Investing in energy might boost your portfolio’s performance…

America is somewhat curbing its dependence on foreign oil by investing in “clean energy” and by making improvements in its infrastructure. Our historical “oil-for-dollars” policy has been a significant transfer of wealth and will potentially jeopardize America’s standing as a world power amongst others...if we don't act now.  The Obama administration is spending billions of dollars to not only create jobs – but to also make necessary improvements to make America greener and somewhat more self-sufficient.

What does this mean for you?

Well, even if you’re not one of the individuals that will be employed by this investment in infrastructure – you can still make some money by America becoming green.

A big investment from the Obama administration is directly related to an increase in public transportation…or electric trains. In order to reduce our dependence on foreign oil – we need less cars and trucks on the roads. One way to do this is by having more electric high speed trains that can get people from point A to point B. By the way, AMTRAK has recently reported a deal with Siemens to develop more electric locomotives with the first being delivered in 2013. AMTRAK also plans to expand its entire fleet over the next 30 years.  Click here to see this article.

Not everyone will be able to ride a train, unfortunately, which is why there are new fuel standards for every car to reach at least 35mpg in 2016…which means there will be more electric and/or hybrid vehicles on the road in the future (Nissan just released its all-electric vehicle called the Nissan Leaf).

What should you invest in?

A smart move would be to include some stocks and bonds of utility companies, coal mining companies, nuclear companies, and battery manufacturers to name a few. Let’s not forget that other countries besides America needs these resources as well…and as more emerging economies seek expansion and more global influence, expect these commodities to become a bit more expensive. This means more profits for you. Call it your “paper-dollar-for-real-commodities” policy!

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Please Invest Responsibly....

The rise of online discount brokerages is a great way to make some money on your own….but please use with caution! Don’t get tangled up with excessive trading which leads to fees, commissions, and other expenses that can eat up your nest egg.

Brokerage firms/banks already know that most investors will react with emotion when investing – which is why so many discount brokerages are popping up like candy stores all over the place today….because when investors panic or get greedy…it leads to excessive trading.

Excessive trading = more revenues for brokerages/banks. So please invest responsibly.  There's only one thing that can happen when you leave the investing up to individuals that probably know nothing about investing but decide to buy a stock or a bond from a company they know nothing about....they'll simply lose their money. 

For instance - Sharebuilder, TD Ameritrade, OptionsHouse, OptionsXpress, Charles Schwab, WellsTrade, TradeStation, ScottTrade, and Zecco are just a few discount brokerage firms that I can think of that are eager to take your money.  You'll see that they spend a lot of money on marketing/advertising in order to get your attention...especially since the economy is recovering and people are starting to feel greedy.

Here's my advice - if you don't know what you're doing - then invest in an Index Fund (such as the S&P 500 - ticker symbol SPY) or a Bond fund (ticker symbol AGG) that will spread a portion of your money into all of the stocks on the exchange...known as dollar cost averaging.  Index Funds and ETFs (Exchange Traded Funds) are the best way to invest on your own, especially when you don't know what you're doing!  In fact, several "professional" wealth fund managers can't beat the performance of an Index fund...so why not put your money here?

Lastly, once your money is invested - you should leave it there until you get ready to retire (depending on your age bracket).  Don't panic about the ups and downs of the market...studies show that the stocks generally appreciate as time progresses.

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QE2

Interesting article at MarketWatch.com about Quantitative Easing II and Ben Bernanke defending the Fed's decision to purchase $600B in securities (click here).  What does this mean in English?  Basically, the Federal Open Market Committee decided to put more money into our economy by printing more money - this causes money to be cheaper and hopefully increase the flow of credit and investments - which are intended to help "spur" the economy along. 

This makes the value of the dollar worth a little less than what it was worth yesterday...so your cash savings in your bank account, that's earning maybe 1%, is worth even less today.  So with that being the case, the average consumer decides it's more beneficial to invest than it is to save...so more money pours into the stock market (essentially giving money to corporations and small businesses so that they may grow, expand, and hire more people). 

An influx of jobs would be great for the economy - but with the government debasing the dollar's value, things will inevitably become more expensive (i.e., commodities such as food, oil, gas, etc....which further supports my last few articles for you to invest into commodities if you haven't already!). 

Hate him or love him, Bernanke is concerned about the economy and the high unemployment, and he's also concerned about the near unsustainable deficits carried by the US....as he mentions in the article - the Fed alone cannot save the economy.  It will be a combination of several other factors working together to get America thriving again.

What am I doing? I'm still a fan of commodities although I have some stock favorites as well.  Here's a few ticker symbols of my favorite investments that I plan to pour more money into:

PWE
BP
F
S
DTE
SLV
HD
XOM

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Residential Real Estate, Commercial Real Estate....

The American economy is very resilient and over the past decade we've made it through some tough ups and downs where some people made money and some people got burned.  As the market goes up - there are a lot of "con artists" stating that the economy is sound and can reach even new highs (remember the dot-com bubble, and the credit-era of 2007?).  When the market is super hot and everything is going up - investors can quickly become infected with greed and FOMO disease...(Fear Of Missing Out).  Only to be dissapointed when the market comes crashing down and they're stuck with something they paid too much for.

On the contrary, when the market is in a deep recession or depression - similar to the one we just came out of or are currently in - these same "con artists" pop up again.  This time around they tell you that interest rates are so low and property is cheap...and you need to buy now before everything goes up.  Or they may tell you that you should get out of the stock market because everything is crashing down and you need to put your money in bonds.  Maybe they say you need to trade in your gold metals in return for declining-in-value paper dollars.  Should you believe them?  Who do you trust?

You must learn to trust yourself...that gut feeling...or second thought that we have and so often choose not to listen to.  Also we must do our own research and use some common sense.  Let me elaborate on residential real estate....

During the 2007 credit-era, banks were allowed to lend out money on an 10:1 ratio... that means if a bank has $1 million dollars of actual cash in its vaults - they are allowed to "create" or lend up to $10 million dollars for mortgages, car notes, and various other small loans to give to consumers...they're able to do this because the money is "backed" by the full faith of the bank not going broke or "failing"...(some banks are deemed "too big to fail"...remember?) Even though they failed us anyway...nevertheless...because the banks had so much (paper) money to lend, they were willing to give it away to whomever had a pulse and simply asked for it (i.e., home builders).

Builders got loans to start residential construction...even if they didn't have enough home buyers to move into the properties.  So what happens to the newly built homes?  Investors rush in to flip the properties....to other investors foolish enough to buy it from them....and the cycle goes on until the price of the house doubles, triples, or even quadruples...then the price comes crashing down.  Today, we have several of these types of properties on the market for dirt cheap, as well as foreclosures...but still not enough buyers.  I think it's funny how there are some investors looking for new home construction as a sign that the economy is back...lol. 

New home construction will not solely be a sign that the economy is going strong again...but for those investors looking to "get in while the gettin's good", they should also be prepared to hold these assets for about 5-7 years before even considering to sell again.  If you're just looking for a good rental - then look hard....don't just buy the first thing because it's cheap.

A good sign that the economy is returning to full swing might be to take a look at commercial real estate...you know, strip malls, hotels, business offices, shopping centers, etc.  Might not be a bad place to invest your hard earned money if you haven't already.  Why?  Because the US is still a consumption based economy - so business travel will soon pick up as a sign that corporations are earning again (I'm currently writing this article while on business travel).  People will want to start enjoying those very much needed vacations again (the airline industry is a good investment as well).  Don't believe me?  Take a Saturday and drive up to your favorite outlet mall this wknd and look at how full the parking lot is. 

Trust your own instincts...do your own research and learn about Investing 101...if you need help, find a tutor or someone offering an investment class.
The consumer is slowly coming back around...and the bulls are starting to see red (or in this case, green).

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