Good Debt vs. Bad Debt

When most people think of debt, they automatically assume that it is bad for your finances. While this is often true, it is not always the case. A person can carry both good and bad debt for a variety of reasons.
Good debt is taken on for a sound reason and there is an expected payoff later. Examples of good debt include student loans and mortgage loans. With bad debt, there is no upside to paying interest on the borrowed money. Types of bad debt include credit card debt as well as payday advance loans.
There are also types of debt like auto loans that can be good or bad depending on your situation. Figuring out which debt to carry can help you maneuver your personal finances into positive territory. To help you do this, we are going to take a look at good debt vs. bad debt.

Credit card debt
Bad debt
Credit card debt is the worst kind of debt to carry. Sure, credit cards are easy to use; just swipe the card and off you go. However, this convenience comes at a cost: high interest rates that can reach 15% to 20%.
Carrying a balance on a credit card is the exact opposite of saving money in a savings account. Instead of you saving the money, the bank is earning interest on money it lent to you.

Auto Loan
Most often bad debt
Financing a vehicle is the option most people choose when buying a car. Financing a car isn’t as much of a choice as it is a necessity, since a car is a large purchase. When weighing good debt vs. bad debt, it's important to consider the practical value of your purchases. Paying interest on a car loan is considered bad debt, but paying cash usually isn’t an option for most people. Your car gets you to work, school and other places on time, which makes financing a car worthwhile for a lot of people.
Buying an appreciating asset and leasing a depreciating asset is always a good idea. This means that buying a used car with low miles is a sensible choice for many. Therefore, having the auto loan can be considered good debt under certain circumstances. Either way, paying cash for a car is usually the better choice if you can afford it.

Mortgage loan
Good debt
Buying a house is the dream of many families around the world, as having a home to call your own is often considered a symbol of having made it.
Hardly anyone would pay cash for a house -- even if they had the money. There are two reasons for this: First, it is better to use leverage and take advantage of the bank’s money to buy the home. This will free up your money for daily living expenses and retirement investing. Second, depending on where you live, there is a tax deduction on mortgage interest.

Payday advance
Bad debt
Aside from credit card debt, payday advance debt is about the worst type of debt out there. Payday-advance business operate in small retail locations and simply require patrons to have a checking account and proof of employment to borrow up to $300. This is a very easy and convenient way to borrow money, but if you read the contract, you’ll find that there can be interest charges of up to 17% per week, which can add up to a huge yearly sum.
This type of debt should be only considered if you have no place else to turn. Most often, you've already made several credit mistakes if you don’t have a credit card or access to a short-term bank loan.

Student loan debt
Good debt
It comes as no surprise that student loan debt is good debt -- and there is a good reason to incur this debt, which is a college education. After you earn your degree, the expected income stream is high and the debt can be paid off.There are some circumstances in which student debt can be bad, such as when the earned degree from an expensive school) yields a job in a low-paying industry. Some former students struggle for years in this situation while they spin their wheels in a low-paying job trying to catch a big break.

Borrowing from your 401(k)
Bad debt
Any financial planner will tell you not to borrow from your 401(k) plan or IRA. In fact, these plans should be one of the last places to get money. Borrowing from your retirement plan involves jumping through hoops with your employer as well as dealing with IRS regulations. Not to mention the high penalties you’ll pay.
Using your retirement plan for a quick infusion of cash should be a last resort because this is your retirement money, not short-term savings money. Tapping family and friends could be a wiser move if you plan to pay them back on time and with interest. Having an emergency fund will enable you to avoid this situation altogether.

THE GOOD, THE BAD AND THE DEBT
Any time is a good time to take a look at your debt load, but it’s especially important when the economy is unstable. A good place to start is to make a list of your good debt and bad debt.
If you find that you only have good debt, you should figure out how to keep it that way. If you have bad debt, you need to figure out how and why it happened and what you plan to do about it. Having no debt at all says something as well. Perhaps you are great at paying off credit cards, but still rent an apartment or don’t have a college degree.Overall, ridding our financial lives of bad debt is always a good thing. Adding some good debt might not be so bad, either -- it could even be great for your future.

Top 5 Money Mistakes Men Make

Psychologists have found that men are more prone to overconfidence than women -- how else do you explain the guy who won’t stop to ask for directions? Evolutionary psychologists have speculated that this tendency toward overconfidence arose in our hunter-gatherer ancestors because confidence improves your survival chances when face-to-face with a wild animal. However, today, we face the market, rather than wild animals. Unlike the hunt, when it comes to investing, men’s overconfidence can doom them to financial failure.

Here are five major money mistakes that can cause men to slip up when it comes to investing:

Actively trading stocks

If you are looking at websites for minute-by-minute updates of commodity prices or the latest stock chart, then you have a problem. Research has shown that as much as you read about stocks, you will be no better at choosing them than someone who has instead spent his or her time doing needlepoint work. You’re convinced your research and instincts will help you pinpoint what the market is going to do next, so you engage in frequent trading. In doing so, you incur all of the transaction costs associated with trading (commissions, taxes, bid-ask spreads, etc.) but don’t actually pick stocks any better than the woman in the next office.

Concentrating on “hot” funds

Women seem to have a better ability to pick good funds because they concentrate on the fees a fund charges rather than what fund happens to be hot at any given moment. Unlike reading financial publications, scrutinizing the fees that are charged by the financial products you own and the taxes they generate is a very good use of your time. Mutual funds are a particularly important area because some funds that seem very similar may have very different tax implications. Even within a given class of funds, such as stocks, the taxable distribution can vary widely.

Sitting on a stock too long

Even though trading stocks is frequently an indicator of overconfidence, so is holding on to it for too long. If you find yourself continuing to sit on a stock that has lost value over the course of several years, this is also a sign that overconfidence has gotten the best of you. When you bought the stock, you thought it was going to increase in value, and now the market has proven you wrong. The problem is that you are both hesitant to internalize some data that your confidence might be misplaced. If you sell the stock at a loss, you will have to admit to yourself that you were wrong. In doing so, you chip away at your own image -- and it’s painful.

Checking asset values frequently

Men tend to find the pain of losing a certain amount of money more potent than the joy they derive from receiving the same amount. The values of stocks and bonds increase and decrease on a regular basis, and even if they do tend to go up over time, the pain associated with seeing a daily loss is real. When you become overly anxious about your portfolio, you’re more likely to trade assets, and this active trading generally leads to decreases rather than increases in wealth, as mentioned previously. You will experience more peace of mind if you forego the morning ritual of checking your financial websites, and you are also likely to be richer for it.

Not listening to good financial advice

Men have a hard time listening to the thoughts and advice of others and changing their own views in light of those thoughts. This is true whether you think you know where you are going, and can’t bear the thought that someone at the gas station will tell you that you were wrong, or whether you are facing a decision about how to plan for your financial well-being in retirement. Women are more likely to listen to and act on financial advice than men. If a company has a retirement planning seminar for its employees, the women will think they need the seminar more than men will, and they also will be more likely to use the information obtained in the seminar to make better financial decisions.

MANLY MISSTEPS

And so we have what amounts to a stark paradox in investing: Men think they know what they are doing, but often don’t, and women think they don’t know what they are doing, but often do.So, are women just better investors than men? Yes, they are. Women bring an emotional and psychological tool kit that is better adapted to decision-making in modern financial markets. They listen, consider alternatives carefully, change their minds when necessary, and generally lack the hubris that leads men astray.

Starting Out: Begin Funding for Your Financial Security

An overview of financial planning geared toward young people just entering the workforce. The importance of saving for the future will be stressed, and tips on budgeting, insurance, and paying off student loans will be offered.

1. Starting Out
Congratulations! You've graduated from school and landed a job. Your salary, however, is limited, and you don't have much money (if any) left at the end of the month. So where can you find money to save? And, once you find it, where should this cash go?

Here are some ways to help free up the money you need for current expenses, financial protection, and future investments -- all without pushing the panic button.


2. Get Out From Under
For most young adults, paying down debt is the first step toward freeing up cash for the financial protection they need. If you're spending more than you make, think about areas where you can cut back. Don't rule out getting a less expensive apartment, roommates, or trading in a more expensive car for a secondhand model. Other expenses that could be trimmed include dining out, entertainment, and vacations.If you owe balances on high-rate credit cards, look into obtaining a low-interest credit card or bank loan and transferring your existing balances. Then plan to pay as much as you can each month to reduce the total balance, and try to avoid adding new charges.If you have student loans, there's also help to make paying them back easier. You may be eligible to reduce these payments if you qualify for the Federal Direct Consolidation Loan program. Though the program would lengthen the payment time somewhat, it could also free up extra cash each month to apply to your higher-interest consumer debt. The program can be reached at (800) 557-7392.


3. What You Should Buy
How would you pay the bills if your paychecks suddenly stopped? That's when you turn to insurance and personal savings -- two items you should "buy" before considering future big-ticket purchases.Health insurance is your first priority, as hospital stays can be extremely costly. If you're not covered under a group plan, see if you can join any trade associations, which often offer group-rate policies. Otherwise, start obtaining quotes on individual policies by calling the major insurers in your state.Life insurance is the next logical step, but may only be a concern if you have dependents. In fact, at the age of 25 you're statistically more likely to become disabled than to die prematurely, according to a 2004 report funded by the nonprofit Actuarial Foundation. Disability insurance will replace a portion of your income if you can't work for an extended period due to illness or injury. If you can't get this through your employer, call individual insurance companies to compare rates.


4. Build a Cash Reserve
If you should ever become disabled or lose your job, you'll also need savings to fall back on until paychecks start up again. Try to save at least three months' worth of living expenses in an easy-to-access "liquid" account, which includes a checking or savings account. Saving up emergency cash is easier if your financial institution has an automatic payroll savings plan. These plans automatically transfer a designated amount of your salary each pay period -- before you see your paycheck -- directly into your account.To get the best rate on your liquid savings, look into putting part of this nest egg into money-market funds. Money-market funds invest in Treasury bills, short-term corporate loans, and other low-risk instruments that typically pay higher returns than savings accounts. These funds strive to maintain a stable $1 per share value, but unlike FDIC-insured bank accounts, can't guarantee they won't lose money.Some money-market funds may require a minimum initial investment of $1,000 or more. If so, you'll need to build some savings first. Once you do, you can get an idea of what the top-earning money market funds are paying by referring to imoneynet.com, which publishes current yields. Many newspapers also publish yields on a regular basis.


5. Shopping for the Best Credit Card
In addition to looking at fees and the interest that you will be charged (also known as the annual percentage rate or APR), consider your lifestyle and past payment history when shopping for a credit card. Factors you may want to consider include:
A fixed vs. a variable rate of interest. Most cards assess a variable rate, which can be reset monthly. In most cases, the rate of interest will not be less than a floor established by the card issuer.
Minimum payment you are required to make.
Maximum you can borrow without incurring an over-the-limit fee.
Fees such as an annual fee, late payment charges, and interest rates on cash advances.
Circumstances when the credit provider can change provisions of the agreement.
How the company calculates the finance charge. Is it based on the average daily balance, the balance at the beginning of the billing cycle, or another amount?
A low introductory interest rate, if offered (extensive lists of the latest low-interest-rate cards in the United States are available at www.bankrate.com and www.cardtrak.com). When is the rate likely to increase? What is the new rate likely to be?
Incentives such as cash rebates on purchases, purchase protection, and frequent flyer miles.
Your prior payment history. If you typically pay off your balance every month, the APR may be less of an issue than getting cash back with a purchase.


6. Build Your Financial Future
Some long-term financial opportunities are too good to put off, even if you are still building a cache for current living expenses.One of the best deals is an employer-sponsored retirement plan such as a 401(k) plan, if available. These tax-advantaged plans allow you to make pretax contributions, and taxes aren't owed on any earnings until they're withdrawn. What's more, new Roth-style plans allow for after-tax contributions and tax-free withdrawals in retirement, provided certain eligibility requirements are met. Another big plus is direct contributions from each paycheck so you won't miss the money as well as possible employer matches on a portion of your contributions.Don't underestimate the potential power of tax savings. If you invested $100 per month into one of these accounts and it earned an 8% return compounded annually, you would have $146,815 in 30 years -- nearly $50,000 more than if the money were taxed annually at 25%. Bear in mind, however, that you will have to pay taxes on the retirement plan savings when you take withdrawals. If you took a lump-sum withdrawal and paid a 25% tax rate, you'd have $110,111, which is still more than the balance you'd have in a taxable account.If you're already participating, think about either increasing contributions now or with each raise and promotion.If a 401(k) isn't available to you, shop around for individual retirement accounts (IRAs), both traditional and Roth, at banks or mutual fund firms. In 2007, you can contribute up to $4,000 to traditional IRAs or Roth IRAs. Generally, contributions to and income earned on traditional IRAs are tax deferred until retirement; Roth IRA contributions are made after taxes, but earnings thereon can be withdrawn tax-free upon retirement. Note that certain eligibility requirements apply and nonqualified taxable withdrawals made before age 59 1/2 are subject to a 10% penalty.


7. Stop Waiting for the Next Paycheck
Beginning your working life with good financial decisions doesn't call for complex moves. It does require discipline and a long-term outlook. This commitment can help get you out of debt and keep you from a paycheck-to-paycheck lifestyle.

Tiered Investing

To understand the approach of tiered investing think of a tier as the level or price of an individual stock. For example, if ConocoPhillips (COP) is trading at $100 per share, assume that one tier lower is $99 and one higher is $101. An investor who follows a tiered strategy will progressively buy stock at specific tiers as it decreases in value, and sell this same stock as it rises above the level of original purchase.

Consider the nutritional food pyramid that students are shown in elementary school. In this diagram, the foods with the most nutritional value make up the base of the pyramid (the largest tier) and those that have the least value are at the peak (the smallest tier). Using this example in the context of the stock market and tiered investing, it is ideal to have a substantial position in a company when it is undervalued and a small position (or none) when it becomes overvalued.

Before you buy a stock you must know why your company of choice is a good buy at the present time. This is one of the most basic rules of stock picking. If you cannot answer this question with intelligent and substantial reasoning, then you should keep your money on the sidelines and wait for a better opportunity. However, when the evidence is abundant, make a note of the rationale behind your action as well as any news articles that helped solidify your case. It’s OK to impulse buy when you are at Wal-Mart, but not on the NYSE. Also, record the date you invested, the price you paid and where the major indexes were. In tiered investing, it is crucial to reference these statistics in order to adjust your strategy as the fundamentals change.

The market can tease you like a hot waitress who flirts for tips, sometimes even more. Keep your emotions at bay in the stock game and with tiered investing; let the numbers do the talking.
Buying the dips

You don’t need a background in calculus to understand that as the price of a stock dips you should buy more as long as the fundamentals are intact. What’s tough to figure out is when to buy and by how much. The main idea we want to stress here is patience and self-control. The strategy of tiered investing calls for buying in predictable increments and at designated levels.

Using the previous example, lets say you buy 100 shares of COP at $100 because there is sufficient evidence that they will beat their quarterly earnings estimate. You also plan to buy 100 more shares at every 5% price decrease, in this case every five points. A few days later there is an overall market sell-off and COP drops to $95. You increase your position and now own a total of 200 shares. At $90 you repeat the purchase. Remember, this is all assuming that the company is still in good standing.

Instead of watching the ticker minute-by-minute, it is OK to set up e-mail alerts that inform you when the stock hits a lower tier. However, we don’t recommend setting up automatic purchases in your brokerage account. Actively managing your account will force you to keep in touch with any daily news related to your stock. Continue to check your notes and if the reason you originally invested no longer holds water and the position gets beaten down, it may be time to take a loss. This is a judgment call based on why you originally liked the company.

When the nuts and bolts of the operation are undamaged and the price starts to find a bottom, the fun part of tiered investing is about to begin.

We have tips on when to sell and when to let it ride during tiered investing

Selling the spikes
So, you braved the storm and bought COP all the way down to $80 and are the proud owner of 500 shares. Now the stock is rallying and is back up to $87 and you are thinking about jumping ship. Take your finger slowly away from the trigger or more accurately your mouse. Equity shows no emotion and neither should you. The earnings report is still a month away and your original hypothesis stated that COP would rise much higher than $100.

Assume that COP beats the estimates and shares are priced at $105. It may be time to slowly tier out of the position. What you need to know at this point is how much you ideally and realistically plan to gain on the investment. This could range from a conservative 5% on up depending on how long you are willing to hold on to the stock. At this point, the 100 shares you purchased at $80 have climbed a significant 31.25% and selling these would give you a solid profit while allowing you to keep your other 400 shares at work in the market. Set conservative price targets for your gains and sell them as they climb to their respective tiers.

Letting the profits ride

You have a couple of options once you reach your goal. You could sell out entirely and pocket the earnings. If you decided to sell all 500 shares at the $105 tier you would still come out with a total profit of $7,500 and an overall 16.67% gain. Or you could sell 100 shares at each 5% increase. A third choice would be to sell enough of the position to cover what you originally invested and let the rest ride. This allows you to continue playing the stock while not risking an overall loss since the remaining money is pure profit. In the worst-case scenario, with the stock busting completely, you would still break even.

ROLLER-COASTER INVESTING

The key to successful tiered investing is patience and self-control. Although, this is an unemotional and mechanical approach to trading, you should still maintain awareness of the overall market and any specific developments in the stock you own. Don’t try to “catch a falling knife,” like many investors are currently attempting in the financial markets. As the price falters, only continue to invest if the fundamentals are sound.

10 Steps to Retire a Millionaire

Having a million-dollar portfolio is a retirement dream for many people. Making that dream come true requires some serious effort. While success is never a sure thing, the 10 steps outlined below will go a long way toward helping you achieve your objective.


1. Set the Goal
Nobody plans to fail, but plenty of people fail to plan. It's a cliché, but it's true. "Plan" is the leading self-help advice from athletes, business moguls and everyday people who have achieved extraordinary goals.



2. Start Saving
If you don't save, you'll never reach your goal. As obvious as this might seems, far too many people never even start to save. If your employer offers a 401(k) plan, enrolling in the plan is a great way to put your savings on autopilot. Simply sign up for the plan and contributions will be automatically taken out of your paycheck, increasing your savings and decreasing your immediate tax liability. If your employer offers to match your contributions up to a certain percentage, be sure to contribute enough to get the full match. It's like getting a guaranteed return on your investment. Finding the cash to stash may be a challenge, particularly when you're young, but don't let that stop you from pursuing future riches.



3. Get Aggressive
Studies have shown that the majority of the returns generated by an investment are dictated by the asset-allocation decision. If you are looking to grow your wealth over time, fixed-income investments aren't likely to get the job done, and inflation can take a big chunk out of your savings. Investing in equities entails more risk, but is also statistically likely to lead to greater returns. For many of us, it's a risk we have to take if want to see our wealth grow. Asset-allocation strategies can help you learn how to make picking the right mix of securities the core of your investing strategy.



4. Prepare for Rainy Days
Part of long-term planning involves accepting the idea that setbacks will occur. If you are not prepared, these setbacks can put a stop to your savings efforts. While you can't avoid all of the bumps in the road, you can prepare in advance to mitigate the damage they can do.



5. Save More
Your income should rise as time passes. You'll get raises, you'll change jobs, and maybe you'll get married and become a two-income family. Every time more cash comes in to your pocket, you should increase the amount that you save. The key to reaching your goal as quickly as possible is to save as much as you can.



6. Watch Your Spending
Vacations, car, kids and all of life's other expenses take a big chunk out of your paycheck. To maximize your savings, you need to minimize your spending. Buying a home you can afford and living a lifestyle that is below your means and not funded by credit cards are all necessities if you want to boost your savings.


7. Monitor Your Portfolio
There's no need to obsess over every movement of the Dow. Instead, check your portfolio once a year. Rebalance your asset allocation to keep on track with your plan.



8. Max Out Your Options
Take advantage of every savings opportunity that comes your way. Make the maximum contribution to tax-deferred savings plans and then open up a taxable account too. Don't let any chance to save get away.



9. Catch-Up Contributions
When you reach age50, you are eligible to increase contributions to tax-deferred savings plans. Take advantage of this opportunity! 10. Have Patience
"Get-rich-quick" schemes are usually just that - schemes. The power of compounding takes time, so invest early, invest often and accept that the road to riches is often long and slow. With that in mind, the sooner you get started, the better your odds of achieving your goals. The



Reality Of Retirement
Retirement might seem far away, but it when it arrives nobody ever complains about having too much money. Some people even question whether a million dollars is enough. That said, with lots of planning and discipline, you can reach your retirement goals and live a comfortable life after work.

Stocks To Buy If McCain Wins

To maintain a sound portfolio, a smart investor must continuously assess the economic landscape, including any government regulations that may influence the business plans of the companies he owns. This year, the presidential candidates, John McCain and Barack Obama have differing policies and their political vision could shape many industries. In this John McCain installment of our presidential election portfolio, we’ll take a look at some of the sectors of the U.S. economy that will benefit if John McCain is elected. Although, both candidates would like to end our country’s continued reliance on foreign oil, John McCain strongly supports the decreased regulation of offshore drilling. John McCain is also against raising corporate taxes and likely won’t impose any “windfall” taxes on Big Oil. He has a longer-term view of the war in Iraq and is a proponent of strategic military spending. Furthermore, under John McCain, capital gains taxes will not increase and neither will taxes rise for higher-income families, allowing them to continue shopping at high-end stores. Three key sectors that could jump if John McCain is our next president are oil exploration, defense and high-end retail.

SECTOR 1
Oil exploration

Any of the large integrated oil companies, such as ExxonMobil and ConocoPhillips, will benefit with John McCain in office. However, a more lucrative play on energy could be found in the companies that actually find the oil and drill it from the earth. Halliburton Company (HAL) provides such services in oil and natural gas exploration, development and production. In recent years, oil exploration stocks have stalled as the locations to drill for the commodity have decreased or dried up. However, with lessened regulations, HAL would have plenty of opportunities to expand its operations and increase its market share. Long considered a dominant brand in the industry, HAL is trading near its 52-week low and has a 2.1% dividend (as of October 14, 2008).

SECTOR 2
Defense

If the United States continues in its dedication to support Iraq and keep a bulk of our troops in the Middle East, there will be a persistent need for military equipment and technology. This demand will prop up the defense sector and keep contractors like Raytheon Company (RTN) in production. Raytheon develops and produces military defense mechanisms, intelligence and homeland security systems. Its products range from missiles to surveillance equipment to aircraft control panels. RTN recently won a contract worth $678 million to upgrade radar systems at multiple airfields. The stock is trading near its 52-week low and has a 2.5% dividend (as of October 14, 2008).

SECTOR 3
High-end retail

High-end consumers will feel comfortable shopping at luxury outlets if they believe their revenues are safe from increased taxation. Nordstrom, Inc. (JWN) is a high-end fashion retailer, and unlike its competitors, such as Bloomingdales or Macy’s, Nordstrom is a leader in online sales. As customers shift to purchasing more of their clothing online, Nordstrom will profit from this increased traffic. People tend to forget that JWN also operates a line of discount stores that have been branded, Nordstrom Rack. These stores have been performing well, even in the recent market downturn. JWN is also trading near its 52-week low and has a 3.5% dividend (as of October 14, 2008).

INVESTING IN JOHN MCCAIN

These are not firm recommendations and there’s no telling whether or not John McCain will have the influence to enact all of his policies if he is our next president, but if the “Straight Talk Express” holds true to his position, these sectors should gain. A couple other industries to consider investing in with John McCain in the oval office are nuclear energy and pharmaceutical companies.

Stocks To Buy If Obama Wins

With the U.S. presidential debates heating up, and Election Day less than a month away, it’s time to take a look at what sectors of the economy will prosper under the policies of each of the leading candidates.

Regardless of whom you plan to vote for on November 4th, you should understand the differences between both campaigns and the effect each will have on your portfolio. Even the smartest investors can’t always prepare for the unexpected, as we have seen with the current credit crisis and the extreme amount of capital that has been lost by some of the safest investors. However, you can and should map out a game plan for what you do know.

In this article, we will review the sectors of the economy that will benefit if Barack Obama is elected. Throughout the debate over the domestic energy policy and the problem of sky-high gas prices, Barack Obama has been an outspoken proponent of alternative sources, including wind energy, solar energy and biofuels. His plan calls for a long-term overhaul of the traditional energy market and increased government support for renewable energy, with a lasting goal to end the United States’ dependence on foreign oil. Barack Obama has also emphasized increased government spending for domestic infrastructure, which should benefit many telecommunications companies. Also, according to his plan, many strategic and “green” technology companies would prosper, especially those dedicated to cleaning waste and sustaining the environment. Three sectors poised to increase with Barack Obama in the Oval Office are renewable energy, domestic infrastructure and green technology.

SECTOR 1
Renewable energy

The Sunpower Corporation (SPWRA) develops and produces silicon solar cells and solar panels. Sunpower’s panels have a greater efficiency than its competitors and continued advancement in this field should increase its market share over time. The $700 billion bailout plan that was recently passed by congress and signed into law will also have a welcoming effect on the solar industry. The approved package extends tax credits for renewable energy, which makes it easier and cheaper for consumers to have solar panels installed. Barack Obama’s stance on clean energy would further warm individuals as well as businesses to the idea of implementing this source of energy. This increase in demand would eventually boost industry-wide revenues. Sunpower is currently trading at the lower end of its 52-week range (as of October 14, 2008).

SECTOR 2
Domestic infrastructure
Corning Incorporated (GLW) makes glass for many display technologies, such as LCD on computers and televisions. The company also produces fiber optic cables and telecommunications hardware products. An increase in government spending for domestic infrastructure, especially within the telecommunications industry, would mean an increase in demand for these products that have made Corning a brand name. Corning is trading at a very low 4.09 P/E ratio due to its disappointing third quarter earnings report. There is no surefire way to navigate the stock market in its recent manic state. If the overall market gets hit, Corning will go right down with it, but it may be worth investigating further at this low price.

SECTOR 3
Green technology

FuelTech (FTEK) creates innovative technology to optimize the combustion systems of various solid waste applications. Simply put, its systems help control and lower pollution in an assortment of industries. Barack Obama’s plan to decrease carbon emissions would bolster the importance of “green tech” companies and ensure the continued support of the government. FuelTech has recently acquired a pair of small-cap companies that help regulate waste emissions. These strategic acquisitions will help FuelTech to diversify and expand its core business. The stock is currently trading at the low end of its 52-week range (as of October 14, 2008).

INVESTING WITH BARACK OBAMA

There are few, if any, safe bets with the current market conditions and regardless of who is in the White House, the market could still dip further. None of our ideas are firm recommendations to buy and please don’t place any bets the day after the election. Politicians often change their tune after entering office and even when they don’t it takes time for their platforms to affect the economy in a significant way. If, however, Obama remains true to his word and is elected president, take a closer look at the sectors we mentioned above, and stay away from the oil conglomerates and large pharmaceutical companies.