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Andrew Gordon
Andrew Gordon is an editorial contributor for Early To Rise Investor’s Edition. He has 20 years of experience working in infrastructure and environmental projects around the world. When he wasn't traveling, he taught marketing and finance courses at the state university of Maryland.
Mr. Gordon has authored several books for McGraw Hill and other publishing companies on energy markets, global countertrade practices and the hot growth sectors of China and Russia.
He is also a top-rated speaker at financial conferences.
Read Andrew Gordon's previous newsletter articles below:
Getting steady income from dividend-paying stocks is getting harder. During the entire year of 2007, only seven companies in the S&P 500 cut their dividends, and only three did away with them entirely. 2008 was a different story. 39 companies cut their dividends, and 22 suspended them. 2009 promises to be just as bad.
I don’t like the Wall Street bromide to “buy when there is blood in the streets.” It encourages inexperienced stock investors to jump into the market at the first sign of panic.
Andy Gordon (www.InvestorsDailyEdge.com) reveals the best thing about falling markets – and two companies you should consider investing in for 2009.
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If you can’t turn on the lights, you can’t make money. That’s the dark reality of a company unable to pay its bills. And without cash lubricating an economy, businesses dry up. I saw it happen in Asia (where I did a lot of business as CEO of a trading company) in the late 1990s. One by one, Asian currencies came under attack by aggressive currency traders. Local currencies quickly sank to one-half to one-fifth of their previous values.
Buying into a company because it has bottomed is a non-sequitur. You can’t really know when it has bottomed. Even if it has dropped 95 percent, you could see it drop another 50 percent.
Splurging in the middle of a recession is a no-no by Wall Street’s lights. They’re very good at punishing companies that can’t rein in spending when the economy goes into a tailspin (like now). The thinking is, a company can’t increase sales in a recession and shouldn’t try. They can only hope to cut costs to sustain profits. But this particular piece of conventional wisdom doesn’t always hold true. In the recession of 1989 to 1991, many companies that dared to spend aggressively on advertising were amply rewarded…
Price-to-earnings ratio (P/E) is a popular measurement of a company’s true worth. I’ve always liked companies with a P/E below 10. But nowadays, I pay little attention to this number - for two reasons, and both involve the earnings part of the ratio…
Since we’ve had negative S&P 500 growth in every quarter of our current recession - which began a year ago this month - it may seem that a falling economy is always accompanied by a falling stock market. But this is not true.
Picking companies that go against the market is hard. As a rule of thumb, only about 20 percent of them are able to swim against the tide. But when the market is falling (as it is right now), it makes more sense to invest in individual stocks than in indexes that go down with the market. At least with individual stocks, you have a chance of picking strong companies that can survive and even prosper in a bear market.
I’ve never seen the market so ruthless and so volatile at the same time. Wall Street is pouncing on weaknesses in sectors and companies. And because of the huge swings the market is making on a daily basis, when it attacks it really ATTACKS. Companies that had been fairly stable are going down 5-10 percent in one day… 30-50 percent in one week.
By Andrew Gordon | Mon, Jan 12, 2009
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