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Monday, February 9, 2009

Invest and Save: The Detroit Scenario

"The function of socialism is to raise suffering to a higher level." - Norman Mailer

Here's a little riddle ... Where do you live if you have to pay:

Taxes simply because you work (but not live) inside the city?

Taxes on living in the city?

Higher sales taxes because of your state?

Your standard of living is in the toilet?

Crime is through the roof?

Your mayor is a slick talking, eloquent criminal who contantly refuses to admit his extreme guilt for his numerous crimes; but somehow manages to get re-elected by a populace that wants their ears tickled, rather than substance?

Businesses want nothing to do with you?

So where do you live? Detroit!

So what does this mean for those in the low funded position? For those who are attempting to invest their money and they dont have $100,000.00?

I discuss that in the following vlog entry ...

(Video Included. If you're seeing this entry elsewhere and cannot see the Video? Click this link to view the entry ...)

My thesis moving forward is that the United States is going to move into what Dan is calling: The Detroit Scenario!

Therefore, save and invest accordingly. Welcome to your brand new toilet economy.

When it comes to that investing account? You could build the cash position in the investing account, so that you're more than 2/3's cash.

In my own opinion? With investing, you want to be a bit more cash heavy ... ... at the moment. That could change. But at the moment, if I was low funded? If my positions were, say: $200 big? I'd want $425.00 saved in the account, before you look to buy $200.00 worth of stock. Then save another $425.00 - before the next $200 purchase. This guarantees your cash position is growing, even if it's by a little bit. And if there isn't a good dividend stock to buy? Then don't buy one. Keep that cash position that is outpacing the S&P right now by 40%, and save another $425, before looking again for only a $200.00 purchase.

Of course that could change. All depends on market conditions.

Remember, cash is a position, and with Sharebuilder, is giving you about 40% more on your cash than what the stock market has given you over the last year.

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Note: This is not an investment or trading recommendation. The losses in trading can be very real, and depending on the investment vehicle, can exceed your initial investment. I am not a licensed trading or investment adviser, or financial planner. But I do have 13 years of experience in trading and investing in these markets. The Challenge accounts are run for the education of other traders who should make their own decisions based off their own research, and tolerance for risk.

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