The key to investing is to always learn. Learn about the markets, learn investing methods, learn how to assess companies and their financial statements. You have to learn the game before you play it. That's how the world works. I have read more than I think my cranium can fit, but somehow it does. Every investor should read different books, articles, etc. on investing. The idea is not to find one book and follow it religiously; you have to get many different aspects of investing, decide what you like, test it, and then fine tune it to your own style of investing.

I will give you a list of recommended reading for beginning and intermediate investors, but that doesn't mean you can't become an expert on the styles presented in the books. They simply explain their particular style in an easier way to start out, and then they go into depth about it.

1. Rule #1- by Phil Town
In this New York Times bestseller, Phil Town describes a different twist to traditional buy and hold. He mixes aspects of value investing with some technical aspects that are important to recognize. His book really opened up doors for me.

2. Real Money- by James Cramer
I know some of you are going to say, "You want me to read a book by that nut Jim Cramer who screams on TV!" The answer is Yes. It is not because everything he says is right or he is the absolute best, but he has some really valuable knowledge on fundamental investing. Mr. Cramer is a former Goldman Sachs employee, hedge fund manager, and much more. I guess 14 years of managing a 24% average return after fees, $450 million hedge fund gives him some authority on investing.

3. Invest Like a Shark- by James "RevShark" DePorre
The shark brings a whole different aspect of investing than Jim Cramer, but he also acknowledges DePorre's book by writing the foreword in it. For those of you that like to analyze charts and technicals a little more, this is the book for you.

4. The Intelligent Investor- by Benjamin Graham
Benjamin Graham is one of the most renowned investing authors in history. He taught Warren Buffett how to invest, and he is quoted by saying, " [It is] by far the best book on investing ever written." This is THE book on investing, and if you want proof this method works, take a look at Warren Buffett's net worth (by the way he is the Richest Man In The World!). I will warn you that this book is much thicker than any other book I recommended and the concepts are quite a bit more advanced.

I will continue to tell you about books that can help you make lots of money in investing in equities markets as well as real estate. For now, you have plenty of reading to get done. Also, take notes on the methods explained in the book, so you can come back and refer to it when it comes to testing out the strategies. These books are a great way to learn investing, and they're great material for investing ideas.

Although many banks reported more writedowns on collateralized debt (CDOs) and negative earnings, there are signs the banks are crawling out of the graves they dug for themselves. Many reports say that the banks are taking their last big writedowns. Hopes are up for banks with the bad news behind them.

As I talked about in my article Financials Maimed, Pick 'Em Cheap, the financial stocks have been beaten and beaten again. Financial stocks have started to rise with sentiment about banks rising, and there is a movement of institutional money (mutual funds, insurance companies, hedge funds, and pensions) into financials as well. The prices of financial stocks have risen significantly in the past few weeks:

Bank of America (BAC) has risen over 8% from about $35.50 to $38.38 since April 14th. Merrill Lynch (MER) has risen over 15% from $43 to $49.50 in the same time period. Even struggling private equity giant, Blackstone (BX), has gone from $17.20 to $19.40; That's a 12.7% increase.



Don't feel like you've missed out on the good opportunities here though. These financials have fallen hard, so they have a long way to go up. If you would have looked at a quote on Merrill a year ago at $90 and asked yourself if you'd like to buy that same stock for $50, would you take it? Absolutely.

Banks won't see the same kinds of earnings they saw in 2006 and 2007 this year, but just as any industry in the stock market, it fluctuates. 2009 and 2010 may see those outstanding earnings numbers, and this time they could be bigger than ever. Stocks go up, stocks go down. Buy them on the way up, and you have no reason to frown.

Mutual funds are a great investment to add to a retirement portfolio. If you find a good manager or a good fund, they will grow your retirement pool from a small amount to a whopping amount. I have reviewed many mutual funds, and it is true, many of them do not perform any better than the S&P 500 index. I believe I can find you a few exceptional funds that exceed the returns of the S&P by a large percentage.

The key to these is to invest in these funds, put more money in them as time goes by, and you will watch a fortune grow. Before you do decide to invest in a mutual fund, make sure you have the means to do so. Make sure your debt is done with, which is what I talked about in Get Personal Finances In Order, and then you can go on your way to making a bundle for retirement.


The List of Mutual Funds is not in any particular order:

Top 5 Mutual Funds

1. Blackrock Latin America Fund (MDLTX)
2. CGM Trust Focus Fund (CGMFX)
3. Fidelity Advisors Utilities Fund (FUGAX)
4. John Hancock Large Cap Equity Fund (TAGRX)
5. T. Rowe Price Value Fund (TRVLX)

1. One mutual fund that I have owned is the BlackRock Latin America Fund (MDLTX). This fund has exceptional returns, much of which is coming from booming Brazil. William Landers, the manager since 2002 has been able to produce annualized returns of about 50% for the past 5 years. That is almost unheard of for a mutual fund. Landers follows the macroeconomic conditions of the countries he invests in. That provides an extra bit of protection from bubbles in different economies.

2. Another mutual fund with rather high returns is the CGM Trust Focus Fund (CGMFX). This fund is managed by Ken Heebner and he has produced an annualized 5 year return of 38.5%. That is another outstanding return. Since his management of the fund began in 1997, he has focused on mid-cap growth stocks in the U.S. This fund is a no-load mutual fund with a .99% expense ratio, so they don't take a percentage of what you put in the fund or what you take out. A .99% expense ratio is low enough that it won't hurt your returns at all. CGMFX also has a five star rating by popular mutual fund analyst Morningstar.com.

3. I found that Fidelity has quite a line-up of good-return mutual funds. The Fidelity Advisors Utilities Fund (FUGAX) has had a more than 20% average annual return for the past five years by investing in public utility stocks. It yields a 1.55% dividend each year, which is a nice bonus to 20% returns. Utilities seem to be almost always a good bet for either constant growth or dividends, so I don't think this fund could ever be in trouble.

4. The John Hancock Large Cap Equity Fund (TAGRX) is an impressive diversified portfolio with mostly large cap stocks. It has seen a 20.29% average annualized return for 5 years, and it is team managed. That creates more evaluation in each pick for the fund. Teamwork works. John Hancock also provides a number of life cycle retirement funds; they are funds that are aimed to provide you with the capital you will need when you retire in 2010, 2020, 2025, etc. They have many retirement years, however, I think they go in blocks of 5 years.

5. John D. Lineham manages the T. Rowe Price Value Fund (TRVLX). The 5 year annualized return is 13.8%, and it has produced a 12.4% return annually since 1994. That is impressive. Value investing reminds me of the Tortoise and the Hare story; slow and steady wins the race. I am a big fan of value investing, and it can do great things for your retirement. So, if you want a fund that you know will perform well over time, it's Lineham's value fund.

In an nation that is reporting contradiction after contradiction, what are we supposed to think about the economy. It is apparent that there has been a downturn. The real questions are: Are we in a recession? Are we going into recession? or Are we finishing the recession? The very problem with asking these questions is that we don't know we've been in a recession until after it happens. The economic data is backward looking, thus we can't conclude on recession or not right now. A recession is defined as two consecutive quarters of declining GDP. With a decline in the fourth quarter 2007 GDP, if we report the first quarter 2008 at a decline we have a recession. But where do we stand now?

Many reports come out and say that the economy looks gloomy. Businesses report that earnings are down and morale is low. Consumer confidence is low as well. Because the credit market is tight, businesses are not borrowing as much to invest, expand, or fund new projects. This all affects the bottom line. With that said, times are not good right now. There's a cliche for that, "We can only go up from here." However, it is hard to call an actual bottom on the market, so we don't know for sure if it will go lower. One thing we do know is that the market will go up from here in the not-so-distant future. I have heard many experts including Bob Doll of BlackRock Asset Management (BLK) say that we have seen a bottoming process and that the worst is behind us.

I believe there are some stocks that have more to fall, but overall I think we have come to a substantial bottom. Companies that have not yet been affected by the credit and consumer problems may experience some spillover in the next quarter or two. Also, be careful of companies that have high P/Es, because once their EPS and growth rates take a hit, that stock could take a tumble down a high mountain. Something that seems to be a trend during recessions (especially ones sparked by financial trouble), is that the Financials sector seems to be the first to fall, the first to bottom, and the first to recover.

Be careful timing the market, and it's never a bad idea to sit on some cash if you are uncertain. Remember, all things held constant, the market will go up over time.

In a CNBC interview, William Greiner, chief investment officer of UMB Asset Management had said that small cap stocks are the best place to be for this recessionary period. He goes on to say that small caps have done well in the past 10 recessionary environments. If you need to bounce back from this recent down market, look to buy some small cap stocks.

If you believe in having a diversified portfolio, you will probably have at least one of each market cap size. If you don't have a diversified portfolio and want sizable returns, small cap stocks can yield greater returns. Historically, the average annual return for a portfolio of the smallest 20% (market cap) of stocks listed on the NYSE is 17.4%. The 17.4% return of small stocks clearly outperform the 12.3% average annual return of the S&P500. Of course, the volatility of a small stock portfolio will be higher than that of the large cap S&P 500.

The common definition for small cap is from $250 million to $1 billion in market cap. Set up a stock screener for Small Cap or Market Cap= $250 million to $1 billion with reasonable growth rates. EPS growth rate should be 10-25% annual. ROE should be 10% or larger. Be weary of companies with abnormally large growth rates, and always check the financials of the company to make sure they are stable. Some stocks I got from the stock screener were ULTI, HNR, and ESEA; a diversified group of companies. The companies are The Ultimate Software Group (ULTI)- a business software company, Harvest Natural Resources (HNR)- an oil and gas operations company, and Euroseas Limited (ESEA)- a Greek dry bulk shipping company, respectively.

With earnings season to a start and an uneasy economy, maybe it's not so bad to just hold some dough. Johnson and Johnson (JNJ) just reported an earnings surprise, but they credit it to cutting costs. There was no real growth in this story. Analysts are uncertain about how Google (GOOG) will do and if they can keep the fast-paced growth they have had in the past. GOOG reports earnings on Thursday, April 17. Most companies will be reporting earnings throughout the rest of April. With a slowing economy, don't make big bets on surprises. Wait out the next few weeks. Get a feel for how the earnings are overall, company to company, industry to industry; and then you will better know where to put your money.

Again, if you are a long-term investor, many stocks that have already been beaten up are going to look very good in a year or two. For a value investor, this is a developing feeding ground, so go ahead and nibble a little. Just wait a few weeks, and start in if you see some good deals after earnings season.

The Dow down 250 points! GE reports dismal earnings. More writedowns will be reported from banks. The world is falling apart. Well... actually it's not. Recession does not equal the end of the world. With all of this bad news out, what am I supposed to do as an investor?... Read More...