Making Money Alert
Bearish on Banks
04/23/2008
This morning, the newspaper Investor's Business Daily interviewed me for an upcoming article about how a lot of companies are likely to start cutting their dividends.
In my opinion, we are at the beginning of a new wave of dividend cuts, especially from traditional dividend-paying sectors such as banks and other financial institutions. I really am bearish on banks right now, and for that matter any company that makes a living by loaning money.
The credit market woes we've seen during the past nine months aren't over yet, and I think it is going to take a lot longer for all of the dust to be pounded out of the financial sector's rug.
Now, the potential for greater pain in financial stocks does not bode well for either dividend investments or the market at large. The chart above of the S&P 500 still indicates that we currently are ensconced in a bear market rally, but if what I think might happen in financials does in fact happen, we are likely to see a big pullback in the S&P 500.
As the market turns and churns, the best approach is a disciplined one. Make sure that if you invest in stocks right now, that you do so with the full awareness that you may be in for a wild ride. Place a stop loss on all of your positions as a preventative measure, and always be willing to get out of the market and wait for a better time to invest.
Investor Education Hub 2
Looking for a little education?
I know that we all can use a little information edge with the markets gyrating as wildly as they are, so that's why today I am going to give you a few links to some of my favorite Fabian educational sites.
Each of these sites addresses a specific investment area that you need to know about right now. Here are my "fab four" investor education links.
The Fabian Lemon List
Does your mutual fund taste sour these days? Do you even know how your funds are performing versus their peers? If the answer to either of these questions is yes, you need the Fabian Lemon List.The Fabian Wealth Strategies Risk Management Primer
Do you know the six threats to your retirement nest egg? In my experience, most investors are woefully unaware of what could happen to the most important money they manage -- the money that will fund their retirement years. This special report by Fabian Wealth Strategies, a fee-only investment advisory firm that specializes in ETFs, will tell you how to manage the biggest threats to your nest egg.The Retirement Income Coaching Call
Retirement income investing isn't as easy as it used to be, especially in this tough market. Find out how to get yourself on the right path toward reaching your retirement goals by listening to my monthly, retirement investment conference call.Big Money's "Secret Weapon"
Want to know how the pros on Wall Street make huge money even when the markets are tanking? Want to learn how to employ those same tools and strategies in your portfolio? We show you how in this special report.
ETF Talk: A Big, Fiery Ball of Profits
It seems everywhere you look lately there are media headlines warning about a looming environmental crisis. We read about the need to "go green," and seriously begin thinking about alternative energy, as the way of the future. But what you may not know is that there are new opportunities to tap the environmental trend by including exchange-traded funds (ETFs) in your investment portfolio.
ETF providers are starting to latch onto the green theme. Two fund families, PowerShares and Market Vectors, have created their own classes of clean energy ETFs. Just this month, a pair of ETFs has been launched in the narrow but potentially profitable niche of solar energy. The cutting-edge funds are Claymore/MAC Global Solar Energy Index ETF (TAN) and Solar Energy ETF (KWT).
Claymore chose "Tax Day" on April 15 to introduce the first solar energy ETF, the Claymore/MAC Global Solar Energy Index ETF (TAN). That ETF, offered on the NYSE Arca, is designed to track 25 companies in the solar power industry. Sectors of the solar energy universe that are included in the ETF are equipment producers, companies that concentrate on selling electricity, and suppliers of materials or services, installation, integration or finance.
TAN currently invests in companies such as MEMC Electronic Materials Inc. (WFR), Suntech Power Holdings Co. Ltd. (STP), and LDK Solar Co. Ltd. (LDK). For a detailed description of this new ETF and to learn about other ETFs in the Claymore fund family, click here.
Not to be outdone, Van Eck Global chose Earth Day, April 22, to launch the Solar Energy ETF (KWT) on the American Stock Exchange. That solar energy ETF seeks to replicate the price and yield performance of the Ardour Solar Energy Index (SOLRX). That index includes companies that generate at least 66% of their revenues from solar energy. The four top holdings are First Solar Inc. (FSLR), Q-Cells (QCE GR), Renewable Energy (REC NO), and Solarworld AG (SWV GR).
KWT is expected to appeal to investors as a "pure play" in solar energy, said Jan Van Eck, principal of Van Eck Global. To learn more information about KWT and Van Eck's other ETFs, click here.
One catalyst for solar energy stocks and ETFs in future years could be legislative initiatives aimed at spurring the use of clean energy sources and enhanced energy efficiency. Solar energy equity holdings could gain upward momentum if surcharges are imposed on companies that produce carbon emissions beyond certain limits. Legislation along such lines could be enacted by 2012 to enable U.S.-based companies to meet global emissions standards that may take effect in 2013 when the Kyoto protocol gives way to a new stage in global environmental compliance.
Exactly when the investment potential of solar energy will be realized is unclear. However, the projected growth in solar energy is huge. Solar electric output is expected to jump a whopping 400% to reach 20 GW in 2011, compared to 4 GW in 2007.
Since the best prospects for solar energy appear to be further out than the coming months, I am not recommending any of the new ETFs that focus on that industry right now. But these ETFs bear watching to see how well their volumes and prices grow. Great value can be found by focusing on a "very narrow" niche that offers big growth potential, former Nasdaq President Alfred Berkeley told more than 100 attendees during his April 17 Industry Leader speech in Washington, D.C., before the Johns Hopkins University Finance Club.
Solar energy, sooner or later, could become such an opportunity -- turning the sun into a big, fiery ball of profits.
You're Invited To An Open House 2
This event will take place on Saturday, April 26, 2008. I will be doing a live radio broadcast from our in-house studio, and I would love for all of my Alert readers to join me.
It's been nine years since I began broadcasting my radio show, and this event will help me celebrate with all of you in style. If you've ever wanted to see a live radio broadcast, or if you are curious about where Fabian Wealth Strategies conducts its daily operations, then you need to be there.
Come tour our new offices, stay and watch the radio broadcast, and enjoy food and drink with the Fabian family. Our offices will open at 9 a.m., and the radio broadcast will begin at 10 a.m. and conclude at 11 a.m.
This is an excellent opportunity to meet the Fabian Wealth Strategies team and learn more about our asset management firm. The offices and radio studio are located at:
260 East Baker St., Suite 200
Costa Mesa, CA 92626
For directions, click here
Please RSVP for this event by calling us at 800.391.1118.
We look forward to seeing you there!
Personal Finance Advice for Uncertain Times
Some pundits are saying that we are in a recession; others call it a mere economic slowdown. The answer in my opinion is what difference does this technical distinction make to you?
The one thing everyone agrees on, bull or bear, is that we're living in uncertain times. As a result, it is of utmost importance for us to take a cautious approach.
But caution means more than just being aware of danger. It also means acting in defense of your own money.
The following are my top 10 money tips designed to help you manage your personal financial situation in these most uncertain times.
Pay down and pay off your credit cards and revolving debt. If you can eliminate credit card debt this year, you can do yourself a huge, long-term service.
Know the terms and conditions of your home mortgage and home equity line of credit. Right now could be the best time to refinance mortgages. New higher jumbo loan limits and low-interest rates make for a good refinancing climate. For more on this issue, contact my mortgage expert, Josh Lewis, by phone at 800.944.JOSH, or by e-mail.
Check your credit score. If you don't have stellar credit, you won't be able to tap these upcoming mortgage refinance deals.
Consider cutting back on your 401(k) and IRA contributions to pay down credit card debt. Hey, putting money into the market right now isn't getting you much, so take this opportunity to pay down that high-interest credit card debt.
Have a cash cushion of three-to-six months living expenses in the bank. You know it's a true recession when people start losing their jobs, so it's just prudent to prepare yourself for anything.
If you don't have any significant credit card debt, then start saving as aggressively as possible in your 401(k), 403(b) and Roth IRA. When the bull comes stampeding back, you'll be in a great position to profit.
Cash is king in a bear market, so if you have not raised cash in your portfolio, WHAT ARE YOU WAITING FOR!
Fees matter. Get yourself out of those expensive annuities, life insurance and mutual funds and join us in the low-fee playground of ETFs.
If you want to buy bonds right now as a defensive move, make sure you buy only quality U.S. and foreign Treasury bonds. Stay away from any mortgage and high-yield corporate debt instruments.
Make strategic, short-term investments in sectors with high upside potential. Be careful here, as adopting a trading mentality requires the utmost caution -- caution that includes the pursuit of fast 5-10% gains and the ability to set tight stop losses.
For more on how we seek short-term gains while keeping a strict sell discipline, I invite you to check out my ETF Trader advisory service by clicking here.
Radio Show Changes 3
I've got great news for my radio audience. As of Saturday, April 19, my radio show, Doug Fabian's Wealth Strategies, has moved to its new time slot in the Phoenix, Ariz., area.
I will be broadcasting LIVE from 10 a.m. to 11 a.m. every Saturday on 1510 KFNN.
This time slot change has me very excited, because it will allow me to answer your questions live on the air and after the show. I would like to encourage all of my listeners to call me with their investment-related questions at 888.300.3684 or e-mail.
For more information on show times, and for some great Fabian content, please visit the show's Web site.
I want everyone to know that I am deeply committed to spreading the message about safety-first investing using my favorite tools, exchange-traded funds. My mission is to empower investors with the knowledge they need to achieve their financial dreams.
Here's to the best within us.
Join Doug for A FREE Retirement Income Conference Call 2
Are you prepared to live out your retirement for 25-30 years? How will you generate the income you need from your retirement plans and real estate? How will you stay ahead of inflation and maintain your standard of living?
These are important questions, and Doug Fabian can help you answer them all.
Retirement-income investing is a whole new ball game. It's about the proper asset mix; the right investment products, and the right income-investing strategies. Most people are comfortable with growth investing by the time they've reached retirement, but they are not prepared to make the most important decisions of their lives -- the decisions that will help to generate retirement income.
To help investors get on the proper path to reaching their retirement goals, Doug will host a monthly conference call to share his views about how to generate the income you need from the assets you've worked so hard to accumulate.
Join Doug for his next conference call on Saturday, May 10, 12 p.m., Pacific. This call will be limited to the first 100 callers who register, so don't delay.
Click here to sign up now for Doug's FREE retirement income conference call.
Blogs Away: A Fabian Aural 3
Want to hear my latest rant about the state of the financial markets? Well, now listening, and even watching, is as easy as a mouse click.
To listen to the audio blog, simply click here.
The Strength of the Will
"He who has a strong enough why can bear almost any how."
—Friedrich Nietzsche
Let's face it; life sometimes is very difficult. There are personal challenges, family challenges, health challenges and yes, even financial challenges. These challenges all are part of life, but knowing why you are doing what you are doing is the real key to being able to work through those challenges successfully. Another way to put this is to always keep focused on the overriding goals in life. By doing so you can withstand almost any hardships associated with achieving those goals.