The Best Investment To Own Right Now

I didn't want to find myself in this position.

Hank Paulson looks awful. He's sweating, uncomfortable, and clearly would rather not be where he is. He looks like he has a gun to his head. Maybe he does... judging from his choice of words-"quickly," "action is needed," "strongly urge"-something dire is about to happen.

Indeed, Paulson's got himself into a real fix. In July he asked Congress for a blank check-a "bazooka" as he called it-to potentially bailout Fannie and Freddie. At the time, his argument was that if the market perceived him as having this "bazooka" he wouldn't have to use it.

Well, Hank DID have to use the bazooka... the bazooka didn't do anything... and now Hank is back asking for a nuclear warhead. And this time he wants it without any judicial review or oversight.

Rather than delving into the actual testimony of the various officials, I'd rather focus on the subtext or real message they were trying to communicate without doing so explicitly. That message is the following...

We have lost control.

For decades the market has operated under the notion that the Federal Reserve would be able to solve its problems by controlling the money supply should things turn for the worse. We are now finding out that assumption was blatantly false. The Fed and the Treasury have done everything they can-including several actions that are not in their charters-to strengthen the financial markets.

All of their efforts have failed.

We are now at a CRITICAL point. Even if Congress DOES grant the regulators the $700 billion in funds they've requested, it won't necessarily re-instate confidence in the credit, bond or stock markets. The trust is gone. And investors are panicking.

According to the New York Post money market funds were hit with $500 billion in sell orders last Thursday. The Post wrote that the Fed's pumping of $105 billion was "just enough to keep key institutional accounts from following through on the sell orders..."

To give you an idea of the seriousness of this statement, consider that collectively money market funds control over $3 trillion. So $500 billion in sell orders represents nearly 15% of this market trying to liquidate at once. We were literally on the brink of a full blown systemic collapse.

Investors are now trying to find safety anywhere they can. It's proving difficult. Last week the yields on Treasuries fell to their lowest levels since the Great Depression. At one point, investors were willing to lend to the US government for a paltry 0.4% in interest-they were essentially lending their money for free, just to insure that the principal was safe.

However, the interventions-particularly the proposed $700 billion-are not exactly dollar positive. Every bailout the US engages in means more debt on the US balance sheet and more money printing. Small wonder that yesterday the dollar posted its biggest single day decline since the Euro was introduced.

And then there's gold...

Gold has staged an incredible turnaround as investors turn to value and safety again. There are even rumors that foreign central banks are buying. Hank Paulson might not like the position he's in... but gold investors are loving it.

By GrahamSummers

Making Money in the Stock Market Crash - How I Am Doing It

You do not have to look very far to see news about the turbulence on the stock markets over the last few weeks and months. Few people will have escaped the recent falls in stock prices without some losses in their stock portfolios. In this article I will explain the investing strategy I have used to navigate my portfolio through the crisis and still return a profit of over 10% over the last two months.

If you are thinking about investing in the sock market or want to know where to invest your portfolio or savings in these turbulent times then this will hopefully be the most important article you have read for a long time. In it I will share the exact methods I have been using to make money during the credit crisis.

The recent crash in the worlds stock markets have manly been due to the faltering banking sector. The cause of the problem is that the banks in recent years had invested huge sums of money in sub prime mortgages. Once house prices started falling in the US people started defaulting on their mortgages making these investments turn heavy losses.

The above sub prime mortgage crisis was the start of the problems. As time progressed in the latter half of 2007 various banks started announcing huge losses as a result of their investments in the sub prime mortgage market. As more announcements were made banks suddenly became very wary of lending money to each other because they did not know how big the potential losses were on each others sub prime investments. Banks rely on borrowing off each other to fund their activities (such as giving us mortgages) so suddenly banks were unable to borrow money to fund their activities and as we are seeing now many filed for insolvency.

So how does all of this relate to my stock investments? Well the above credit crisis has manly affected the major indexes such as the Dow Jones and FTSE. What has not really been publicized is that the impact on smaller companies has been minimal because they rely far less on funding their activities from the large banks.

Finding information about these small cap companies can be a challenge. I am subscribed to a service that sends me a short list of companies that are undervalued. The list is produced by a computer that analyzes company data of thousands of firms looking for signs that they are undervalued. This saves me a huge amount of time that I would have otherwise wasted investigating stock I ended up not investing in.

Of the stocks in this shortlist I then conduct my own analysis on each company, filtering out any stocks related to banking or financial sectors. I do basic research such as look at their websites, gauge professionalism by clang their HQ and requesting a copy of their annual reports. Google can tell you may things about a company in just a short period of time. Use this tool to your advantage.

In addition as investors sell their stocks in major indexes some of the funds is being invested in these small cap companies, pushing the prices up, making me more money.


Good luck and I wish you profitable investing!

By James McKerr