We just went through the largest one day drop in three years. Everybody is worried that the Fed is going to go berserk and raise rates nonstop for months on end. All kinds of traders and analysts are driving stock prices down like there’s no tomorrow.

Me on the other hand, I don’t listen to these ‘doomsday’ predictions. Something everyone knows is that the stock market is constantly going up and down. So you’ve got two basic choices when your stock is down in the dumps.

First, you could stress out about all the money you have lost. The next step involved in this train of thought is to sell your stock as it gets towards the bottom. If you do this, you’re breaking the only rule of investing. You’re losing money.

(Continue reading this article…)

Jim Cramer from CNBC’s Mad Money has said, “Never underestimate the stupidity of Wall Street.”

He was at the time referring to overreactions. Perhaps when earnings reports were not as great as expected. Perhaps it’s due to something in the news.

What ever it is, people have a tendency to panic when stock prices begin to move in any direction. People will blindly sell their holdings when the price starts to dip. They will then jump on the bandwagon and buy when the stock has started to move up.

Looking at any stock that seems to take huge dips in price (do to overreactions and the panic of incompetent traders), they quite often seem to fall back into line moving back to the comfortable zone after a couple of weeks.
(Continue reading this article…)

Oil has reached a new all time high at over $70 a barrel, and we all know what that means. People are going to complain about it without considering the whole “supply and demand” idea that determines prices.

Don’t get me wrong, I don’t enjoy spending $2.89 per gallon of gas either, but I know that since I can’t directly control the price of gas, I can control how much I consume. This is pretty obvious, but can be ignored pretty easily even by yours truly.

Use less gas.

If you fill the tank less often, you spend less. So get on your bike and go! Put on your walking shoes, get a bus pass, or ride with your friends.

Using less gas will save you money, but what if you could use high gas prices to actually make you money? The price of oil affects all kinds of stocks; I’m sure that yesterday when they all either jumped or dumped, you realized this little lesson.

High oil prices will drive shares of airline stocks down as well as the rest of market. But it will drive up the prices of some stocks such as alternate energies as people look to lower the oil dependency.

Take a look at some of the sectors in comparison to the price of oil. Oil prices often drive trends, so see how it has affected your stock sector in the past. While it won’t guarantee that you will see similar results, it can help you predict where your finances will be going.

Just a reminder to you that there is an investing challenge that starts up today. You start out with 1,000,000 cheerio dollars* and have the entire quarter to crank that up as high as possible.

It is being run by CNBC, and there is a prize of a 2006 Maserati GranSport that has a sale price of $100,000 to the person with the best portfolio at the end of the contest.

Even though I’m not quite so likely to win the prize, it’s a good exercise in investing and will help to sharpen my skills. (hopefully that is)

Check it out

*or otherwise not real money

Before jumping to the reply, let’s apply this to the stock market. Investing around $300 means the stock has to go up 10% before you can even see any profits. That’s taking in your buying and selling commissions.

I understand it is a little less for the commissions, but the amount of money you would be making right after would be practically negligible.

Why is this good that you don’t make any money? Because it teaches you how to pick stocks that will do well. If you have to work harder to break even, then when it comes to investing bigger amounts down the road, you will have a much better eye for stocks.

Sure you could lose money, but you can always lose money in anything you do. The stock market is not exempt from risk, regardless of how much you invest or how much you know.

Once you have a grasp on picking out stocks that are winners, putting more into the next good stock will be much easier. When you invest $1,000 in your stock now, it only has to go up 2-3%, to get your commission money back, but since you know how to do your homework you picked one that will be going up at least 10%.

Then you can tell them, “It’s too bad Acey aint in charge no more.”

When investing, it is important to know what you are putting your into. Quite possibly it may be more important to know WHO you are investing in. Companies are run by people, so it’s important to know if they are flakey or not BEFORE you invest.

So when you do your research to buy a stock, it may be a good idea to check into the main shareholders. Most likely these will be the CEOs, the CFOs, and all the board members.

Through a quick internet search, you can find out how they have preformed in the past, what their credentials are, and how companies have responded to having these people on board.

While I don’t expect you to write a detailed report on something, it’s just good to know who you are dealing with.

The same thought here also applies to partnerships and deals with other people.