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Investments - All posts in category Investments

  • Aug 11, 2011
    2:37 PM ET

    5 People Who Should Avoid the Stock Market

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    For bargain-hunters and thrill-seekers, this may seem like a good time to buy stocks. But experts say there are many would-be investors who should refrain from putting any more of their money in equities – at least for now. “I discovered over time that most of my clients have a high risk tolerance,” says Kevin Sanderford, principal of Colorado West Investments in Montrose, Co., “but not one of them has a high loss tolerance.” Here are some people who may not be able to withstand losing money:

    1. The Big Spender

    If you need cash in the next 6-12 months for a car, college fees, a wedding or a new home, this is not the time to take excessive risks in equities, despite the temptations. “You just don’t want to have your short-term money invested in the market at the moment,” says Gary Winnick, financial adviser with Ameriprise Financial Services in Saratoga Springs, NY. “Five to 7 years is a proper time frame for investing.” Given the uncertain economic climate, John E. Sestina, a financial planner in Columbus, Oh., says, “You should also use any extra money to cut your credit card debt as fast as you can.”

    2. The Nervous Investor

    Kit Yarrow, professor of psychology and marketing at Golden Gate University in San Francisco, says nervous or overly emotional people should think twice about playing the market. “Anyone who is a hot head should avoid putting too much of their money into stocks,” she says. “It takes a dispassionate person not to overreact to a market correction.” Yarrow says investors need discipline and patience. Ray Mignone, a financial planner in Little Neck, NY., says, “If you’re conservative, stay conservative. There are certain people who can’t tolerate volatility and want to sell out at the bottom.”

  • Aug 9, 2011
    7:18 PM ET

    Under Pressure: The 3 Fastest Broker Sites

    When making an online trade, every second counts. In alphabetical order, the winners from Monday are Charles Schwab, E-Trade and Fidelity Investments. Their sites had the fastest online trades, according to data from website monitoring site Gomez.com. On Monday, the average response time to buy or sell a stock was 9.4 seconds, according to data released to Pay Dirt exclusively by Gomez. The fastest time was 3.1 seconds, but the slowest was 20.8 seconds.

    Charles Schwab and Fidelity declined to comment on topping the list of the fastest online trades, but E-Trade spokeswoman Alison Cahill said that Monday was “extraordinarily active” when U.S. stocks fell 5.5% and Tuesday was “even busier” when they rose 4% by the closing bell. “Our systems have sustained throughout the last few days,” Cahill says. “Our service teams have dealt with these levels of volumes efficiently and effectively.”

    Still, Gomez says the average trade was faster – 8.3 seconds – for the previous three Mondays. “When measuring the performance of a key business process such as making a stock trade, a response time of 8 seconds is consistent with providing users with an acceptable online experience,” said Jonathan Ranger, Gomez Benchmarks Practice Director at Compuware. When a broker’s website performs poorly, customers will further clog up the phone lines, he says.

  • Aug 9, 2011
    4:07 PM ET

    Lessons From the Market Correction

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    As Pay Dirt reported yesterday, some brokerage houses have extra staff manning the phones and taking questions from panicked investors. The Dow fell 634.76 points on Monday amid worries about a double-dip recession — making it the steepest single-day plunge since 2008. Are you asking the right questions? And are you happy with the answers? We asked executives at Vanguard, Fidelity Investments, Morgan Stanley Smith Barney and the owners at two boutique advisory firms for their answers to a few of the big questions anxious clients have been asking over the last 24 hours.

    Is this 2008 all over again?

    “Not even close,” says Jeff Applegate, chief investment officer for Morgan Stanley Smith Barney. “That was caused by the completely unexpected bankruptcy of the largest investment bank on the planet. The markets literally froze.” In 2011, he says bank lending and inter-bank lending is very much intact. Velda A. Eugenias, president and CEO of Eugenias Advisory Group in Northeast Alabama, says, “2008 was like a forest fire,” she says, “it was long overdue and necessary for the cleansing that every so often must be done.” This time, Eugenias says, Americans were not riding high on low unemployment and unrestrained confidence in the banking system. She says investors were far more prepared: “This is more like an aftershock.”

    Should I get out of stocks?

    Investments should be made on economic fundamentals, says Blaine Dunn, owner of Dunn Financial Advisors in Winchester and McLean, Va., and the same is true this time around. “That has not significantly changed in a day,” he says. He says stay in stocks until the volatility is over, and then reassess your position based on whether you can stomach the risk. Experts say the same is true for worried baby boomers. John Sweeney, executive vice-president of planning and advisory services at Fidelity Investments, says that even if you’re in your 60s, you’re still planning for 30 years in retirement, so their baseline asset allocation should still be around 50% equities to provide some growth (with 40% fixed income and 10% short-term instruments).

  • Aug 8, 2011
    12:32 PM ET

    How Fast Can You Reach Your Broker?

    On days like this, nervous investors reach out to their brokers. With U.S. stocks falling in volatile trading Monday, Pay Dirt contacted some of the biggest brokerage firms by phone and email to see how fast they were in responding to our queries.

    iStockphoto

    Our telephone response times are listed in order of speed:

    E-trade: 40 seconds.

    Trade King: 55 seconds.

    Vanguard: 50 seconds.

    Options Xpress: 1 minute.

    Fidelity Investments: 3 minutes, 25 seconds.

    Sharebuilder: 4 minutes.

About Pay Dirt

  • Pay Dirt examines the millions of consumer decisions Americans make every day: What to buy, how much to pay, whether to rave or complain. Lead written by Quentin Fottrell, the blog examines these interactions, providing readers with news, insight and tips on shopping, spending, customer service, and companies that do right – and wrong – by their customers. Send items, questions and comments to quentin.fottrell@dowjones.com or tweet @SMPayDirt.