Ken's Stocks Blog

Want to get in on the “green” energy movement, but not sure where to put your money?

To paraphrase the classic movie “The Graduate,” I have one word for you to think about: batteries.

From electric cars to storing solar energy, batteries will play a big role in the new world of energy resources.

The problem is the battery or batteries that will help solve the energy problem probably haven’t been invented yet. At least, the advanced designs needed to make alternative energy work.

The batteries will need to be:

• Light weight
• Long lasting
• Quick charging
• Recyclable
• Affordable
• And more

Who makes or will make this battery?

Answer that and you are on the ground floor of the next Google.

Despite a healthy bounce on Wednesday, the stock market is far from on the road to recovery.

The markets are desperate for any good news and even the little they got Wednesday (lower oil prices and some decent earnings news) is enough to trigger a brief rally.

Unfortunately, the basic reasons for the market’s bear mood haven’t gone away:

• Oil is still in the stratosphere
• The credit crisis hasn’t hit bottom (which will hold down any housing recovery)
• Inflation is climbing at an alarming rate
• The economy has slowed to a crawl

We are on the verge of stagflation, which is a period of high inflation and a failing economy.

There aren’t many good alternatives in the near term except to work through this period and hope the economy can rebound sooner, rather than later.

OK, this is going to sound more like a political candidate's answer than an honest attempt to solve the problem. You know, short on specifics and long on rhetoric.

The housing industry, which includes lenders and developers, has long marketed home ownership as a "great investment." Home ownership has tax advantages and, thanks to creative lending, millions of people have found a ready source of cash in their equity.

When the housing market is expanding, homeowners in primary markets often see appreciation gains that outshine the stock market. Huge equity buildups create a sense of wealth.

The problem (or one of the problems) is that when the government setup mechanisims (Fannie Mae and Freddie Mac, for example) to encourage home ownership, its goal was to create stable neighborhoods of families with a reason to be involved in their communities.

The social benefits of a country with a large percentage of homeowners are significant. These social benefits (stable communities, involved citizens, and so on) ultimately create economic benefits (a growing local tax base, workers with an incentive to stay employed, and so on).

However, when homes become “investments” first and places to raise a family second, it defeats the primary benefit the government wants to achieve. Speculating, at taxpayer expense, is encouraged.

When you add in the exotic financial instruments that have been created to market home loans to investors, it is little wonder that housing has gone from encouraging stability to fostering speculation.

What we need is a housing policy that rewards the benefits of home ownership and discourages speculation. The housing status quo defenders point out that the market is the best regulator. That would be true is everyone involved completely understood the risks. That’s not the way it worked, however.

While the investment banks and other players in the financial services industry have suffered huge losses (and will to do so for some time), virtually none have lost everything. This is the fate of the millions of homeowners who took out risky loans without adequate information or warning - they lost everything.

Sometimes, what is important for society is more important than blindly following free market folly, wherever it goes.

Have you ever bought or sold a security on the basis of a “hot tip” or rumor?

Most investors have discovered that there are plenty of people and sources with information they will be glad to share, whether you asked for it or not.

Now, months deep into the most severe financial crisis in modern history, the regulators are announcing new rules for the financial services industry. In speeches and press releases, the Fed, SEC and FHA are heralding new oversight of many aspects of the mortgage business, from lenders to ratings firms to Wall Street firms.

I’m from a rural, ranching background and this seems very much like closing the corral gate after the horses have bolted.

The financial community hates regulation and you will frequently hear them say that the market is the best regulator because bad deals and over-zealous operators are eventually unmasked and dealt with.

Unfortunately, this Utopian view ignores one of the basic motivators of human behavior: greed. When greed is unrestrained, you find the market flush with debt instruments and bundled investments so complicated no reasonable person could understand them.

When greed is unrestrained, gullible consumers sign mortgage papers without understanding much more than they can buy the McMansion they always wanted.

No one wants financial innovation stymied by heavy-handed regulation, but the people who are supposed to be watching out for the economy and the consumer failed in their jobs - and that includes all those and others who are belatedly beating the drum of “trust us, we’re from the government and here to help you.”

There are number of factors to consider when deciding whether a stock is a worthy candidate for your investment dollars.

Growth in earnings, revenue, market share and other markers are important factors. They should be considered on their surface and be used to compare the company to its peers.

Investors often look for the magic number or metric that will identify a great stock out of the universe of all stocks.

This magic number doesn’t exist.

However, when you are considering stocks to buy, there are certain metrics and numbers that are more important than others.

You can get a clue about where traders are thinking the market will open by looking at the indexes in relationship to “fair value.”

Picking stocks has never been easy if done correctly. Some investors thought they had the talent during the dot.com boom, but that popping bubble revealed lucky guesses instead of investor insight.

If you apply yourself, it is possible to improve the odds that the stock you pick will be a winner, at least for a reasonable period.

Stock investors may be tempted to bet on the upcoming hurricane season by investing in companies that could profit from others’ misfortune.

The consensus of major weather forecasting services – public and private – is that this season will be an average or above average in storm activity.