I do not believe if she was elected by republicans she would have any chance of winning the presidency in 2012. Though her supporters are a strong base they are not demographically large enough and her chances of capturing the middle are slim and none. Her nomination would cause even moderates to switch sides or stay home on election day. Running as VP again is also out of the question.

Once you become a running joke on Saturday Night Live and late night TV, history has shown that its impossible to rebuild a tarnished career and reputation whether deserved or not. Witness the demise of Whats Next For Palin?career in 4 seconds over not being able to spell potato.

A more successful spot for Sarah Palin would be as a TV host (Fox News are you listening) were she always seems to draw great ratings both from her loyal base and those who just can’t stop looking at wreck on the side of the road as they pass. The best chance in 2012 would be Mitt Romney running as a fiscal conservative (minus the word maverick) knowing what this Obama spending spree is going to do after the party is over and the hang over kicks in. Perhaps a Romney Presidency would have some role for a Sarah Palin if she doesn’t burn to many bridges during her failed run at the republican nomination but either way do not expect her to fade off into the beautiful Alaskan sunset.

If you were to short sell xyz company for 1000 shares @ $10 you are hoping that when you buy it or cover your short the price will be lower than $10 per share. If XYZ falls to $9 a share and you feel its time to cover your short you will have made $1000 (Initial XYZ Sale  Price $10,000 - $9000 price to purchase stock)not including relating fees.

Short selling can be very risky since your loss is really only limited to the size of your account, it can potentially wipe out your account if it were not limited by margin. This is due to the fact that a stocks upside has no limit but a stocks downside is limited to zero. So if you were to invest $10,000 in XYZ and in went to zero your return would be $10,000. If on the other hand XYZ went to $150 a share and you had to cover at that point your loss would be $140,000. This dichotomy makes short selling very risky and not for the faint of heart.

More Short Selling Notes

• The short seller must pay any interest 0n the borrowed stock until the short is covered.
• Short seller is responsible for paying dividends to whom the stock is  borrowed from.
• Naked Short selling can have very high margin requirements.

Standing in GM’s way are bond holders and unions who must accept lower than what is expected. GM is also looking at selling assets like Opel, Hummer and Saab to raise their cash position for continued funding. The company would like to close up to 2600 of their dealerships which are not profitable.

If they can not get thing figured out in time expect a bankruptcy unless they can somehow get a extension of the June 1st deadline. Either way shareholders have little to look forward to with a possible 100-1 reverse stock split, the stock continues to trade at just over $1

Recently the Yahoo has rallied on more rumors of a partnership with Microsoft. The two would seem to make a natural partnership to rival search industry leader Google. While Yahoo remains a popular site it has suffered from the popularity of not just Google but the social bookmarking sites. Sites like Facebook and Twitter are becoming not just a fad but making there way into the main stream as celebrities become part of the communities and devoting entire shows to this new media.

There is no need to be afraid of ETF’s,  short for Exchanged Traded Funds they are very similar to mutual funds.  With the big difference being they are traded on a stock exchange as the name implies. The funds themselves often mirror a stock index like the S&P 500, but they can contain bonds, commodities or foreign assets depending on the goal of the fund.

Why Do People Buy ETF’s?

The ease of buying and selling ETF’s has made them very popular with investors. Many ETF’s are very liquid with high volumes of buyers and sellers daily.

ETF’s are a great way to invest in commodities like gold and oil without owning the underlying asset. Many investors also prefer to invest in the index as the majority of fund managers are unable to beat the index in the long run.

Management Fees (MER) are usually lower than most mutual funds as many ETF’s like those that mirror a index require very little daily management compared to mutual funds.

Because ETF’s trade on the open market where there are supply and demand factors involved, ETF’s can sometimes trade at a discount to their net asset value (NAV) creating value for bargain hunters and those looking for arbitrage opportunities.

ETF’s can also be used to hedge against risk, specially if you think the market will fall in the short term but do not wish to sell because you are bullish with the long term prospects of your investment. You could purchase a ETF that shorts a financial index if you own financials and fear a short term sell off. Of course this will not work if your portfolio vastly under performs the index and will cut into your profits if the index continues to go up along with your stocks.

In some instance ETF’s can have additional tax savings and lower broker related fees.

As ETF’s have become more popular the number of ETF’s available continues to grow. Some have become more exotic where they mirror or short a index x2. Meaning your exposure is double what the index is, so theoretically if the index moves 2.5%+ in one day a ETF should go up 5%.

List Of Exchange Traded Funds (ETF’s)

Standard & Poor’s 500 Index Depository Receipts (SPY:AMEX)
Nasdaq-100 Index Tracking Stock (QQQ:AMEX)
DIAMONDS Trust (DIA:AMEX)
iShares S & P 500 (IVV:AMEX)
Standard & Poor’s MidCap 400 SPDRs (MDY:AMEX)
iShares Russell 2000 (IWM:AMEX)
iShares MSCI EAFE (EFA:AMEX)
Total Stock Market VIPERs (VTI:AMEX)
iShares SmallCap 600 (IJR:AMEX)
Consumer Services Select Sector SPDR (XLV:AMEX)

For a more complete list see nadaq.com or nyse.com

Hard to see this continueing on hope and change alone. If we are going to see a extension of this rally past the 18-21 day number we will have to see some solid numbers that show things are really better than they were. Even in the most broken down markets you get strong rallies which surge and make people think that the worst is over, these type of rallies are known as bear traps. If you have ever seen a bear trap you know that the last place you would ever want to get you leg caught in. With both GM and Chrysler dangling by a thread who knows what the next 30-60 days will bring us.

Having a put option on a stock that is plunging could be your life jacket for survival in a financial ship wreck. You can also use puts to lock in profits. If you were lucky enough to purchase a stock that went from $24 to $40, you could purchase a put option with a $30 strike of price. This way you limit your downside to $30 but still have the opportunity to participate fully in any upside. So whats the problem, why doesn’t everyone rush out and buy put options, Well for one thing they can be very expensive. Unfortunately in times of chaos and volatility like we are experiencing now put options go up in price. Just like life insurance will be more costly if you have increased health risks. Of course the longer length of time you want your put options to cover the more expensive your puts will cost. Put option are best used when you are concerned about a short term down turn in the market, after all if you think the long term peospects for the company are not good you  should not be holding them in the first place.

If  you are interested in options ask your financial advisor to explain how they could help your portfolio. Option strategies are complex and not something that should be tried with out professional help or a great deal of experience. Another alternative to buying options could be to purchase a inverse ETF something I may write about in a future post.

We were due for a rally as nothing goes straight down or up and after breaking 8,000 on the Dow we plunged rapidly below 7,000 so it should be no surprise to see some sort of rally. The bigger question is it a bottom or a dead cat bounce. No need to declare this raging bear dead and dive head first into this market. If we have indeed put the bottom in, the markets probably will not rocket over the 10k mark and there is a good chance we may test these lows at some point later in the year, possibly in the fall which is seasonally the worsts for equity investments.

Let see if this is a “sell in May and stay away”, situation. You may also want to use this situation to make some adjustments to your portfolio as it appears we may have a window to get out of a few investments that you may no longer favor long term. Much of the consensus seems to have this market rally going to about 8k for what ever thats worth.

This downturn should remind us all how important it is to prepare for retirement and its not just about saving as much as possible. Portfolios must be managed so that stock investments play a large role early on but as the years roll on and retirement becomes closer your portfolio should rely less and less on equities. I believe unfortunately many of those who were retired had far to much of their money in equities. Equities are a gamble no matter how good a company looks today it is simply impossible to predict many factors that could happen. Even if you have correctly identified a company with a great product, in a growth market; tomorrow that product could be obsolete thanks to technology. Than there are factors outside of the product market that you can not control. Lawsuits over trademarks and other issues can and have bankrupted companies. These type of issues come down to management. Before you invest in any company you have to ask yourself, do you have faith in the people resonsible for running the company day to day. You are handing these people your hard earned money, so take a interest in what they are doing instead of just tossing those annual reports into the recycle bin.

Historically the first year of a presidency tends to be poor in terms of financial performance for the stock market as a newly elected president tries to bring in all the unpopular policies right away. History definitely seems to be repeated itself. The bailouts have not been embraced by those on Wall Street or those on Main Street. It does not appear more funds will be needed for the bailout as companies like AIG are already asking for further funding.