Dividend is a crucial part for investors’ investing return historically. According to Wikipedia, when dividend yield is high or rising, it is when investors’ return among the greatest. For example, dividend yield of the Dow Jones Industrial Average plunged to a low of 3.2% during the market bubble of 1929 and rise to 15% during the stock market collapse of 1932.

I do not have a hard cold fact to back it up but let’s just assume a historical average dividend yield of 3 %. Since the world war II, stock market index has returned investors 10.5 % return annually. That implies that dividend contributes to 28.6% of overall investors’ return. Ignoring dividend will decrease your investing performance by that much, which can be devastating in the long run.

Having said that, what is the characteristics of stocks giving out dividend yield of more than 3 % ? One thing that can help is to find companies trading at below their fair value. The fair value of a common stock is when it is trading at around a P/E of 13.4. This means that a company trading at $ 13.40 would have to earn $ 1 annually. Assuming that it pays half of this profit as a form of dividend, you can then expect a dividend yield of ($ 0.50 divided by stock price $ 13.40 ) = 3.73 %.

For growth stocks trading at 50 times earnings, you can rest assured that they won’t have pay dividend that yields 3% year in and year out. The reason is quite simple. If a company earns $ 1 while its stock price is trading at $ 50, the most dividend it would pay is $ 1. At $ 50, the dividend yield for that stock is a measly 2 %. Your dividend yield will actually be lower since most companies do not pay all of its profits in the form of dividend.

In summary, to boost your investing return by 28.6%, you need to find stocks trading at above average dividend yield of 3 %. You won’t find these dividend payers at a company whose stock is trading at 50 times earnings. The reason is simple. Even when they are paying out all of their profits as dividends, their dividend yield is still less than what average stocks pay historically. To find stocks paying dividend yield of 3 %, you can start by buying companies trading at below fair value, which is defined as the stock trading at a forward Price/ Earning Ratio of 13.4, assuming a 0 % growth in earnings.

Would you want to boost your investing return by 28.6% in one simple swoop? Of course you do. It is like catching two birds with one stone. Finding stocks trading below fair value will enable you to extract capital gain as well as dividend payments.

You can write your own investing articles and get your free investing idea at http://www.noviceinvesting.com

SPX closed the week at about 1,284, while oil closed at $67.76 a barrel. Two potential market catalysts next week are the FOMC and OPEC meetings, both on Tuesday. The FOMC is expected to raise the Fed Funds Rate 25 basis points, while OPEC is anticipated to leave oil output unchanged. However, it seems, the stock market partially discounted a FOMC tightening pause, since it rose on the report of much slower real GDP growth.

The charts below are same period weekly charts of SPX, the NYSE Oscillator, and OIH (oil ETF). SPX major resistance levels are 1,288 (to close the gap), 1,295 (recent high), and 1,307 (upper line of Bollinger Band). Major support levels are 1,246 (a prior high and the late December low), 1,242 (middle of the Bollinger Band, which is also the 20-week MA), 1,200 (lower line of the rising wedge), and 1,176 (lower line of Bollinger Band). The 50-day MA, currently at 1,265, was short-term support.

The NYSE Oscillator’s 10-week MA (blue line) indicates SPX will be much lower within three months. The Oscillator’s 10-week MA rose above 25 in early January and fell below 21 last week. Typically, when the Oscillator’s 10-week MA reaches 25 and starts to fall, SPX selling begins slowly and accelerates. Also, the daily Oscillator will fall near negative 50, at least once, and SPX will fall sharply. So far, over the recent decline, the daily Oscillator hasn’t fallen near negative 50.

OIH had almost a parabolic rise in January on rising oil prices, into the OPEC meeting, on top of big gains last year. Energy stocks represent about 15% of SPX. OIH has a stronger positive correlation with SPX than with oil prices. Currently, OIH is above the weekly upper Bollinger Band line. Oil prices may fall somewhat within a week or two after the OPEC meeting, and OIH may fall greater than SPX.

Economic growth has slowed, while inflation has accelerated. However, output is expected to pick-up in the current quarter, while inflation expectations have risen. Consequently, there may be greater uncertainty about monetary policy between the FOMC January and March meetings, which may be the catalyst for a steep fall in the stock market. Also, a slowing housing market (which slows consumption), rising production costs (including higher cost of capital), and lower productivity (from greater employment) will create uncertainties about corporate profit growth.

Charts available at http://www.peaktrader.com/Forum Index Market Overview section.

Arthur Albert Eckart is the founder and owner of PeakTrader. Arthur has worked for commercial banks, e.g. Wells Fargo, Banc One, and First Commerce Technologies, during the 1980s and 1990s. He has also worked for Janus Funds from 1999-00. Arthur Eckart has a BA & MA in Economics from the University of Colorado. He has worked on options portfolio optimization since 1998.

Mr Eckart has developed a comprehensive trading methodology using economics, portfolio optimization, and technical analysis to maximize return and minimize risk at the same time and over time. This methodology has resulted in excellent returns with low risk over the past four years.

On Friday, it was reported the Unemployment Rate fell to 4.7% last month. NAIRU, the Non Accelerating Inflation Rate of Unemployment, is estimated to be 5%. Consequently, the stock market fell on Friday, since it became more uncertain about monetary policy. Also, last week, Productivity growth was reported to be negative for the fourth quarter and labor costs rose sharply in January, which are also inflationary. Economic reports should continue to have greater influence on the market, until the next FOMC meeting in late March. However, next week is a light economic data week with no inflation related reports.

The first chart is an SPX daily chart that shows a MACD indicator "bearish kiss" (see circle), which preceded the selling Thursday and Friday. With few economic reports next week, SPX may be in a volatile range, perhaps driven more by oil prices. SPX closed at 1,264 Friday, below the 50-day MA. Major support levels are 1,259 (January low) and 1,246 (previous support and resistance). There are several major resistance levels between 1,270 and 1,280. However, within two months, SPX may fall to around 1,225 or around 1,200 (explained in recent articles).

The second chart is an OEX (large caps) to Russell 2000 (small caps) ratio monthly chart that indicates large institutional investors (or "the crowd") are bearish on the stock market, since institutions generally buy large cap stocks. The large cap to small cap ratio fell to a multi-decade low recently. The last time it fell below 0.80, in early 1994, SPX soon fell over 9%, had a flat and volatile year, and then began the bubble boom, in late 1994. There are many similarities and differences between the two periods. However, perhaps most importantly, the U.S. is in a structural bear market this time.

There may be opportunities to make gains on volatility within the trading ranges and within the downtrend over the next month or two. Also, quality large caps, including ETFs, e.g. SPY DIA and QQQQ, may be better long-term buys, within two months, than small caps in general. It may be a more volatile and basically flat year at best. However, the recent economic data, and the extended three-year cyclical bull market within the structural bear market, suggest either the end of the bull market or a major correction in 2006 or 2007.

Arthur Albert Eckart is the founder and owner of PeakTrader. Arthur has worked for commercial banks, e.g. Wells Fargo, Banc One, and First Commerce Technologies, during the 1980s and 1990s. He has also worked for Janus Funds from 1999-00. Arthur Eckart has a BA & MA in Economics from the University of Colorado. He has worked on options portfolio optimization since 1998.

Mr Eckart has developed a comprehensive trading methodology using economics, portfolio optimization, and technical analysis to maximize return and minimize risk at the same time and over time. This methodology has resulted in excellent returns with low risk over the past four years.

When you start your Penny stocks trading career you first need to decide how much you are willing to invest. You need to remember that this is not a “sure-fire” income opportunity and that it is possible that you may lose everything, so be sure to not to invest more than you can afford to lose.

That said when you have decided on an monetary amount, whether it is $100 or $10,000 you should avoid the temptation to put all of it into one or more Penny stocks. But why you ask? Surely the whole point of putting the money into your stock broking account in the first place is to invest it.

Well yes and no. . . if you have all of your funds invested at the same time then you lose a lot in flexibility. You have few options when faced with the need to respond to a rapidly rising market. Or to profit form a newly acquired piece of information that one or more penny stocks are about to move upwards.

If you have invested all of you cash and your present portfolio is flat, the only way to buy into rising penny stocks market and get a piece of the action is to either. Use “your own money”, for example money that is not part of your penny stocks investment fund (and is not money that you can afford to lose) a very bad idea. Or to get on the phone to your broker and see if can sell some of your existing shares so that you can buy into the rising penny stocks.

The first is obviously not really a good thing to do and is more akin to gambling than investment. After all if you couldn’t make a profit with the first group of penny stocks, why do think you could with the second. A more likely scenario is that you are throwing good money after bad, except that this time it is not money that you can afford to lose.

The second, though more sensible than the first, is not really what trading penny stocks is all about. The whole point is to be able to buy quickly if you think that a stock is about to rise. T sell quickly, as well, when the market seems to have to have peaked for your penny stocks, so that you can maximize your profit and sell before the market starts to fall.

If you keep a portion of your assets as liquid in your stock broking account, then you have the flexibility to move quickly as the market conditions dictate. A penny stocks trader without the ability to move quickly is likely to be missing out on many lucrative trades. By keeping around a third of your investment fund as cash allows you to buy into a rising market without having to rush into selling any penny stocks that may be under performing at that time.

That way you get to benefit from the rising penny stocks but can also hold onto the non performing or flat ones until they start to rise or you have decided that you need to cut your loses and get rid of them. Either way the point is that you are not rushed into a decision and can decide based on research and rationality, rather than a need for quick cash to fund your next investment.

The ability to move quickly in response to rapidly rising penny stocks can greatly affect your potential for profits in this most volatile of the financial markets. Keeping a portion of your penny stocks fund liquid will help you to achieve profitability and make the success of your investing venture into the world of penny stocks trading more likely to be a profitable one.

Buzz Scott has 12 years of Penny Stock investing. Big profits can be made in Penny Stocks, but there are also many dangers. Find some insider secrets at: http://www.penny-stock-secrets.com

Wall Street Institutions pay billions of dollars annually to convince the investing public that their Economists, Investment Managers, and Analysts can predict future price movements in specific company shares and trends in the overall Stock Market. Such predictions (often presented as “Wethinkisms” or Model Asset Allocation adjustments) make self-deprecating investors everywhere scurry about transacting with each new revelation. “Thou must heed the oracle of Wall Street”… not to be confused with the one from Omaha, who really does know something about investing. “These guys know this stuff so much better than we do” is the rationale of the fools in the street, and on the hill (sic).

What if its true, and these pinstriped super humans can actually predict the future, why do you transact the way you do in response? Why would financial professionals of every shape and size holler “sell” when prices move lower, and vice versa? Would this pitch work at the mall? Of course not. Now lets bring this phenomenon into focus. Hmmm, not one of these Institutional Gurus ever doubts the basic truth that both the Market Indices and individual issue prices will continue to move up and down, forever. So, if we were to slowly construct a diversified portfolio of value stocks (My short definition: profitable, dividend paying, NYSE companies.) as they fall in price, we would be able to take profits during the following upward cycle… also forever. Hmmm.

Let’s pretend for a (foolish) moment that broad market movements are somewhat predictable. Regardless of the direction, professional advice will always fuel the perceived operative emotion: greed or fear! Wall Street’s retail representatives (stock brokers), and the new, internet expert, self-directors, rarely go against the grain of the consensus opinion…particularly the one projected to them by their immediate superior/spouse. You cannot obtain independent thinking from a Wall Street salesperson; it just doesn’t fill up the Beemer. Sorry, but you have to be able to think for yourself to stay in balance while pedaling on the Market Cycle. Here’s some global advice that you will not hear on the street of dreams (and don’t get all huffy until you understand what to buy or to sell as well as when to do so): Sell into rallies. Buy on bad news. Buy slowly; sell quickly. Always sell too soon. Always buy too soon, incrementally. Always have a plan. A plan without buying guidelines and selling targets is not a plan.

Predicting the performance of individual issues is a totally different ball game that requires an even more powerful crystal ball and a whole array of semi-legal and completely illegal relationships that are mostly self serving and useless to average investors. But, again, let’s pretend that a mega million-dollar salary and industry recognition as a superstar creates Master of the Universe quality prediction capabilities…I’m sorry. I just can’t even pretend that it’s true! The evidence against it is just too great, and the dangers of relying on analytical opinions too real. No one can predict individual issue price movements legally, consistently, or in a timely manner. Face up to this: the risk of loss is real; it can be minimized but not eliminated.

Investing in individual issues has to be done differently, with rules, guidelines, and judgment. It has to be done unemotionally and rationally, monitored regularly, and analyzed with performance evaluation tools that are portfolio specific and without calendar time restrictions. This is not nearly as difficult as it sounds, and if you are a “shopper” looking for bargains elsewhere in your life, you should have no trouble understanding how it works. Not a rocket scientist? Good, and if you are at all familiar with the retailing business, even better. You don’t need any special education evidentiary acronyms or software programs for stock market success… just common sense and emotion control.

Wall Street sells products, and spins reality in whatever manner they feel will produce the best results for those products. The direction of the market doesn’t matter to them and it wouldn’t to you either if you had a properly constructed portfolio. If you learn how to deal unemotionally with Wall Street events, and shun the herd mentality, you will find yourself in the proper cyclical mode much more often: buying at lower prices and, as a result, taking profits instead of losses. Just what if…

Steve Selengut sanserve@aol.com
http://www.sancoservices.com
http://www.valuestockbuylistprogram.com Professional Portfolio Management since 1979 Author of: "The Brainwashing of the American Investor: The Book that Wall Street Does Not Want YOU to Read", and "A Millionaire’s Secret Investment Strategy"

On Friday evenings I look forward to closing the week by going twilight racing on a friend Alan’s 30 ft yacht on beautiful Sydney Harbour. It’s a wonderful experience, with some spectacular sites of the city skyline and the many sails as we return to base in the setting sun. We have a handicap of about half an hour, which means we start about half an hour after the first boats.

Yet week after week we manage to overtake the other boats and arrive back at or near the front…..

At the start of the season the club organisers decided to challenge us further by moving us into the next category of yachts – to race against the 40ft yachts which are designed to be faster due to their increased sail area and length…… yet a few weeks ago we took out line honours there too!

What’s the secret? Is it a special purpose built lightweight boat with secret features built for speed? Do we have a special winged keel like Australia 2 had in 1983 to win the America’s Cup?

No. None of these. It is a standard yacht built over a decade ago.

Our hidden gem as to why we do so well is the experience and leadership of our tactician Jim Vaughan.

His many years of sailing on board many owners’ boats in all conditions means that he is totally in tune with all the parameters needed to win. He plans each race before we hoist a sail.

He checks weather forecasts, current weather conditions, tides, winds, competition, skill levels and weight of those on board…. the list goes on. Then, once we cross the starting line Jim watches for every slight change that may come our way.

For nearly two hours Jim checks every detail around him on the boat, what the crew are doing, the surface of the water for tide and wind changes - to make sure he sticks to his plan or makes fine changes to suit if any unexpected changes occur.

Yesterday I had the pleasure of helping him and a few friends sail the yacht about 20 nautical miles in the open sea from an inlet called Pittwater (North of Sydney), past Sydney’s northern beautiful beaches, before re-entering Sydney Harbour.

While this was not a race, Jim and Alan still planned the trip down to the smallest detail.

For this one we had charts; Global Positioning equipment to check not only position but also our actual speed relative to the ocean floor bed and extra safety equipment in the form of personal EPIRB – so that satellites could track us if we fell overboard …………

This time we were due to sail south into a south west wind. For the benefit of non sailors, let me first explain that you can’t sail into a wind head-on. This means that you have to ‘tack’ back and forth in a series of steps in a zig-zag pattern to progress forwards.

For our journey yesterday Jim eluded to us that in addition to the wind coming almost face on, we also had an opposing tide to slow us down too.

Jim’s solution? He also explained that a few miles off the coast there were ocean currents which contained warmer water - travelling southwards in our favour. The weather forecast was for slight seas and no storms forecast so his risk assessment was that he felt safe heading straight out to sea.

So rather than do a series of multiple tacks backwards and forwards close to shore, Jim’s plan was to sail a few miles out to sea until we found these warmer waters and then to alter course to take only one more tack straight in through Sydney Heads.

Sure enough, when we found the ocean current, the colour of the sea turned a magnificent shade of blue; we watched the sea temperature climb from 23.8o C to 26.3 o C within an hour and the GPS measured our real speed over ground increase by a few knots.

The result of Jim’s contrarian approach? We clipped almost an hour off the overall sailing time taken by other yachts as they went to and fro close to shore, trying to make headway against an opposing wind and tide.

In comparison, our experience miles off the coast was to me one of those magic moments to be treasured forever.

As we achieved our goal and safely rounded North Head at the entrance to Sydney Harbour, I reflected on what had made the difference to our success – to making it appear simple:

* Having a mentor – being able to follow Jim who has several years of experience, knows what he’s doing and can handle the simplest and most difficult conditions

* Calculating our risk exposure in advance and having safety equipment and safety procedures in place

* Taking the time to make a detailed Plan before we cast off from the safety of the yacht club mooring.

* Including within that plan, the ‘what ifs’ – to know what we would do if conditions didn’t go our way.

* Having the right charts, with indicators, tools and skills to monitor and review our progress

* Having made the Plan, the decision then to stick to it with discipline.

My mind then turned to successful stock trading – and the parallels sprung out as being so very similar. The activity of sailing vs trading may appear vastly different at first sight.

Look a little deeper and we see the principles of success remain the same.

John Atkinson is the co-editor of the world famous ‘Investing & Online Trading’ stock market newsletter, featuring weekly stock trading education for novices & experienced traders & investors by high profile trader authors Jim Berg, Daryl Guppy, Dr Brett Steenbarger & Dr van Tharp.

His previous ebooks include ‘7 Secrets to Profitable Online Stock & Share Trading’ and the ‘Atkinson -Guppy Articles’ - a series of articles written for Daryl Guppy’s newsletter ‘Tutorials in Applied Technical Analysis’, previously voted no 1 trading newsletter in Australia by ‘Shares’ & no 4 in the world by ‘Stocks and Commodities.’

John’s co-authors the new ebook The Stock Trading Template which shows traders how to build their Trading Plan, with input from Tim Wilcox Jim Berg, Daryl Guppy & Dr Brett Steenbarger.

A free copy will be given to all ‘Investing & Online Trading’ stock market newsletter Members when released in February 2006.

For a Free trial membership & Free sample ebook chapters visit & join the free stock market club at http://www.sharetradingeducation

The most important decision you’ll ever make in your life is in no way concerned with stocks, bonds or mutual funds. This crucial decision is picking a suitable broker. Your online broker will execute your trades and store your money and stock in an account. There are dozens of companies offering brokerage services on the internet. Choosing the one that is right for you is indeed a daunting task.

Here are a few factors you may want to consider:

•Discount: Discount should not be the sole criterion. It is better to start with a full-service broker for novice investors who wish to develop confidence and knowledge of the markets. As you get familiar with the process, you can handle all the tasks yourself.

•Site performance: Check out the company’s website particularly during peak hours and check how fast their site loads. It is very important to feel comfortable with the site environment as you’ll be using it regularly. If the order page is confusing, you are prone to making mistakes.

•Alternatives: It is better to choose a broker who can be reached by other means than the internet. Such alternatives may include touch-tone telephone trades, faxing ordering, or by talking over the phone.

•Research the broker: Find about as much as possible about the broker.

•Price: The price may be indicative of the quality. Don’t open an account with the broker just because he offers the lowest commission cost. You might find that the advertised commission rate may not apply to the type of trade you want to execute.

•Minimum deposit: Find out the minimum deposit the firm requires for opening an account. Some firms have high minimum balances, as much as $10,000 to start. This might be fine for some investors, but not all. Some brokers have no minimum deposit at all. You can deposit and withdraw amount as much as you want, and your account stays open.

•Product selection: When choosing a broker, most people usually think only about buying stocks. But there may be other investment alternatives as well. This includes CDs, municipal bonds, futures, options and even gold/silver certificates. Mutual fund offerings are becoming increasingly popular. Many brokerages offer other financial services, such as checking accounts and credit cards.

•Customer service: Customer service is a very important criterion you need to consider. Test the company’s customer service before opening an account. Call the company’s service center and ask some questions and then decide about the customer service. You may not need to suffer later.

Although choosing an online broker can be difficult, carefully considering the above mentioned factors can help reduce stress and speed-up your decision making process.

Robert Scheer is a freelance writer and consultant for Best Brokers Online at http://www.best-brokers-online.com.

"Fair Value", what is it and why it’s important every morning. I’m not surprised that folks don’t know just what it is, because it’s really not that easy to explain, let alone to understand! But let me give you the "highs and lows" so you have an idea of what’s going on.

"Fair value" refers to the "proper" relationship between the futures and the cash. What is the "cash?" It’s the S&P 500 index. Through a complex formula using current short term interest rates and the amount of time left until the futures contract expires, one can determine what the spread between the futures and the cash "should" be.

When the spread is at fair value, where it "should" be, there is no theoretical advantage to owning the futures instead of the cash, or vice versa. To professional investors and the big institutions, when the spread is at fair value, it makes no economic difference to them whether they own the futures or the actual stocks that make up the S&P 500. Their buy and sell decisions will be driven by other factors. But when the spread drops below fair value or moves above it by a large enough margin, then one of the choices (stocks or futures) will become more attractive than the other, and they will sell one and buy the other.

In really loose general terms, if the futures are well above fair value, they will dump those futures and buy the underlying stocks, thus closing the spread and causing an "up" market. On the other hand if the futures are well below the fair value, they will sell the stocks, take the money and buy the futures. This is why the stocks "generally" follow the futures action.

So, in the morning we find it quite useful to watch the futures versus the fair value. For instance, one day the futures were below fair value and sure enough we opened with the DOW off about 35 and the NASDAQ down 5. So the indicator worked that day. Some days it won’t work that well and sometimes the futures suggest a major dumping and yet we get minimal selling. Don’t forget that along with the futures versus fair value, we also have to be cognizant of global events, news will often move the market more than anything else.

The Stocks2Watch® newsletter has been published since 1998.

For a FREE report on HOW TO TRADE FAST, enter your email address at:

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The peddlers of hot penny stocks today peddle their wares much like the hot cross bun streetsellers of the 19th. Century. They don’t exactly hawk their wares round the shopping malls crying out “Get your hot penny stocks tips here”, but telemarketers and professional rumor mongers are making sure that you get their message loud and clear. The message is the same – buy my stock – it’s just the medium that’s different. The telephone, newsletters, the internet and word-of-mouth are the vehicles used to ensure the message is heard.

The old streetsellers were certainly streetwise; two a penny buns were seen as bargains to be snapped up before they went cold. Bought too many? The nursery rhyme offers a solution: “If your daughters do not like them, give them to your sons”. Buy two a penny hot penny stocks and that’s what you are likely to be doing, too: giving them away because they’ll be almost worthless. Two a penny hot penny stocks sell like hot cakes only because the hot stock tip comes from unscrupulous promoters eager to spread the word that the stock is about to go through the roof. You won’t make a killing, but the promoters who pocket your money will.

Let’s pause for a moment and reflect on why anyone would want to go around circulating these rumors or peddling ‘hot penny stocks’ over the ‘phone. It just doesn’t tally with human nature nor with the way in which power operates in the real world. Just think about it: isn’t it far more likely that a small number of self-interested individuals are intent on dumping over-the-counter stocks onto you? Why, if they had genuine information on a hot penny stock about to take off, would they want to share it with you?

It’s perhaps a truism to say that knowledge = power = money, but in the real world it’s also true that individuals who wield the most influence and power, and incidentally tend to make the most money, operate quietly behind the scenes. That’s not to say that these background figures, who buy and sell stocks over the counter, necessarily operate “under the counter”. Nor is it true that there’s no such thing as a good, informative penny stock newsletter. However, it does mean that, when being harangued by a zealous telemarketer to part with your money, you can be sure that a sinking company and a few unscrupulous individuals are lurking in the background.

Perhaps, though, you see two a penny stocks as providing a real opportunity to get in at the bottom and then make a big killing? Perhaps, when a stock has dropped, you might think that the only way to go is up? Don’t get fooled, though, into buying “bargain” stocks solely because they cost less than before. They could continue to sink without trace. As children we must have been extraordinarily prescient when we added an extra line to the nursery rhyme and chanted the virtues of four-a-penny bargains: “If you haven’t got a halfpenny, a farthing will do”. It won’t do, though, if you’re buying hot penny stocks. Don’t ever feel pressured into buying a “bargain” that will almost certainly end up virtually worthless.

If you still think that you’re acting rationally in buying hot penny stocks then you’re behaving exactly as our 21st. century streetsellers would wish. But, remember, you’re not a consumer buying hot cross buns: you’re an investor aiming to make money by buying and selling hot penny stocks. Buying two-a-penny hot cross buns might make some sense, but two-a-penny hot penny stocks can mean buying, but not selling, for the price you want.

Not only selling but buying, too, becomes difficult when stocks are being traded at very low volumes but, at the same time, are being flagged up as the next hot penny stocks tip. A consistently high volume of traded stocks is absolutely essential, preferably on a daily basis. Average figures might seem good enough, but can often mask one insider’s buying and selling activities. Lack of trading opportunities precludes any chance you might have of becoming a rational, educated trader as you will not develop a “feel” for where the stock is heading.

Learning how to become a rational, educated investor takes time. There’s no easy shortcut to the undoubted profits which exist in the market. Those individuals who want to reduce the risk of their hot penny stocks investment must be proactive and subscribe to a newsletter, research companies, and track investments.

Only when they feel comfortable, and have set themselves a limit of 20% of their portfolio to invest in hot penny stocks, should they prepare to do quiet battle with the market and silence the two-a-penny hot cross bun merchants.

Maureen Cook gives you a clear understanding of Hot Penny Stocks. She signposts the beguiling words of the tipsters, and the dangers inherent in trading penny stocks. To find out more, visit: http://www.penny-stocks.myknowledgevault.com

One of the main problems with traditional investing is that you seem to have to either settle for a lower yield on local business investments or give up the interactivity of knowing and influencing the factors that affect your investment by purchasing shares in worldwide companies or bonds created on a national level.

Luckily, there is an option that allows for a greater return than some local stocks, bonds, and other investments while offering a chance to make an investment in your own community. Municipal bonds can give you the best of both worlds in this regard, and can be a sound investment on top of that due to the fact that they are government bonds.

The information provided below should give you an initial feel of what municipal bonds and how they operate, helping you to decide whether or not a municipal bond investment is right for you.

What Municipal Bonds Are

A municipal bond is defined as a bond that is issued by a state, city, or other localized government which is used to pay for new construction or some other special project. What this means is that a local government issues a bond that individuals can purchase shares of in order to finance a project that exceeds the local government’s budget for that sort of project. Like other bonds, the new municipal bond has a date of maturity and a rate at which the value of the shares increase.

Once the municipal bond reaches maturity, the investors can cash in their bond shares for their full value, the money for which being allocated as part of the issuing local government’s budget. Investment in a municipal bond can be considered a type of loan, where the investors are lending money to the local government in order to pay for the project the bond was issued for and the interest paid upon the bond is the interest that is paid by the local government on the loan.

Why Municipal Bonds Are Issued

As mentioned above, municipal bonds are usually issued in order to cover the cost of new construction or other special projects that are being conducted by a local government. The actual type of project may vary, and may include surveys or statistical analysis, conservation or environmental projects, or even the building of new roads or attempts to improve industry, commercial property, and residential housing. Municipal bonds may also be issued as a method for making up temporary budget deficits or to fill other financial needs of the local government.

Investing in Municipal Bonds

Making an investment in municipal bonds is much like choosing to invest in other bonds, though they may be issued locally instead of being publicly traded on a large stock exchange. Often municipal bonds can be purchased at the city hall, capital building, or other hub of government for the issuing city or local government. In most cases, the investment opportunity will be listed in newspapers, tabloids, or other financial papers that cover local financial news, though in the case of larger cities that may be issuing municipal bonds the news might be released over a much larger area. Former investors in a particular locality’s municipal bonds may be alerted when the bonds first are available for purchase, though not all local governments follow this practice.

You may freely reprint this article provided the following author’s biography (including the live URL link) remains intact:

About The Author

John Mussi is the founder of Direct Online Loans who help homeowners find the best available loans via the http://www.directonlineloans.co.uk website.