Good Friday $3 Billion Dollar Profit Wells Fargo

Happy Friday. It is a wonderful feeling to know that Wells Fargo has made $3 billion dollars of profit in 3 months. Wow!! We can all rejoice right? Didn't Wells Fargo get some kind of government assistance? So.......if they borrowed more than $3 billion how did they make $3 billion? Don't get it twisted, the banks are winning but are they lending any of our tax payer money that they borrowed? No! They are keeping the tax payer money as a life raft. The Wells Fargo CEO said clearly that they made a profit. When asked about the plan to pay back the money to the tax payer, he first said he did not want to comment but then immediately turned around and said they plan on paying it back. When? We will never know. Is this transparent? I do not think so. So if they are making $3 billion then we better see higher dividend paid to the stock holders. The stock is relatively cheap right now. If we put in $10,000 will they guarantee that our money will be worth more in three months? No they will not. Keep it in perspective, if Wells Fargo made $3 billion over the last three months then they should give the tax payer's a check and share the wealth. They are still foreclosing on homes, they are still reluctant to lend if your credit score is not over 700, or demanding huge down payments if your score is below 700. I hope my Friday is as "Good" as Wells Fargo's. When this market fully recovers we all will be a little more trusting. As for now.......?

Commission Confession: Investment Knowledge is The Key

Commission Confession: Investment Knowledge is The Key

Investment Knowledge is The Key

We will be brief.  If you do not know what you are investing in you should learn it first before you invest.  Take it from me, I have been on both sides.  The investment side, as the provider and the side of the investor.  I have to agree that we should take responsibility for our actions.  This rule is applicable only if the provider of the investments has accurately stated the good and the bad about the investment.  If the experts of the investments are unwilling to be truthful about what you are getting into then you should walk.  If you feel you have not learned enough do not invest.  If you are ok with what you know, then your decision to invest should be easy.  Go ahead an do it.  Remember there are no get rich quick ideas.  There are only ideas.  Some good, some bad, just get the education first.

Some people say how can you trust the advisor that is giving you the advise.  That is easy.  Any advisor who is giving you advise should also disclose his or her motivation for trying to get you to invest.  The motivation is money.  Ask for a disclosure of what he or she is making and then ask if there are any other products out there that he or she can offer.  Ask what the commissions are on those products as well.  If the commissions on some other product is lower and better for you the advisor will have some explaining to do.  Get the picture?  Good.  

Don't Be a Fool

Wow, did you hear stocks are soaring.  All the big players in the market are just putting in millions of dollars.  Bull!  I mean c'mon people.  Who is really making money in this market?  I will tell you who, the people who have the millions to lose before they make any money.  The normal investor puts in $5,000 and makes $200 one day and loses it right back the next.  The risk level is so extreme in these kinds of markets for the little guy it is almost impossible to make any money.  I am going to break it down for you.  What do all those guys on tv say?  They say don't bail out of the market you will miss the up side potential.  Listen that is only with new, fresh money.  Not with the money that has been beaten down since April of 2008.  The Dow Jones Industrial Average was at 12,612 April 7, 2008, it is 7,769 today and may end up lower when trading is done for the day.

The other piece to the puzzle is that these big time investors have the ability to get out when they make money at a lower cost then the small investor.  It is called economy of scale.  They put in $1,000,000 and make $200,000 and get out.  They pay the broker on both ends.  They also may have losses to take against the gains they have.  Oh yeah, did I mention that they have enough resources to play the market on the other side.  Yes that's right, when the market goes down they make money as well.  

So do not be foolish, only invest what you know you can lose without getting hurt financially. Do not, I repeat do not sit around and do nothing if you are in this bad market.  Always adjust your portfolio to your specific current tolerance level of risk.  Just because you heard them say buy and hold is the way to go, that does not mean your risk level has to hold.  If you cannot take the heat get out and wait to get back in.  This is not a recommendation by any means because I do not know everyone's situation and I am not telling anyone what to do.  All I am saying is that what we see on CNBC is not what we see everyday in the normal investment world.