Yield or Capital Gain or Loss

Based on the market close today, JP Morgan (JPM)common stock is yielding 6.7%, Altria (MO) is at 8%, Bank of America is at 11.20% and Citi (C) is basically zero dividend. Which stock or any would you buy? Believe it or not, there are many stocks where the dividend is safe, except in the case of a depression. One of those is Altria (MO), the tobacco company. In the financial arena, JPM, BAC, etc. will definitely be cutting or eliminating their dividends as the next six months unfold. Citi has a government backstop to losses and no dividend. Which would you rather own? How about Exxon (XOM) or Apple (AAPL)? This coming Thanksgiving weekend is a good time to evaluate all of your favorite stocks to determine what to do next. There is no doubt in my mind that 2009 will be a very weak year for earnings. Many dividends will be eliminated but many stocks will go up.

Random thoughts....I bet you cannot count how many household name stocks are under $10/share....take a look in the Wall Street Journal and you will not believe the companies that are trading under $20/share....When will single family real estate stop going down? ....

Supply & Demand of Stocks

We all understand that Supply & Demand is one of the most fundamental concepts of economics. When we are in a bull market, the amount of supply of stocks is limited while the demand is extremely strong. In the current bear market, it seems that there is an unlimited supply of stock for sale and no demand. We are seeing deleveraging in the economy which creates forced selling in the stock market. The market will continue to go down as along as we still have willing and unwilling sellers around. It seems to me that the willing sellers sold a couple of months ago.

We are now forced to watch the liquidation of unwilling sellers. These investors or institutions must raise cash to avoid bankruptcy. Institutions include pension plans, hedge funds, mutual funds and corporations. The deleveraging or unwilling sellers seem to appear everyday.

If you are in a cash position, now is the time to be buying stocks. I would advise buying stocks on a monthly investment plan. For example, lets say you want to commit $100,000 in the market.
Buy 1/12 or about $8,333 every month starting today. This will limit your exposure to one day events. If you are leveraged, it is time to cut your risk and make sure that you have enough cash to last you for two years.
Random thoughts.....look at the British pound vs. the dollar today....1.49....the Euro is about to break 1.25....oil is testing $55...Goldman Sachs is trying to hold $69.5...Best Buy is not selling any electronics....If you have cash, isn't this a time to nibble?