The author of the article speculates that the reason for this is because the first two years, a new President is trying to get his agenda enacted and is not concentrating as much on the economy. After the midterm elections he is then more focused on getting reelected which means he will do more things to boost his approval ratings and to boost the economy. A good economy going into an election means a greater chance of getting elected.

While the new Obama tax package was just passed one might argue that things are already happening along those lines. With investors and companies knowing that their taxes are not going to be raised for the next two years, things are already looking good for the business environment.

But wait a minute.

Didn’t Obama already throw everything he had against the wall trying to stimulate the economy in his first two years? What about a little thing called the Obama stimulus bill in the amount of 787 BILLION! How much more can he do to try to stimulate the economy? Seems to me like he’s got very little left and that new Republican House is not going to let him get away with other reckless spending like that.

No, Obama was trying his hardest to stimulate the economy in the first two years and he clearly failed. He gave away our tax dollars and flushed them down the toilet like all Democrats seem to do. Whatever happens from this point will be more of a result of the Republicans who are there to put a stop to all his shenanigans.

If there is an Obama stock rally in 2011, it shouldn’t be called that. It should be called the return to sanity rally.

Earlier today, there apparently was a rumor that Apple might be looking to by Sony (SNE). That “news” even sent Sony stock up 3% in Japan on Tuesday and it probably was the reason the stock went up right at the open here in America as you can see in the chart below.

Apple has over 50 billion dollars of cash and there has long been speculation about what they are going to do with it. Many shareholders want them to start distributing dividends but so far Apple hasn’t done that. They have bought some smaller companies that were competitors of theirs or that had technology they needed but so far no major purchase.

The rumor was based on nothing more than an article in Barrons that perhaps Apple is setting up to buy a bigger company with all it’s excess cash. Sony might have been mentioned in the article and that was enough to start the rumor.

Stay away from rumors as that is a sure way to lose money. If you bought Sony stock early this morning you still have a good stock but you probably paid more than you should just because of all the unfounded speculation. Additionally, you now own stock in a company that you likely had no interest in until you heard the rumor. You can always sell it back but that is not a good way to invest. Always invest in things you know, not on what you think you know.

When it comes to individual stocks and how they relate to the mutual fund investor, the explanation is anything but simple and a quick read through a Stock Market For Dummies book might be advised. The dilemma that many investors become enthralled with has to do with the advantages of purchasing shares of individual stocks or buying mutual fund shares.

One of the primary reasons that mutual funds have dramatically increased in popularity is directly related to the underlying investments of 401(k) participants. Anyone investing in their employers 401(k) plans generally have a few investments options to choose from. During that annual company meeting where the retirement benefits are explained, the historical performance data of the investments found within the 401(k) are highlighted. Generally, mutual funds fare much better than the other investment choices found within the plan. Many employers also provide a match to any employee participating in the 401(k), which makes many employees feel compelled to join up. Thus, a mutual fund investor is created.

Mutual funds are open ended investments that invest in individual stocks, bonds, certificates of deposit, real estate and money markets. These funds are usually managed a team of professionals that are employed by the mutual fund company. Individual stocks within a mutual fund are purchased to match the focus of the fund itself.

There are lots of different fund you can buy that have different goals or criteria. Growth funds purchase large amounts of individual stocks that have a high potential for growth. Whereas, growth and income funds contain various issues of stocks that have dividends that provide income as well as growth. There are funds that focus in on geographic or specific business and technological sectors. Some mutual funds may have over 100 different individual stock issues contained within it’s portfolio.

One of the greatest considerations within managed mutual funds is called turnover. This is the frequency in which the fund’s underlying portfolio is bought and sold within any given year. High turnover with profit can create a higher tax liability. This is a huge consideration when buying shares of mutual funds because it can undercut the net profit of the investor.

The most frequently questioned consideration of most mutual funds is their often excessive expense ratios. This along with turnover can make investing in aggressively managed growth funds unattractive, especially in a down market.

Individual stocks are often considered during both bull markets and bear markets. When the bulls are running and the market is high, new issues of stock also known as “hot issues” are created with impunity. Many individual stock investors jump on these risky bandwagons with religious fervor. The end result can be huge losses in the blink of an eye.

However, purchasing individual stocks during down markets can be profitable over the longer term. This is known as value investing, which is something that has grown in popularity since the peak of the recession. However, investing in any individual stock limits the diversity found within the mutual fund world. The risk of buying individual issues over the potential to purchase many may be a concern to the average investor.

For the 401(k) investor, individual stocks are usually not available within the plan itself. Therefore, exposure to individual stocks would likely come outside of the retirement world. However, IRAs and Roth IRAs are easily set up to accommodate the purchase of individual stocks. The biggest problem with buying individual stocks is that the average investor must actively manage his or her own portfolio. Though there are brokers who will gladly perform this task for a commission, it is still up to the investor to express their own personal goals for profit and success. Buying individual stocks means that the investor must make the correct choices twice. Buying low and selling high is definitely not as easy as it may seem.

If you had bought when the market was down 800 or more points, you could have made some quick easy money. From that point stocks went back up and although it was a bad day with the Dow losing around 350 points, it was no where near what it was at it’s worst.

Whenever people panic like this it makes one wonder whether it is a buying opportunity? It was if you timed it just right today but few people have the ability to do that. Other than that, it might be too risky to buy now and hope things get better. This was the third day in a row that the market went down and there is definitely a lot of bad news and uncertainty on the horizon. This could be just the start of more bad things to come so buying here could be foolish. At least one thing seems to be for sure: stock trading will driven by a lot of fear in the near future. 

If you are a stock market beginner just wanting to find out what it is all about, you might use this opportunity to sign up for free to Stock Market Survivor where you can be in control of your very own portfolio. You are given $100,000 in virtual play money to get started and you can trade stocks exactly like in real life. There are also monthly prizes to win and it is all free. Most of all though, Stock Market Survivor is a great place to get your feet wet in stock trading and find out what it is like to have your own portfolio of stocks. It should be a lot of fun to watch your stocks go up and down in the coming months and not have any of the risk. 

If you are interested in finding out what it would be like to have a portfolio and do your own stock investing, you might want to sign up for the free stock simulation game called WallStreet Survivor. Not only can you use it to learn how to trade (with virtual money), but there are also a lot of tools and resources that will aid you in gaining a greater understanding of how to get started trading stocks.

Stock investing is something you should only do with money that you can afford to lose. There is risk in stocks no matter how safe your choice(s) seem to be. If you invest money that you know you need or will need, that is truly stock investing for dummies and you should not complain if you lose money. Not all investing is risk free and betting on stocks is one of those that carries various amounts of risk.

Too many people had all the money in their 401K plans invested in stocks and that is why so many Baby Boomers are having trouble retiring right now. You see, that was retirement money they need right now or very shortly from now and the market downturn took a lot of it away. That is why it is smart to invest less and less in stocks the older you get. Had they switched their 401K investments from stock mutual funds into something safer, they would have lost less and been much better off than they are now. 

Learning how to buy and sell stocks is actually quite easy. Most people do it all online now by signing up to one of the many stock broker sites. Anyone who has any familiarity with the Internet and computers can learn to trade and manage their account. It is the actual stock picking and figuring out what to invest in that is the hard part.

Picking the right stocks and knowing when to sell them is something that people struggle with every day. It is sort of like predicting the future and no one has a 100% success rate. Even if you somehow had insider information it wouldn’t guarantee you that you would make money. You see, there are a lot of factors that go into determining a stock’s price and the one that plays the biggest role is that of perception. Stocks are bought and sold everyday and their price is based purely on what people are willing to pay for them.

The free market as well as supply and demand determine stock prices. Of course, a lot of that demand (or lack of it) is based on how well a company is doing. For instance, if a company is having troubles like Toyota is right now, people know what is happening are are less inclined to buy the stock. Less demand means a dropping share price. Conversely, if a company is on fire and releasing products that everyone loves, it is perceived that they will be making money and people will bid up the price of the stock due to high demand.

People use a variety of methods to choose their stocks. A lot of stock picks are in financial magazines and newsletters that can be subscribed to. There are radio talk shows that discuss stock picks as well as a good number of investing shows on television where you can get all sorts of information. Those are the places that most people probably get information on stocks and where they base their decisions off of. A lesser number of people actually know enough to do their own stock analysis and find stocks they are interested in on their own.

A good number of people don’t invest in individual stocks but instead put their money in something known as funds. Mutual funds are investment vehicles that are comprised of a group of stocks and they are managed by a professional. There are fees associated with putting your money in a fund but it is often thought that a professional stock fund manager has a better chance of making money for you than you do yourself. You can put your money in thousands of different funds that each have their own investment objectives and you can choose a fund based on what types of stocks you would like to put money into.

Stock investing has always been thought to give a person the highest return over a long period of time. Because of the risk involved, buying stocks for short term investments is never recommended in case the market goes down. If you have money that is only available for a short time, it should be put in bonds, CD’s, treasury bills, or some other safer investment that is guaranteed through FDIC insurance.

However, if you have money that you don’t need for 5 or more years (and that number is arbitrary), any long term investment plan that involves stocks should be able to overcome periodic market dips and will most likely provide a nice return many years later. The more years you have to invest your money, the safer you should be in the stock market because you have time to make up the losses during the down periods and the up periods can be quite profitable.

The Internet is the place many people go to get all kinds of information but sifting through all the trash and trying to figure out what is valid is often difficult. There is no lack of stock investing advice online but the question remains: where do you go to get good stock market advice?

Morningstar is an established and respected company that has been around since 1984. It is one of the big names in stock research and opinion and it is also a leader in mutual fund analysis. For anyone who is interested in keeping up with and learning more about the stock market, signing up for either the free service or paid service is a good idea.

Of all the stock sites on the Internet, Morningstar is usually rated one of the best and most reliable. All it’s members (more than 6 million of them) have access to stock video commentaries, financial data, independent stock and fund analysis, and portfolio management tools. 

If you are looking for good stocks for dummies advice, Morningstar is a great place to start and they have both a free membership plan and a premium one as well. Signing up for the FREE membership will give you access to all sorts of valuable stock tools such as daily stock market news, the ability to track your investments, as well as a large forum. You will also be able to view the archive of video reports and articles which feature news and analysis from the experts. 

The great thing about Morningstar is that you get investing advice anyone can understand. You have both the free service and a paid membership for serious investors that will give you insight to the market that you won’t get anywhere else.

So far in 2010, things have also been on an upward trend and you don’t hear much discontent from those in the market right now. Does this mean that 2010 may also be another good year for those of us who have their money in stocks?

No one can ever know the future but it seems to me that this is a classic time to be cautious. How can stocks keep going up when the economy is still in a funk with very few signs of improvement? President Obama can pretend all day that things are going great but the people know better, especially the ones who are part of the 10% unemployment statistics. 

The stock market is forward looking and the price of stocks are largely influenced by what investors see happening in the future. Right now it is hard to believe that too many people see the immediate future as being bright enough to keep the stock market going up in the relatively straight line that it is following now.

2010 sees many things happening in the political front that will impact taxpayers and businesses alike. If health care reform is passed, it means higher taxes for all of us at some future point. That will impact the amount of money people have to spend.

We must remember that most companies only make money when the public has discretionary income to spend. If people are not willing to part with their money, it impacts businesses in a cascading fashion. Will people really be confident enough in the 2010 economy to keep spending like they have? Can stocks possibly keep going up like they have been?

If you throw caution to the wind and buy stocks with no regard to the possible market downturns, you may end up with a sick feeling inside if things get worse economically. Stocks for dummies is not what you want to be feeling like at the end of 2010 so perhaps you might consider caution before you jump in with all your money.

When you short a stock you borrow the shares from your broker. You then sell those shares and pocket the money. For this, your broker will charge you interest and maybe some other fees. It is presumed you do this because you feel a stock is overpriced (overvalued) and you think it is going to go down.

At a later date, you will hopefully be able to buy the shares back (that you borrowed and sold) at a lower price. That way you can give the shares back to your broker but you will have paid less for them and profitied from the difference.

You need a margin account to be able to do this and you need to have an ample amount of money and history with your broker. This is because you can lose a lot of money doing this and your brokerage has to have some assurance you can pay.

Unlike regular stock investing where you can only lose what you put in, with stock shorting there is no limit to what you can lose. If you borrow and sell a stock at $100 a share (thinking it will go down) and it continues to go up to $200, you will have lost $100 per share. If it goes up to $300 you will have lost $200 per share.

At some point you will be forced to sell because your broker will make you based on the amount of money you have in your account. This is why you just can’t always wait it out and hope a stock goes back down again. If the stock you short goes up enough to bring your account to zero, your broker will do a margin call and you will be forced to buy the stock back at the higher price. This is why shorting stocks is not something any beginner should attempt to do.

The stock market for dummies is not a place where you should take a lot of risk. Many people have abused the shorting process and gotten in a lot of trouble. If you are looking into buying stocks for the first time, it is okay to understand what short sells are but not a good idea to try it until you have more experience.

Jim Cramer is a stock analyst / radio talk show host/ TV show host who has a new book that has just come out titled Getting Back To Even. I am NOT going to buy that book and this is why:

In 2005 Cramer got his own stock market show on CNBC called Mad Money. This show is high energy and it is obviously designed to get people interested in the stock market. His dynamic presentation style made him a favorite with young investors and he sometimes tapes his show from college campuses. None of this is a bad thing but I feel it is more of a stocks for dummies type show than a real serious analysis due to all the shenanigans he has going on.

Mr. Cramer makes a lot of stock predictions, recommendations, and other analysis on his show that is rapid fire. If you don’t watch the show religiously every day, it is unwise to watch it and follow any of his recommendations without viewing previous shows. In fact, it is unwise to buy any stock without doing your own homework first.

As an industry insider with many years of experience though, it can reasonably be assumed that he knows something and that he has a connection or two with people who do. At this point it might be good for you to check out his Wikipedia page that details his life, his history, and much of his professional work.

You will see that toward the bottom of that page are details of some of the major blunders he has made on that show including him totally being blindsided and having no clue that the stock market was going to face a major decline due to the poor economy and credit / debit problems all over the world. He has also recommended people stick with several stocks (Bear Stearns and Wachovia) that have subsequently gone down more than 90% since his recommendation.

As previously mentioned, now he has a new book titled Getting Back To Even and I ask why should anyone buy this book? If you are an investor who has followed Cramers advice, why should you now trust that this time will be different? If you have lost money in this market, and who hasn’t, why should you once again put any faith in what Cramer writes? If he had seen any of this coming in the first place he might have been able to warn people and then they wouldn’t be faced with having to get back to even.

If you want to have access to some of the best financial information on the Internet, you might want to take a look at Morningstar.com. There is no need to feel like you are investing in the stock market for dummies when you have the availability of their extensive online materials. They have  two services and one of them is 100% free to sign up to and with it you get extensive tools you can use for research and analysis  that will greatly aid you in getting the best stock market results you can.

Morningstar is a complete investment portal website that is a trusted source of fanancial information online. You will be able to run screens that will help you find the stocks, ETF’s, and funds that meet all your criteria. You will have all sorts of other tools and analysis that will help you make the best investing decisions for your goals in life.

Additionally you will be able to read stock market analysis articles by some of the most well known industry insiders and learn things that you would have never been able to on your own. Considering the basic service is 100% free with no obligation, it seems like a smart thing to sign up for. They also have a paid service that will get you more tools and analysis if you should decide you want it.

Getting the best stock market results is a never ending quest for up to date information and the best stock picking analysis. If you don’t feel like you have the ability to do it all yourself, Morningstar.com is a great place to go to learn about the market and keep abreast of all the news you need. Especially if you are thinking of buying stocks for the first time, you need a service that will guide you through the learning process and help you get your feet on the ground.

Disclosure: I am a member of the free service