is unwise to try to time the market right now. Many participants have been burned when trying to time the market. I think a much wiser solution is to try to combat the stock market volatility with consistent dividend paying stocks.

As I have said before, you must always remember that not all dividends are created equally. Some stocks have an “attractive” dividend yield simply because they have lost so much market value in recent trading. These aren’t typically the stocks that you should be looking for when trying to find a safe haven. On the other hand, some stocks have a solid dividend, typically in the range of 3%-5%, and are also consistently growing that dividend. Often you’ll find that these are companies that have a great deal of cash on the balance sheet, and are diversified nicely in their business sectors.

The simple fact of knowing that you can receive a much higher rate of return from these dividend yields than you can from any bank money market or certificate of deposit is very encouraging. Additionally, these stocks that have a history of hiking their dividend payout in all economic environment’s are much more likely to hold up than a speculative stock.

Use the current stock market volatility to learn an important lesson in the power of consistent dividend paying stocks. These are the stocks that will help you get through the tough market and build up a nice savings in the long run.

Stocks posted their second straight week of gains, as the euro regained ground on signs the European debt crisis is being contained with both governments in the region and global banks being able to access the markets and raised debt for their financial needs. Weak economic data in the U.S. limited the upside in the market, on concern over the strength of the economic recovery.

Apple is still on fire. Apple moved to the upside as Kuafman raised its estimates and target price a day after the company announced it logged 600,000 pre-orders for its iPhone 4. Apple closed at $274.

CBOE Holdings Inc’s IPO received enthusiastic response from the crowd, it’s slightly off from its first day close. It has good potential to be as profitable as ICE when it comes to trading. I own ICE, I am waiting to buy CBOE on weakness.

Federal Reserve policy makers meet this week to discuss their target for the federal-funds rate. They are likely to keep the interest rates unchanged. Meanwhile, the growth rate of the Economic Cycle Research Institute’s weekly index of leading economic indicators has fallen into negative territory for the first time since May 2009, indicating the froth has come off the recovery, at the very least.

China surprised with a pledge to make its exchange rate more flexible, but quickly damped the idea that the move would trigger a dramatic revaluation of the yuan by saying it would make the adjustment “gradually.” Whether this is a political game or real thing, we need to wait and see.

Related Link: Searching for stability in stocks

Though it may sound like it, the title of this post isn’t meant to be a tongue twister. The stock market truly is looking for stability right now. The volatility that has occurred since the Flash Crash of May 6th has been a negative for investor confidence and what we now need is some solid footing to build a base from. The summer trading season is coming soon and that generally means lighter volumes and it can lead to increased volatility when news breaks. Right now the stock market doesn’t need a huge catalyst on the upside, rather it just needs the bad news to stop pouring in.

The oil spill in the Gulf of Mexico and the constant concerns about the European crisis and the plunge of the Euro have led to a whole lot of uncertainty about where things will go in the near-term for stocks. It hasn’t helped a bit that the jobs data and the retail sales reports have come in weaker than expected, since many have been banking on a healthy recovery in the economy. The European fears may be overdone here in the United States, but I can’t fault investors for worrying about the oil spill and the economic data.

While traders may see volatility as a great thing since they are able to make more money during these times, I am fully convinced that for the average investor stability and a nice quiet market is much healthier. You’ll find that those days with huge swings in the market tend to end up negative more often than not.

The game plan for investors should be to be ready to scoop up quality names during significant drops in the market, but don’t jump in with both feet until we see a little bit quieter action in stocks. There’s no sense trying to be a hero in this market. Play it smart and be cautious with your investments!