Investor Help (NO Ihub questions)

[SmallCapValueInvestor]

Came across your link via Newbie's board and figured I'd give your questions a shot. Note I'm only student and have been in the market for less than 2 years now, so I'm not a great source, but here I go anyway.

1. How to measure the economy?

In the US we have the U.S. Bureau of Economic Analysis (BEA). They offer GDP data and various interactive data tools. Thier site is here (www.bea.gov) Please note that sometimes the data isn't always what it looks like so following someone like Peter Schiff and checking his site and his YouTube channel for his personal analysis would be a great idea. I consider Peter Schiff to be a genius. He knew that the government involvement with mortgages was going to cause a bubble and eventually burst and cause a recession. Mind you, during the time he was warning about this all the government came out and said that since real estate is a tangible asset there would not be a burst like in the dot-com boom. Obviously after what happened in 2008 we now know Peter was right. Of course he wasn't the only one who warned of this, but he and Ron Paul were two of the big ones.

2. What cycle of the economy are we in?

If by cycle you're asking between the boom and bust cycle, the answer is a boom. Big board stocks and blue chips have rallied recently big time and caused a bull market. However, this isn't a sign of recovery. It's the FED (Federal Reserve) printing money to tune of billions of dollar a month to help give the imprecision all is well. Nothing more than a government fraud in my opinion. This can go over and the bubble can burst at any time causing big losses or the FED might continue doing its thing causing the markets to go up while taking away value from our dollar since the more money they print to give the impression all is well the less value there is the dollar already in the market.

3. What businesses / sectors do well in each cycle?

I like looking at the Markets Data Center from Wall Street Journal (link here: http://online.wsj.com/mdc/page/marketsdata.html). Under the US Stock tab they have a panel for Industries/Sectors you can use that to track different Industries/Sectors and check their performance

4. How does the dollar and gold/silver relate to each other

Well the dollar is a currency and gold/silver are pressisious metals. Since we are no longer on the gold standard the dollar is a fiat currency and is simply faith based. We assume it to be worth a dollar not because of its value, but because you are told that's its value. The dollar actually lost over 90% of its purchasing power since 1913. (Chart here: http://www.small-business-goldmine.com/images/MeltingDollar-1913.gif)

5. How do you evaluate a company for investment?

There is a lot of different metrics. Google fundamental analysis a lot of stuff will come up. Your broker most likely even has a lot of learning material on their site. They have a very strong incentive to teach fundamental analysis since when you make better trades you trade more often with larger amounts thus driving them more commission. Ask them if they have a knowledge center on their site or try to look it up.

6. How to read charts for short / long investments?

Reading chart is a lot to learn. I recommend learning moving averages and stochastic oscillators. Moving averages will show you trends and stochastic oscillators will tell you when a stock is overbought or oversold. You can learn a great deal from stockcharts.com they have a charting service as well as a charting school and education center.

7. What are the various reports that measure the economy and where can I get them from and when?

See answer to question 1

8. What indexes to pay attention to and why?

Well if you want to sounds intelligent, I’d say track the majors one. But in terms of usefulness I'd say gather a list of indexes and try to understand what they track, if they cover a segment of the market that you think is important to your investing/trading strategies and analysis pick those indexes to track.

9. What to look for in international economies and how they relate to and affect the US economy?

I was watching an interesting video clip where an investment manager said he likes domestic stocks with international exposure so he can buy the stock on the NYSE for instance and if it has exposure to China and China does well his investment would capture sales and revenue from China doing well. He also said something I found to be funny, that he looks which countries they are installing the most elevator in because elevators are a sign of more large buildings and corporate offices. Not sure how that acutely works out though.

10. When to invest long and trade short?

Not sure if you mean long vs. short term or long vs. short positions. Long vs. short term is hard to say and is a matter of one’s personal analysis. Long vs. short positions, I'd say if you thing there is upside potential go long and if you see downside go short, but keep in mind shorting is very serious and losses are technically unlimited.

11. What signs to look for to short a company?

Overvalued companies, companies with legal problems, declines in sales and/or equity