In a perfect economic world, the stock price of a corporation would be based solely upon the company’s financial strength – its earnings, its short- and long-term debt, its management, the quality of its products or services and its plans for growth. In other words, rationality should be the order of the day. But we all know that’s not the way the modern stock market works.

So many other factors affect an individual stock, and the stock market as a whole, that the fundamentals often take a back seat to endless combinations of things like rising or falling oil prices, analysts’ targets, market timing, industry hype, the overall state of the economy – not to mention national and international political events.

All in all, the stock market likes stability and what drives stocks down is uncertainty. Yet in a world of interconnected economies, there is no insulation from uncertainty – regardless of where it occurs. Any political event that augers an ambiguous outcome, will make investors nervous. And it doesn’t take an actual incident to remind us that stock trading is often driven – not by rationality – but by the psychological twins of fear and greed – two of the strongest human emotions when it comes to money and finance.

For instance, just recently, stocks took a hit based on the news that Greece may find itself in default and/or out of the European Central Bank’s Eurozone. The fact that nothing actually has happened yet did little to calm the worries of investors who were reacting to a possible future event, rather than any current reality. In fact, worries over Greece’s future and that of the region’s other debt-plagued nations – notably Spain, Portugal, Italy and Ireland – have caused deep losses in the Dow, Nasdaq, and S & P 500 averages, throughout the month of May.

Last summer, the markets plunged when Congress and the White House continued to spar over raising the debt ceiling. It’s likely to happen again as the second act of the debt ceiling debate takes the floor, sometime before the November election. And of course, depending on who wins the presidency this fall, stocks will undoubtedly react to the political ramifications of any change of leadership in the executive branch of government.

What other political events at home or abroad affect the U.S. stock markets? Well, government policies in China are predicted to slightly slow its growth rate this year. That potential has helped depress stocks because of fears that the Chinese will curtail imports and . . .

This just in – Wall Street advanced today as Greek election polls pointed to growing support for the country’s pro-bailout New Democracy party.

Of course, the only poll in Greece that counts is the June 17 national election. That’s when the Greek people will decided the direction of their country. Up until that day, all is speculative.

Nonetheless, U.S. stock markets continue to gyrate, based on supposition, shifting poll numbers and unreliable predictions of what may or may not happen.

All of my attention will now be focused on The Rogue Investor. Check it out to strengthen your investing through alternative investing strategies and disciplined portfolio management. Also, you can follow me on twitter o become a fan on facebook.

-Alex Stewart
The Rogue Investor

Stocks fell hard this last week, breaking support and entering uncharted waters. For those of you eager to jump right in a short on the Dow, be careful.

While stocks broke a key support level, a false breakout is not out of the question. Stocks pulled up off lows on high volume so the successful investor would do well to wait and see how stocks react on Monday.

People have opposing opinions when it comes to credit cards. Some believe that credit is necessary, for the others, credit cards are inherently evil. Anyway, a vast majority of U.S. households use plastics on a daily basis, but some cardholders are quite satisfied with their cards, while the others constantly blame credit cards for their troubles. Why is it so?

A credit card is much like some brand-new gadget – if you don’t know how to use it, you can hardly enjoy it. Credit cards come with a lot of features – APRs, fees, default rates, penalties, etc. Millions of customers use plastics, but how many of them understand how their credit cards work? You don’t need to be an expert to make the most of your credit cards, but you need to be aware of some important basics that will let you keep your plastics under control.

First off, every credit card comes with a mixture of beneficial and harmful features. Plastics that come with only good features are a rear breed. To define which card is good for you, you need to analyze your payment habits. Low APR cards are considered as the best choice. Well, they are but only for people who carry a balance. If you pay off the entire balance in full each month, you will pay nothing at all, by all means if you have a no annual fee card.

Before applying for a card, the applicant should set priorities and determine the features that would benefit him or her most. Take for example cash rewards cards. Have you ever noticed that top balance transfer card deals come with fantastic rewards schemes? There’s the huge temptation to participate in a membership rewards program, but don’t forget that you have a big balance on this card!

Good credit management is the result of observation, discipline, and responsibility. You need to take charge of your credit cards to keep the situation under control.

The Dow had a pretty bad week, dropping 430 points on slightly above average volume. As you can see on the chart, the Dow pulled back slightly, but is on its way to a new down-trend.

The bailout might be a market booster short-term, but I think that the more time that passes the more things we will find in it and, ultimately, the more the market will dislike it.

If the market falls below the 7500 mark on above-average volume, get ready to short!

Link: http://online.wsj.com/article/SB123318906638926749.html

My Bipartisan Stimulus

Let’s cut taxes, as I want, and spend more, as Obama would like.

By RUSH LIMBAUGH

There’s a serious debate in this country as to how best to end the recession. The average recession will last five to 11 months; the average recovery will last six years. Recessions will end on their own if they’re left alone. What can make the recession worse is the wrong kind of government intervention.

I believe the wrong kind is precisely what President Barack Obama has proposed. I don’t believe his is a “stimulus plan” at all — I don’t think it stimulates anything but the Democratic Party. This “porkulus” bill is designed to repair the Democratic Party’s power losses from the 1990s forward, and to cement the party’s majority power for decades.

Keynesian economists believe government spending on “shovel-ready” infrastructure projects — schools, roads, bridges — is the best way to stimulate our staggering economy. Supply-side economists make an equally persuasive case that tax cuts are the surest and quickest way to create permanent jobs and cause an economy to rebound. That happened under JFK, Ronald Reagan and George W. Bush. We know that when tax rates are cut in a recession, it brings an economy back.

Recent polling indicates that the American people are in favor of both approaches.

Notwithstanding the media blitz in support of the Obama stimulus plan, most Americans, according to a new Rasmussen poll, are skeptical. Rasmussen finds that 59% fear that Congress and the president will increase government spending too much. Only 17% worry they will cut taxes too much. Since the American people are not certain that the Obama stimulus plan is the way to go, it seems to me there’s an opportunity for genuine compromise. At the same time, we can garner evidence on how to deal with future recessions, so every occurrence will no longer become a matter of partisan debate.

Congress is currently haggling over how to spend $900 billion generated by American taxpayers in the private sector. (It’s important to remember that it’s the people’s money, not Washington’s.) In a Jan. 23 meeting between President Obama and Republican leaders, Rep. Eric Cantor (R., Va.) proposed a moderate tax cut plan. President Obama responded, “I won. I’m going to trump you on that.”

Yes, elections have consequences. But where’s the bipartisanship, Mr. Obama? This does not have to be a divisive issue. My proposal is a genuine compromise.

Fifty-three percent of American voters voted for Barack Obama; 46% voted for John McCain, and 1% voted for wackos. Give that 1% to President Obama. Let’s say the vote was 54% to 46%. As a way to bring the country together and at the same time determine the most effective way to deal with recessions, under the Obama-Limbaugh Stimulus Plan of 2009: 54% of the $900 billion — $486 billion — will be spent on infrastructure and pork as defined by Mr. Obama and the Democrats; 46% — $414 billion — will be directed toward tax cuts, as determined by me.

Then we compare. We see which stimulus actually works. This is bipartisanship! It would satisfy the American people’s wishes, as polls currently note; and it would also serve as a measurable test as to which approach best stimulates job growth.

I say, cut the U.S. corporate tax rate — at 35%, among the highest of all industrialized nations — in half. Suspend the capital gains tax for a year to incentivize new investment, after which it would be reimposed at 10%. Then get out of the way! Once Wall Street starts ticking up 500 points a day, the rest of the private sector will follow. There’s no reason to tell the American people their future is bleak. There’s no reason, as the administration is doing, to depress their hopes. There’s no reason to insist that recovery can’t happen quickly, because it can.

In this new era of responsibility, let’s use both Keynesians and supply-siders to responsibly determine which theory best stimulates our economy — and if elements of both work, so much the better. The American people are made up of Republicans, Democrats, independents and moderates, but our economy doesn’t know the difference. This is about jobs now.

The economic crisis is an opportunity to unify people, if we set aside the politics. The leader of the Democrats and the leader of the Republicans (me, according to Mr. Obama) can get it done. This will have the overwhelming support of the American people. Let’s stop the acrimony. Let’s start solving our problems, together. Why wait one more day?

***If the U.S. Commerce Secretary resigns due to issues with the bailout, how could it be good for anyone?***

OBAMA BURNED: GREGG WITHDRAWS AFTER POLICIES TOO MUCH TO STOMACH
Thu Feb 12 2009 16:18:14 ET

For Immediate Release:
Thursday, February 12, 2009

Senator Gregg Statement on His Withdrawal for Consideration of U.S. Commerce Secretary

Sen. Gregg stated, “I want to thank the President for nominating me to serve in his Cabinet as Secretary of Commerce. This was a great honor, and I had felt that I could bring some views and ideas that would assist him in governing during this difficult time. I especially admire his willingness to reach across the aisle.

“However, it has become apparent during this process that this will not work for me as I have found that on issues such as the stimulus package and the Census there are irresolvable conflicts for me. Prior to accepting this post, we had discussed these and other potential differences, but unfortunately we did not adequately focus on these concerns. We are functioning from a different set of views on many critical items of policy.

“Obviously the President requires a team that is fully supportive of all his initiatives.

“I greatly admire President Obama and know our country will benefit from his leadership, but at this time I must withdraw my name from consideration for this position.

“As we move forward, I expect there will be many issues and initiatives where I can and will work to assure the success of the President’s proposals. This will certainly be a goal of mine.

“Kathy and I also want to specifically thank Governor Lynch and Bonnie Newman for their friendship and assistance during this period. In addition we wish to thank all the people, especially in New Hampshire, who have been so kind and generous in their supportive comments.

“As a further matter of clarification, nothing about the vetting process played any role in this decision. I will continue to represent the people of New Hampshire in the United States Senate.”

By JIM ABRAMS, Associated Press Writer Jim Abrams, Associated Press Writer – Wed Feb 11, 5:37 pm ET