TOP STOCKS:BlackRock to buy Barclays in blockbuster deal

SAN FRANCISCO (MarketWatch) -- BlackRock Inc. said late Thursday it has agreed to acquire Barclays Global Investors, including its iShares division, in a cash-and-stock deal that would create the world's largest fund manager, with over $2.7 trillion in assets, and drastically alter the financial industry.

Under terms of the deal, BlackRock /quotes/comstock/13*!blk/quotes/nls/blk (BLK 182.60, +4.08, +2.29%) would acquire BGI in exchange for 37.8 million shares of common stock and equivalents, and $6.6 billion in cash, the U.S. finance firm said in a statement.

Estimates of the transaction's total value ranged from $13.2 billion to $13.5 billion.

The deal, expected to close in the fourth quarter, will result in BGI parent, U.K. banking giant Barclays Plc /quotes/comstock/13*!bcs/quotes/nls/bcs (BCS 19.90, +1.25, +6.70%) /quotes/comstock/23s!a:barc (UK:BARC 299.00, -5.25, -1.72%) , holding a 19.9% economic interest in the combined firm, which will be called BlackRock Global Investors.

"As one, BlackRock and BGI will have a world-class product offering across the risk spectrum," BlackRock said in a statement.

Shares of Barclays closed Thursday up 6% at $19.90, while those of BlackRock rose more than 2% to close at $182.60.

BlackRock, the New York investment firm founded in 1988, is no stranger to blockbuster mergers.

The firm has been expanding in recent years through acquisitions, and in 2006, it snapped up Merrill Lynch Investment Managers for $9.6 billion.

Bank of America Corp. /quotes/comstock/13*!bac/quotes/nls/bac (BAC 12.97, +0.99, +8.26%) , which has acquired Merrill Lynch, holds a sizeable stake in BlackRock, as does PNC Financial Services Group Inc. /quotes/comstock/13*!pnc/quotes/nls/pnc (PNC 42.43, +0.63, +1.51%)

Gone shopping

BlackRock had confirmed earlier this week that it was in talks with Barclays, though Barclays indicated at the time that it was holding talks with a number of parties.

Barclays in April agreed to sell iShares to private equity firm CVC Capital for $4.4 billion, though the deal included a "go-shop" clause allowing Barclays until June 18 to find a better offer.

BlackRock said in a statement that unless Barclays received a counter-offer from "that party" within five business days which "considers to match the terms of BlackRock's agreement to acquire BGI," the Barclays board will execute a purchase agreement with BlackRock and recommend it to shareholders for approval.

BlackRock has apparently managed to remain relatively stable during the course of the credit crunch and recession.

Meanwhile a sale of the lucrative, San Francisco-based Barclays Global Investors and its iShares unit was seen as a means for Barclays to be able to raise considerable funds without taking a government bailout.

"The ability to offer BlackRock's global mutual funds alongside iShares will create an unmatched ability to tailor portfolios for retail investors," BlackRock said.

IShares has over $300 billion in assets under management in more than 350 funds worldwide.

"IShares is a rapidly growing business, ranking among the top three selling mutual fund and ETF families for the last three years," BlackRock said.

Wall Street analysts have generally issued favorable opinions about the anticipated tie-up between BlackRock and Barclays, noting that a combined firm would likely be able to cut a significant amount of overlapping costs following a merger.

Citigroup starts its stock swap ... finally

This morning, Citigroup (NYSE: C) began its $58-billion stock swap, a move that could leave the government with a 34% stake in the bank. The country's third-largest bank plans to swap common stock for (up to) $33 billion in preferred shares and convert as much as $25 billion of preferred shares held by the U.S. Treasury into common stock.

The bank believes that the swap could (emphasis on could here) make Citigroup one of the world's best-capitalized banks. The action could add up to $61 billion of tangible common equity and $64 billion of Tier-1 common equity. Citigroup had planned to take this action back in April.

The stock swap could result in the issuance of more than 17 billion new common shares. Such a move could dilute the holdings of existing investors by 76%.

In terms of capital, Citigroup would be in a far better place thanks to the stock swap. Unfortunately, that isn't the case when it comes to the stock's technical performance. The stock continues to wallow in the $3 region, which some may see as a buying opportunity. Of course, others may view this as a sign of exactly how weak the stock has become. There are others still who will say the stock swap is a sign of how the government feels Citigroup is simply too big to fail.

Whatever your opinion of Citigroup watch for the stock to pop a bit this morning in response to the news.

With apologies to Buffalo Springfield, there's something happening here. What it is ain't exactly clear. But if Bank of America (NYSE: BAC) first quarter numbers are sustainable, then it may not be long before the government is out of the business of bailing out banks. That's because Bank of America reported a $4.24 billion profit -- its 44 cents earning per share was 40 cents a share more than the 4 cents a share the average analyst expected.

How did Bank of America achieve this feat? Like its peers, the bank benefited from gains on home refinancing -- on April 9 President Obama said that refinancings rose about 88% in the last month -- and trading. But don't get too excited because Bank of America expects more credit problems, which is why it added $6.4 billion to its loan loss reserves.

Meanwhile, the U.S. has invested huge amounts in Bank of America in various forms. The Treasury owns $45 billion of Bank of America preferred shares, the FDIC guaranteed $41.7 billion worth of debt that Bank of America sold, and the government guaranteed $118 billion of assets so it wouldn't back out of a deal to buy Merrill Lynch. But with stress test reports looming for May 4th, the U.S. is now talking about converting such preferred shares into common equity so that it can avoid asking Congress for more bank bailout money.

Would such a partial nationalization be good for Bank of America? Maybe. If the government converted its $45 billion in Bank of America preferred into common shares, then it would become by far the bank's largest shareholder, which would further dilute the holdings of all the other common shareholders. Such a conversion would also boost the bank's tangible common equity and cut back on the $700 million in preferred dividends it paid the Treasury -- although it would presumably keep paying some dividend on the new common shares.

Does this mean that Bank of America is out of the woods? It's too early to tell. It depends on whether it can keep posting big profits while limiting the costs of charging off bad loans. And those bad loans look mighty costly now since its credit-loss provisions more than doubled to $13.38 billion, its net charge-off rate rose to 2.85% from 1.25% a year earlier; its credit-card losses increased to 8.62% from 5.19% and its total nonperforming assets jumped to 2.65% from 0.9% in the prior year.

It will take several quarters of results before an answer becomes clear. But if Ken Lewis keeps beating expectations by 1000% as he did this quarter, his job will be less insecure.

Meanwhile, investors seem to be taking profits this morning -- the stock is down 7.7% in pre-market -- since its March 6th low the stock has risen 238% from $3.14 to $10.60 on Friday.

LOS ANGELES -After weeks of speculation, U.S. investment manager BlackRock Inc. said Thursday it will purchase the asset management arm of British investment bank Barclays PLC, including its iShares division, for $13.5 billion in cash and stock.

Barclays Global Investors is the world's largest asset manager with more than 3,000 institutional clients and approximately $1.5 trillion of assets under management as of Dec. 31. New York-based BlackRock, which will pay $6.6 billion in cash plus 37.8 million shares currently worth about $6.9 billion, said its takeover of BGI will create a firm with combined assets under management of more than $2.7 trillion.

BlackRock said the deal will allow the company to better tailor portfolios for retail investors by marrying its global mutual funds to the iShares' ETF platform.

Barclays had agreed to sell San Francisco-based iShares, the exchange-traded fund which generates half the profits within BGI despite managing less than a quarter of the operation's assets, to CVC Capital Partners for $4.4 billion. But under a "go shop" clause in the agreement, CVC has five business days to match or top BlackRock's bid for the whole Barclays unit or walk away with a $175 million breakup fee.

Blake Grossman, CEO of Barclays Global Investors, will serve as a vice chairman of the combined firm, head of scientific investing, and a member of the Office of the Chairman. Barclays Chief Executive John Varley and President Bob Diamond will join BlackRock's board.

At closing ― expected in the fourth quarter ― BlackRock will have more than 9,000 employees in 24 countries.

Barclays' sale of BGI is part of its effort to raise capital after it declined to take part in a multibillion pound bailout of the struggling British banking system last year alongside Lloyds Group and Royal Bank of Scotland. The bank instead raised billions from Middle Eastern investors and agreed to sell the iShares fund management business.

Barclays also decided, after passing a "stress test" of its assets by regulators, not to participate in the government's Asset Protection Scheme to underwrite potential losses on toxic assets.

The deal gives Barclays a 19.9 percent stake in the new BlackRock Global Investors, representing a 4.9 percent voting interest. There will be certain restrictions on Barclays buying or selling BlackRock shares, but the British bank will have the right to maintain its ownership percentage if BlackRock issues additional shares in the future.

BlackRock said it will fund the cash portion of the purchase price through a mix of existing cash, debt facilities and proceeds from issuing 19.9 million shares to a group of institutional investors for $2.8 billion.

A group of banks, including Barclays, Citi and Credit Suisse, has committed to provide BlackRock with a new 364-day revolving credit facility of up to $2 billion, which would be repaid by any capital raising efforts and refinanced with the proceeds of term debt financings.

The transaction is subject to approval by Barclays shareholders and regulators.

Citi and Credit Suisse served as lead financial advisers to BlackRock. Banc of America Merrill Lynch Securities, Morgan Stanley, and Perella Weinberg Partners provided additional financial advisory support. Skadden, Arps, Slate, Meagher & Flom served as legal counsel.

Shares of BlackRock closed earlier up $4.08, or 2.3 percent, at $182.60. Barclays shares ended up $1.25, or 6.7 percent, at $19.90 and added 35 cents in aftermarket electronic trading.

Copyright 2009 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

BEST STOCKS:Long-Term Investing Doesn't Work

Today, everywhere I turn in the investment world, someone is asking about the merits of long-term investing. Does it work? Did it ever? Looking over the wreckage of one-time blue chips AIG (NYSE: AIG), Fannie Mae (NYSE: FNM), General Motors, et al, these are natural questions.

For every Danaher (NYSE: DHR), up around 3,000% over the past 20 years, there are plenty of disappointments -- such as Eastman Kodak (NYSE: EK), down nearly 90% over that same time frame.

So which is it? If you buy and hold for 25 years, are you a champ or a chump? If you stick with a stock for five years, are you a star or a sucker?

What do you think? (Drop a comment below!)

Here's what I think.
It makes sense that this debate would rage during the most explosive year in the history of stocks, with the S&P 500 racing to 1,400, buckling to 670, and now settled 'twixt the two. In 2008, on 18 separate days, the index moved more than five percentage points. Damnation!

It took nearly 60 years to rack up the same number of highly volatile days. When decades of tiny waves give way to a single tsunami, you can no longer blindly accept the merits of body surfing. The same goes with long-term investing; we can't help but debate it after a year of calamity.

Now, if you think I'm chalking this up to mere shortsightedness -- a one-year phenomenon -- hold on there. The Motley Fool has been associated with long-term, buy-and-hold investing since our founding in 1993.

And as co-founder and CEO, I'm writing to say that, for many people, long-term investing simply doesn't work. You read that right. Many investors today are wrong to anchor their stocks to an average holding period of three to five years or more.

But now, are you ready to be confused?
All that said, the evidence still shows that multiyear or multidecade holding periods will generate the highest real rates of return, after taxes and the frictional costs of trading.

Lifelong stock investing is the most broadly available way, across the world, to become a millionaire. It's just that most people don't have the time frame, the temperament, or the training to invest this way. Nor do they tack on new capital to their portfolio at lower prices.

Master investor Shelby Davis did. By repeatedly buying and holding stocks forever -- Chubb (NYSE: CB), Aon (NYSE: AOC), and Torchmark (NYSE: TMK) among them -- he turned $50,000 into $900 million over a half-century of investing. Against that record, you have reams of statistical data showing that when investors trade their accounts actively, the odds of their losing to the market rise dramatically. Worse still, the likely outcome of their hyperactive trading is that they lose money outright (see Terrance Odean and Brad Barber, "Trading Is Hazardous to Your Wealth").

So what's the average investor to do -- caught between the rock (of not having the time or training to invest prudently for the long haul) and a hard place (of facing insurmountable odds against successful active trading)?

For me, it starts with knowing thyself. You must know the following (the four Ts):

1. Temperament. Can you stomach a 50% loss in the value of your investment portfolio over a two- to three-year period?

2. Time frame. Can you handle 10 years of zero returns from your investments?

3. Training. Are you capable of investing in public companies, diversifying internationally, and understanding what you own?

4. Tacking on. Are you inclined to add new money along the way, particularly as prices fall?

If you can't chant a resounding yes to all four of these, you shouldn't embrace buy-and-hold investing for the long term.

The facts bear out that most people don't demonstrate all four in their investment approach. They can't endure volatility leading to flat returns over any decade. They don't truly understand the businesses in which they've invested or the money managers with whom they've invested. And they are disinclined to add money during bear markets.

They should not buy and hold for the long haul -- period.

It is for these reasons that we launched our Motley Fool Pro service, smack in the middle of the mayhem last fall. Pro has almost never been in the red; it is up 10% today; and it is beating the market by 5.8 percentage points. But how?

The service features buying stocks long, selling stocks short, using exchange-traded funds (ETFs), and deploying options as a conservative hedge. The aim is to:

1. Dramatically reduce volatility.

2. Avoid down years.

3. Protect investors against ignorance, via an open community.

4. Eliminate the need to add new capital each year.

It aims to neutralize the need for a steely temperament, a multidecade time frame, the training to understand each investment, and the necessity of tacking on new capital each month, quarter, or year. This is precisely what must be done by the many investors for whom long-term, buy-and-hold investing simply is not suitable.

The debate
And so as I see it, the debate about long-term investing is actually a poorly framed one. Long-term investing simply doesn't work for many, many investors today. But that doesn't mean it's dead.

For those for whom it does, I expect they'll be enjoying financial freedom measured in quarter-centuries. For those for whom it is not suitable, they must learn diversification and hedging strategies.

We're having a big debate around this question here -- with Fools voicing strong opinions at both ends of the spectrum. Over the coming weeks, we'll be interviewing experts and voicing our own motley opinions. But we also want to know what you think.

So, what do you think? I look forward to reading your opinions and mixing it up with you in the comments area below, Fools!

Should I Put My Money In A Small Company Stock?

Staying on top of current trends is important for any investor.  Most people who invest put money in a 401k or mutual fund for long term growth. The ups and downs of dealing with individual stocks can be too much for some people to bare. Every once in awhile they do need to think about making profits and not just collecting dividends thirty years down the road.  One of the best ways to do that is by investing in small cap stocks.

With a smaller company the potential profits are endless. There is so much unknown about them that it is considered too risky for the average investor. The amount of data you can collect from their balance sheets does not tell you where the company can go as it is so new. This can be too much for some people but aren't you investing to make money and not just to say you invest? The short term profits are not going to be made with large companies every body knows about. Double digit profits will come from investing on the right business plan from a smaller business.

Small cap investing is tricky to do. The company does not have that much cash in hand to be able to acquire new resources to further develop their product without it. This is why they need you. Your hard earned cash will keep them a float while they develop their product and start marketing it. It does not take that long to know if you put your money in the right place. The product or service will either catch on quickly or get ice cold and fizzle out. If its a hit you should expect to make your investment back and more in a short time. If it does not go over well then you can move onto the next one.

There is one thing to remember about a small cap business. Most leaders with the company have more then your money invested into it. There is usually count less hours, money borrowed from family, and there is a chance that no one has taken home a paycheck. It is made up in their mind that they are going to succeed. With a large corporation it is much different. The current directors have only invested time by punching in a clock over a certain time period picking up a weekly check and somebody has to run the show now. Their business model has gone through its changes over time but has now found its groove. The profits of investing with a large company are not going to be there because the market knows what to expect. A small cap company can jump through the roof over night and take your investment there with it.

If you are planning on investing your money in the stock market right now you should consider buying small cap stocks. If your goal is to focus on profits and not on long term growth then you will want to put your money with a small company. Investors as a whole were to focused on putting their money into large companies that were deemed too big to fail. This mindset is a leading cause as to why the stock market has taken such a beating over the past couple of years. One big problem with large companies is that they have so many levels of organizational leadership to go through before a decision can be made. With so many levels to go through they cannot react to changes in their business model that fast.

Small businesses can stop on top of changes better as there are not as many people that need to have a say in making changes. With only a few or one product to focus on, a small business can be more efficient and cost effective then a bigger one. Leaders of these companies know that they are not a expert in everything as they are an expert in one thing. This mentality forces them to have to be the best at the product or service they create.

When you are ready to put your money into the market you should start researching a bunch of small cap companies. Most of these companies have revenues of $200 million and $2 billion a year. This might seem like a lot of money but many large cap companies usually have sales volumes between $10 billion and $200 billion a year.

Most people who do well with investing will tell you that the profits are in small companies. You will earn dividends and with big companies. Most small businesses develop a new product so well and grow so fast that they are usually sold to a larger company resulting in a windfall of profits for the investors. There are many stories of people tripling their investment this way. The tricky part of all of this is to find the best small cap stock for the moment. The only way to find out is to do your research and stay on top of trends and forecasts. The stock market moves at lighting speed and the second the word gets out on the latest company you might be too late.

Cheap Stock Picks And Mutual Funds

Before you buy any shares of a company the first thing to think about is if the price will go up or down in the foreseeable future. Not stopping to take this into account, may very well cause your portfolio to spiral downward.

Once you have fully explored that first point of interest, make sure that the stock is priced low and ready to go higher. Should you start to think that buying undervalued stocks means learning about buying penny stocks then you are way off base. Basically, knowing how to pick stocks would be the same as buying stocks cheaply.

What are cheap stocks then? Buying cheap stocks means purchasing them when they are trading below face value. Being able to locate and purchase these cheap stocks is what makes the pros so wealthy.

How would you go about figuring out if a stock is cheap? The number one thing to look for is a sector that is not performing like it should or will do better in the very near future. Compare the PE multiples of your stock with that of it's competitors. Should the stock look like a winner and the price appear like it will rise, then you have on your hands an under priced stock. If you really believe the stock is under priced then you should think about buying it.

Will this prevent you from having to learn how to successfully trade mutual funds? You should already know the answer is no. Denying yourself the option of learning other ways to invest would be extremely foolish. If you don't look at mutual funds you might as well not look at investing at all. You might regret not taking the opportunity to learn it. Mutual funds could be the best way to make your investments grow over a very long time. You would not want to be one of the destitute and regretful would you?

Penny stocks are the share aid made to the public by companies that are simply too small or new to be listed with the major overall stock relations. Penny stock share prices regularly range under $1 to flaunt true penny stock character though they can range up to $5. These type of shares offer generous large return on outlay opportunities, and the early original investment can be very low, it is key to note that the risk of the concern closing its operations down and your share value right of no value is achievable. Many investors nevertheless completely trade these types of stocks plainly for the reason that of the fact that even all the same there are high risks there can also be very high profits. The main question mark then again is "how do I find penny stock picks?"

If you are going to trade penny stocks as part of your speculation set (which is an superb diversification approach you are going to need to know as much superiority information about the concern you are opinion of purchasing shares in. Just like when selecting shares of any other sort of freely traded party it is decisive to make inquiries all achievable about the custom. This means looking into the theater group operations, its managing share assembly fiscal place and increase forecast etc..

One portion that makes penny stocks so pleasant to investors is the theory that most of the companies are exceptionally new with considerable room for significant industriousness augmentation. There are many of these types of stocks which are companies dealing with wherewithal for example - their share price will vary based on the value of the service.

With a eminence trading method or tune-up penny stock trading can be extremely well-paid in terms of the revenue it can cause for an sponsor. There are a multitude of okay small organizations, which have special forecast for advance. If you use a superiority dependable ritual that employs FULL specialized and deep assay to find hot penny stock picks, then the revisit on your penny stock shares will be substantial.

A few weeks ago the blogger at This Stock Pick Blog decided to get back into the stock market game after having been out of it for a few years. He was drawn to stocks like GM & C which had taken a huge hit since the markets fell through the floor in the fall of 2008.

The C and GM picks were very successful and that got him into looking for other stocks like them. He found a couple of microcap stocks, LJPC and CTIC, that looked like they may break through with big gains.

That ended up being the case as both CTIC and LJPC ended up being big gainers.

He thought that he may really be onto something with the way he was selecting these stocks so he decided to try and make a screener which would find more stocks like them right at the moment before they were about to have big gains.

The reason I'm writing this article right now is because his first stock buy with this new screener reached a high 20% above it's open today and that certainly impressed me. Obviously my imagination is off and running with the kind of gains I could make by following his advice.

Of course I don't expect every stock pick he or anyone else makes to have big gains. No way. It's also key to know that a gain isn't "official" until you sell the stock. Deciding when to get out is just as important as deciding when to buy. The cool thing is that he also makes a post on his blog (and on Twitter) when he gets out.

He doesn't share exactly how he screens for these penny stocks as I guess he's too selfish to share all of his trading secrets but he shares more than  most do.

While I understand that it's tempting sign up for The Day Trading Robot or Forex Funnel, I certainly think you will have superior results just by following what he's doing. And the really great thing is that it's totally free.

One final note: I think it's always a good idea to make "fake trades" before you start making trades with real money when trying a new stock picking method.

Penny Stocks and its Risks

Penny stocks are for the new investor who may have limited funds to spend. Discover that penny stocks are especially in new or up and coming companies or companies that are on their last leg and treading water. This doesn't mean that even those companies that have fallen off the big lists aren't worthy investments, all the same they have been known to pick themselves up, reinvent themselves, and find themselves back on the big lists. For the sake of this article however, penny stocks are sometimes big companies going through a downward spiral, which makes them, just like the new companies, somewhat of a risk.

Of course reason is rarely a good bedfellow for ambition or dreams and the low prices of most penny stocks it's perfectly acceptable for even the common man to have a few dreams of his own when it comes to obtaining wealth by playing the stock market game and there is a much greater thrill with penny stocks than you will find in any casino with penny slots.

Some of the common risks associated with penny stocks may not be risks one would commonly assume are related to the stock market. The thing you need to remember is that trading penny stocks isn't regulated in the manner that the major stock exchanges are regulated. This means that a large safety net that others in the stock market are protected, to some degree, by does not extend into the murky waters of penny stock trading. It is the forgotten child of oversight and investors are left to fend for themselves.

The first risk is fraud and this risk seems to be rampant in the penny stock market. You will find all kinds of fraudulent penny stocks that are heavily marketed by overseas companies that look glossy and legitimate on the Internet, in investment magazines, and through many brochures, and even several carefully crafted and well written press releases, newsletters, and emails. The problem is that there is no product or the demand is deceptively overrated and the stocks are essentially junk stocks worth nothing, if they exist at all. The "businesses" in question take the money, dump, and run never to be heard from again. Unfortunately this is quite common and many of the "companies" that perpetrate the frauds are located overseas. This is the biggest risk though certainly not the only risk

The other risk is that the companies that are listing penny stocks are often smaller businesses that are building or larger businesses that have fallen off the major exchanges radar for one reason or another and are either going through desperate restructuring or failing all together. Both pose very real risks but if you choose to put your faith in the right new business or old business that is getting its act together the proper way you can find amazing profits on the other end of the roller coaster ride.

The other risks that are involved when trading penny stocks are the lack of financial reporting. Corporations and companies that trade in the major stock exchanges are required to release their financial information and account to their stockholders. The same doesn't hold true for penny stocks. There is no accountability and very little public information. This means you have to really dig to find out credible information about the companies you are considering and are left going with your gut more often than not rather than relying on legitimate information that will be beneficial in your investment decisions.

Penny stocks are very lucrative to those who manage to pull off the investments and come out ahead. But it can be hard to make huge profits in these investments.

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Automated Stock―To Use or Not to Use Stock Trading Software

While the world continues to strain under the burden of the ongoing global recession, there is never a lack of people who could use a hand, especially people in stock market trading. A number of big league corporations have already succumbed to wave after wave of fiscal challenges brought by the worldwide economic fracas, and many more are teetering on their brinks. It is excruciatingly puzzling to imagine how stock market figures are dancing as companies struggle and fail one by one, and at the same time intriguing to see how analysts and traders are keeping up and riding the waves. Do they perhaps have some ingenious stock software? Could they have acquired some sort of system affording them the means to stay afloat and keep waltzing amidst the tumbling tango of stock market figures?

The World Wide Web has influenced almost every industry there is in the real world, including stock trading, and has sprouted cyber-industries that support their real world counterparts. Stock software soon became well-known as traders couldn't simply turn their backs on the potential of the internet. Traders benefit from trading systems support traders in a variety of ways. They can serve as active monitoring or analysis agents, organizational software (like a stock trading assistant), or even act as traders themselves. But how much of a stock traders living can he afford to put in the virtual hands of a bunch of codes and an interface?

Anyone from stock market neophyte to seasoned stock trader can take full advantage of such systems.  It's a known fact that many traders have other occupations as well, as such, managing stock trading at the same time can be tedious and inefficient. A investment software system that can analyze the data and organize information can aptly do half the job and leave the decision making to the trader. And then there are stock software that completely take over the role of trader. Systems like these that collect data, analyze, and make decisions make trading almost fully automated. In a sense these programs just take the data a they've collated and analyzed and then take a step further by doing what they see fit in relation to collected information. Of course, it's completely up to the trader if he would prefer his computer to handle his work or some of it, because as it stands today, most stock traders wouldn't let a machine make their choices for them, though they probably would've made similar decisions in light of the recorded data.

Either way, stock traders have lots of choices of software to invest in and rely on in the internet. A simple search engine would do the trick. You might even stumble across an options university review that could be of some tremendous use. All that's left to do is sort through them and figure out which one to use. In an industry void of any long term assurances of stability where the risk to reward ratio sometimes goes against rationality, it may be too much to let a program make the choices for you, but it sure pays to get some much needed help. Especially in the current economic and financial climate.

Software for Forex Trading

There are a multitude of types of software for Forex trading. All the trading software offered in the market has its own disadvantages as well as advantages or benefits. In order to choose the best software that you can use in Forex trading, you need to know your needs. So what systems are available for you?

Most of the software offered in the market help in easing the burden of trading in the Forex market. The Forex market is open twenty-four hours unlike the stock market. With efficient software, you can keep track of all the things happening in the Forex market. Trying to monitor the market all hours of the day and night for updates is unreasonable. With the software, you can continue with your everyday routine activities and once you have time to study and analyze the stock market, you can simply use the trading software to monitor the day's activities.

The software will do all the difficult tasks for you. One of the great aspects of Forex trading software is that it monitors the markets activities around the clock. The trader can decide the degree of independence of the software. Many traders with busy lives leave the dirty work up to the software.

Here is a very good example of how trading software works:

You make the decision to invest on a certain trade. When you were out doing the laundry or perhaps you're in the grocery, you started losing money because of some unfavorable changes in the market. Purchasing an efficient software can lessen your losses in the market by automatically trading once an unfavorable change is acknowledged. This is just one advantage to having trading software as a trader.

Signal indicators or generators and other market trends are emphasized by some of the trading software. This software allows you to trade with confidence without concerns. You see, this kind of program use tested and complex mathematical algorithms. Forex moguls continue to make large profits from using this kind of software. The software has been tested and is effective. In fact, this kind of software can help you in making a precise trading decision through the advanced algorithms and trend indicators. You get trading tips when certain indicators are found by the software, thereby providing you with accurate Forex market information.

Combo software programs are also offered. Whether you're a beginner or an advanced trader, you can make use of this program. This kind of software can monitor the changes in the Forex market and at the same time provide helpful trend indicators or signal generators.

The similarity in the majority of software is great enough that it doesn't really matter which one you choose. Forex trading software has a good longevity, so once you have found a software that works for you you can use it for as long as you want. Software programs are mostly updated by their publishers and so you don't need to worry about anything. Many of the software programs allow you a trial test period allowing you to find the right program for you.

Research the different Forex trading software available before chosing the best one for you. Trading in a very complex market is not as easy as you think and you need to be prepared for everything with the help of the trading software.

Green Shoots Stock Market Rally

The green shoots believers seem to be firmly in control this morning as General Motors files for a chapter 11 bankruptcy and the Dow skyrockets up by over 200 points as I write. Humans are a hopeful lot aren't they?

The rally from the March lows of 666 on the S and P index has carried the S&P to above 940 and the Dow from 6517 to above 8700. Anyway you look at it that is an impressive rally. Still, it is a rally that doesn't smell right as evidenced by the last two minute surge last Friday that took the averages straight up on a high volume surge going into the close. That surge was far from normal activity on an otherwise lackluster trading day.

Could it be that taxpayer money given to Goldman and others is finding its way back into the stock markets? Could it be that the government is busy fueling yet another bubble with trillions of dollars in fiat money?

The green shoots that the Obama administration and their very much under control TV talking heads love to gush about are the sort of green shoots that are of the less bad sort. For example, housing prices are still falling but falling at a slower pace than at the end of 2008. Unemployment is still increasing and will likely continue to increase for some time but is not increasing as fast as during the last quarter of 2008. Car sales are horrible and foreclosures continue but maybe, just maybe, they will pick up some fine day.

In a few words the economic fundamentals are still pretty terrible for the United States but Obama has done a masterful snow job on the American people and consumer confidence has soared. After all, GM will be a better company after it emerges from bankruptcy, right? Certainly, the US government will run GM better than automotive executives. Well, maybe better than the auto executives at GM for the past 50 years. How could it be any worse? Still in all of the world the history for government run auto companies is not good.

How long can the con continue? Given the trillions that the Obama administration is throwing at the economy, trillions that, since the treasury is broke, the government has to borrow or to create out of thin air, probably longer than you would reasonably think.

But who can say that creating green shoots with borrowed and with fiat money or that attacking problems of excessive leverage and debt levels by increasing leverage and debt levels is reasonable. The policies being implemented by the government may be increasing the American people's confidence now but I have a sinking feeling that they will increase their misery later. Running 2 trillion
dollar deficits and even larger can not go unpunished forever.

When the next decline gets under way you will want to be out of the way. Better take advantage of the rally, as the big elite boys at Goldman Sacks and across elite land are doing, and raise cash while you can. Green shoots are fragile things. They can whither away and be no more in a New York minute. Still, at least for awhile the trillion of dollars in funny money seems to be in control.

BEST STOCKS:Shifting from Stocks to Bonds May Be Risky

When the stock market is too risky (as it was in 2008), investors often flee to safer shores.

In many cases, U.S. Treasury Bonds are those safer shores. And why not, the U.S. government guarantees it will redeem the bonds at their face value if held to maturity.

In other words, if you buy $10,000 worth of U.S. Treasury Bonds you will receive that $10,000 back when the bonds mature. In the interim, you will receive interest payments twice per year.

If your goal is to buy and hold the bonds until maturity, this is all you really need to know.

Stocks and Bonds

However, many investors hold the bonds during difficult times in the stock market and then sell them on the open market when the investor wants cash to get back into the stock market.

This is a common strategy and one that works because there is a secondary market for buying and selling U.S. Treasury Bonds.

There is a risk however in this strategy. The U.S. Government guarantees to redeem the bonds at face value when held to maturity.

It does not guarantee that you will receive face value if you want to sell (as many do) before the bond’s maturity.

There are three numbers that you need to know when assessing a bond:

• Coupon or stated interest rate – This is the interest rate that is used to compute interest payments to bond holders. In most cases, it does not change during the life of the bond.
• Face value – This is the value of the bond and what you will pay if you buy a newly issued bond from the U.S. Government. It is the amount you will receive when the bond matures. Yield – This is a computed interest rate for bonds sold on the secondary market. It changes based on the price of the bond in the secondary market. There are more complicated numbers (yield to maturity for example), but for purposes of this article, I’ll keep it simple.

When you buy or sell a bond in the secondary market you are not dealing with the bond issuer, but another investor.

Price of Bond

This is important to know because the price of the bond may not be its face value.

Here’s how it works. If a bond is issued with a stated interest rate of 6 percent it will pay the holder that interest rate for the life of the bond.

However, suppose the bondholder decides to sell the bond before the maturity date.

What the bondholder will receive for the bond is based on current interest rates and how they differ from the stated interest rate on the bond.

For example, a U.S. Treasury Bond is issued for $10,000 with a stated interest rate of 6 percent and a maturity in 10 years.

The bondholder wants to sell after just three years. In the three years that have passed, interest rates have climbed to 8 percent.

Who would want a bond paying 6 percent when they could buy a bond paying 8 percent?

Bond Rule

A rule about bonds: when interest rates rise, the price of existing bonds falls.

To entice a buyer, the bondholder must lower the price of the bond so that the interest rate (remember it is fixed at 6 percent) of the bond equals what an investor could receive from a new bond.

The math makes sense. If you are paying the same interest rate on a smaller principal the effective interest rate or yield is more than the original bond.

You can’t change the interest rate on the bond. That’s fixed at 6 percent. You can, however change the price you will take for the bond.

The annual payment of $600 ($10,000 x 6%) must equal an 8 percent payment. Doing the math, you discover that the face value of the bond must be discounted to $7,500 ($600/8% = 7,500) so that the $600 fixed payment equals an 8% yield on the buyer’s investment ($7,500 x 8% = $600).

If interest rates went down instead of up, you could then sell your bond at a premium over face value because the fixed interest rate would be higher than the market rate.

Illustration

PLEASE NOTE: This is just an example to illustrate the relationship between interest rates and bond prices. It does not represent an actual computation. To do this calculation correctly would require a more complicated process and the answer would be different. However, the seller would still have to discount the face value of the bond to compensate for the interest rate difference.

This illustrates the risk investors face when holding bonds. If interest rates rise and they want to sell before maturity, the investor will have to take a discounted price for the bond.

Stock Trading Slime

I've had the opportunity to meet a lot of different stock trading experts during my fifteen year career as a stock trader. Most are top notch, but there are others that give our profession a really bad reputation. Sadly, they are the ones that can greatly disappoint a new stock trader and turn them off from the profession forever. In the hopes of warning you away for some of the slime before you go through what I did, here are a few of my experiences, and a couple suggestions for avoiding the encounters yourself.

 

I'll never forget my worst experience with a stock trading service, the ultimate in "slime" and an incident that changed my life. It, finally, taught me the important lesson that some people are just in it for themselves, regardless of who they hurt along the way. It also made clear to me that I would have to be different than that, and cemented my personal creed that if a business opportunity requires me to hurt someone else, I just pass it up.

 

This service, like many others, provided a daily listing of recommended stocks to buy or sell short each day. And, like many others, they had impressive statistics to prove that, in most cases, the stocks they chose would do what they said they would. I was impressed, and said "sign me up!"

 

But, unlike many others, this particular service had an ulterior motive I was not aware of at the start. Turns out, the folks running the service were making recommendations to their subscriber group for the sole purpose of manipulating the prices for their own profits.

 

Let me give you an example. The first step was for the top management to purchase IBM stock through their account. They would then send an alert to us subscribers, recommending we buy IBM. Once the 3000 + members started buying the stock, the stock price would rise as a result of the activity. When the cost of the stock accelerated to a level that the slime were happy, they sold their stock for a profit.

 

I couldn't believe that this service was using its subscribers to front run their own orders. Their goal wasn't to assist and help the subscribers as advertised, but rather to make their own profit and get out. Not only was this wrong, but the subscribers were paying them to make it happen!

 

I must admit, most stock services do not subscribe to that slimy form of business. But, less disagreeable, but more common are those that brainwash the new trader to believe that stock trading is way to risky to go it alone. But if you sign on for their monthly program (at a hefty fee, I might add), they will do all the work for you.

 

True, stock trading is complicated at first, until you have found a system that is right for you. However, if anyone tries to convince you that you can never gain enough knowledge to eventually go it alone, they are probably just in it for your monthly subscription fees. These types of programs are usually very plain vanilla and won't take into account your individual risk tolerance or trading style.

 

Now granted, some people don't want to bother with stock trading on their own, and are content to pay the monthly fee, be told what to trade, and be right some of the time. While the return is usually okay, I have found that finding a system that works and structuring it around your risk tolerance level will always result in higher returns and a more satisfactory trading experience.

 

It does take some upfront legwork to find someone to help you learn the ropes without taking control over from you. But there are plenty out there and you will be pleased with the result as they will take the slime out of the profession and help you help yourself become proficient at stock trading. I guarantee, you will enjoy the results for many years to come.

 

To read about other lessons I learned in my fifteen years as a day trader and coach, as well as tips and techniques for becoming successful at stock trading, read my free report "From Video Junkie to Day Trader," and learn more about how you could be trading stocks profitably in as little as two weeks.

The Key To Successful Online Stocks Trading

If you have ever considered online stocks trading, now is a great time to get involved. Stocks are still down across the board but we are getting close to the turning point in this recession where everything will start to go up. This is great news if you are just starting out because chances are any stock you pick is going to increase in value as the whole market ride a wave to recovery.

There are never any guarantees with the market, a painful lesson a lot of us learned over the past year and a half, but a century of historical data shows that even with its rises and dips, the stock market always rises over the long term.

Indeed, "The long term" is the key to online trading success. So, you'll actually make money if you hold on to a stock as long as you're patient. It is usually the people betting on short term gains that get badly burned in the market.

So if you have started to think seriously about online stocks trading, you need to first make yourself a budget. Simply put, the money you can afford to lose is the money you can afford to invest in the stock market. The money should be in the bank where it safe, if you need to pay some bills the next month.

That way, if you are never forced to pull money out of the market, then you will rarely lose any. Because if a stock goes down, all you have to do is hold on to it and wait. Unless the company has totally imploded, the stock will usually recover in time.

To get started with online stocks trading, you need to create an account with a reputable online broker. Pick one that is well known as they will have the most secure websites. You don't want to rist yourself with identity theft, so this is very important for you since you will be sharing your personal banking info and credit card to set up an account. The stock market is risky enough!

Once you have found a brokerage site that you like, you can start researching and picking stocks. My advice to those just starting out with online stocks trading is to buy small amounts of inexpensive stocks to start. This will allow you to spread your risk around and if any of your choices turns out to be a mistake it will not wipe out your whole portfolio.

Online stocks trade should fun and by investing small amounts you can get involved with more companies which increases the rate at which you will learn about the market. My advice is buy a few reliable stocks and then take a little more risk with those that are volatile. It prevents you from losing it all while gives you a chance of hitting it big.

How To Buy Top Stocks

Although it may seem obvious to most stock market traders there are a number of simple rules that you can follow which will ensure that you have more success when buying stocks:

In the USA stock market there are 3 major indexes which are each made up of a basket of stocks, they are the S and P 500 (also known as the S&P500), the DOW 30 and the Nadaq 100. These indexes generally only contain major blue chip  stocks, as long as you buy from these 3 groups you will at least know that you are getting a well known solid stock.

For example the DOW30 contains major industrials and large multinational stocks such as Home Depot (HD) and Johnson and Johnson (JNJ) whereas the Nasdaq 100 mainly contains techical companies such as Apple (AAPL) and Miscrosoft (MSFT).

Always buy a stock that is liquid, this means that it is a highly traded stock, this will enable you to quickly buy and sell at the price you want without having a delay. You will also get a smaller spread, thats the difference between the BID and ASK price of the stock. For a stock to be considered very liquid it should trade at least 500,000 shares per day, ideally even more.

It is best to aviod stocks that are bellow $10 as this usually means the company is in trouble, although with the bear market of 2008/9 there have been a lot of good stocks at bargin prices between $5 and $10. Avoid buying a stock below $5 at anytime.

Another consideration is options, does the stock has options?, this will be important if you want to trade options around your stock, such as a covered call, or you may want to buy a PUT option inorder to protect your stock.

Be very cautious about buying a stock just before it's earnings release, stocks often drop significantly if you come out with a poor report. Earnings are released 4 times a year with one of them being the annual report.

If you are going to trade options make sure that you learn how to trade by getting some good education. There are many swing trading strategies that work well with stocks in todays volatile markets.

Although it may seem obvious to most stock market traders there are a number of simple rules that you can follow which will ensure that you have more success when buying stocks:

In the USA stock market there are 3 major indexes which are each made up of a basket of stocks, they are the S and P 500 (also known as the S&P500), the DOW 30 and the Nadaq 100. These indexes generally only contain major blue chip  stocks, as long as you buy from these 3 groups you will at least know that you are getting a well known solid stock.

For example the DOW30 contains major industrials and large multinational stocks such as Home Depot (HD) and Johnson and Johnson (JNJ) whereas the Nasdaq 100 mainly contains techical companies such as Apple (AAPL) and Miscrosoft (MSFT).

Always buy a stock that is liquid, this means that it is a highly traded stock, this will enable you to quickly buy and sell at the price you want without having a delay. You will also get a smaller spread, thats the difference between the BID and ASK price of the stock. For a stock to be considered very liquid it should trade at least 500,000 shares per day, ideally even more.

It is best to aviod stocks that are bellow $10 as this usually means the company is in trouble, although with the bear market of 2008/9 there have been a lot of good stocks at bargin prices between $5 and $10. Avoid buying a stock below $5 at anytime.

Another consideration is options, does the stock has options?, this will be important if you want to trade options around your stock, such as a covered call, or you may want to buy a PUT option inorder to protect your stock.

Be very cautious about buying a stock just before it's earnings release, stocks often drop significantly if you come out with a poor report. Earnings are released 4 times a year with one of them being the annual report.

If you are going to trade options make sure that you learn how to trade by getting some good education. There are many swing trading strategies that work well with stocks in todays volatile markets.

 

U.S. stock futures point to weaker start

LONDON (MarketWatch) -- U.S. stock futures dropped Monday, as traders fretted that a recent rally has been too sharp even as the economy is looking closer to recovery.

S&P 500 futures fell 9.6 points to 930.90 and Nasdaq 100 futures fell 16 points to 1,479.00. Futures on the Dow Jones Industrial Average fell 80 points.

The day ahead

Futures are forecasting a lower open Monday. Bank shares will be in focus as the deadline for federal regulators to approve capital-raising plans at nine of the country's largest banks expires. WSJ's Matt Phillips has your day ahead. (May 8)

U.S. stocks finished higher last week in a period that concluded with data showing fewer jobs were lost in May than at any point in eight months. The Dow Jones Industrial Average rose 3.1%, the S&P 500 rose 2.3% and the Nasdaq Composite rose 4.2% last week.

The last time the Dow Jones Industrial Average rose for 11 weeks out of 13 was in the May-to-September period in 2003, when it rose 13 out of 15 weeks.

The recent gains have some worried that a pullback could come.

"It is easy to become very positive given the scale of improvement in the macro dataflow as well as in some of the technical indicators, and especially after a near-40% gain in the U.S. market from early March," added David Shairp, a strategist at J.P. Morgan Asset Management, in a research note. "However, set against this is the fact that several markets are looking extended; relative strength indicators are elevated and sector breadth is at extremes, suggesting that markets look in need of a breather."

The sell-off in the bond market also has fueled concern about stock valuations. Yields on 10-year Treasury notes fell 4 basis points to 3.80%. Yields move in the opposite direction to prices.

The dollar extended Friday's strength against major rivals, notably the British pound and the euro, after the payrolls data. News that Standard & Poor's downgraded Ireland's credit rating also had a negative euro impact.

Oil futures fell 75 cents a barrel, and gold futures fell sharply, losing around $13 an ounce.

Citi /quotes/comstock/13*!c/quotes/nls/c (C 3.43, +0.01, +0.29%) slipped 2% and Bank of America /quotes/comstock/13*!bac/quotes/nls/bac (BAC 12.06, +0.20, +1.69%) also fell on the deadline for federal bank regulators to approve capital-raising plans.

Palm /quotes/comstock/15*!palm/quotes/nls/palm (PALM 12.13, -0.03, -0.25%) and the mobile operator Sprint Nextel /quotes/comstock/13*!s/quotes/nls/s (S 4.99, +0.03, +0.61%) will be in the spotlight as the Pre went on sale over the weekend.

Citi analysts said Pre is off to a solid start with sell outs across the country as the broker estimated that between 35,000 and 60,000 units were sold. After initial pre-market gains, Palm shares dropped 4%.

Meanwhile, Apple /quotes/comstock/15*!aapl/quotes/nls/aapl (AAPL 143.95, +0.10, +0.07%) is holding its worldwide developers conference, with the company expected to announce a new iPhone model. The keynote speech is expected to be delivered at 1 p.m. Eastern, with attention being put as much as to what's said as to who's delivering it -- the company has previously said Steve Jobs will return as chief executive at the end of June. Apple slipped over 1%.

General Mills /quotes/comstock/13*!gis/quotes/nls/gis (GIS 54.30, +0.08, +0.15%) rose nearly 2% as it increased its view on fiscal 2009 earnings per share.

Barclays /quotes/comstock/13*!bcs/quotes/nls/bcs (BCS 18.50, +0.15, +0.82%) said it's in talks about selling its fund management unit Barclays Global Investors to BlackRock /quotes/comstock/13*!blk/quotes/nls/blk (BLK 168.95, -0.41, -0.24%) .

The weaker yen helped automotive and technology shares in Tokyo, with the Nikkei 225 closing 1% higher. But South Korea's Kospi Composite index ended 0.1% lower, and the Hang Seng Composite index in Hong Kong closed 2.3% lower.

Stocks were weaker in Europe, with the Stoxx 600 falling 1.3%.

Yes, You Can Still Find Cheap Stocks

Lots of stocks looked cheap three months ago. Now, though, after a powerful rally that has gone nearly nonstop since March, a quick look at the bargain bin won't show you a very good selection to choose from.

Experienced value investors have made fortunes over the years by picking the right times to buy beaten-down stocks, and those who managed the perfect timing of buying near early March's lows struck paydirt. The last U.S. automaker standing, Ford Motor (NYSE: F), has seen shares rise more than 265% since March 9, while battered financials Citigroup and Bank of America (NYSE: BAC) have also tripled.

Now that those "obvious" bounce-back candidates have played out, where should you look next for value? Or is there simply nothing cheap left in the market?

Who missed the rally
Above all, value investors are contrarians, often swimming against the crowd in order to capitalize on opportunities that other investors ignore. So one natural place that you might look for good values is in the companies that really haven't seen big gains in the recent rally.

On that theory, I decided to comb through good-sized companies whose stocks still trade at reasonable earnings multiples below the market's average of around 13. I then narrowed down the results to include only those stocks that haven't seen the same sorts of big gains since March that most stocks have. The results included a number of interesting candidates for future research, such as the following companies:

Stock	CAPS Rating (out of 5)	P/E ratio	Return Since March 9
Cardinal Health (NYSE: CAH)	*****	9.3	4.1%
GameStop (NYSE: GME)	***	9.9	4.3%
PG&E (NYSE: PCG)	*****	10.3	6.9%
Archer-Daniels-Midland (NYSE: ADM)	****	8.9	8.7%
Altria (NYSE: MO)	****	11.5	9.5%
ExxonMobil	****	9.6	13.7%

Source: Yahoo! Finance, Motley Fool CAPS. P/E = price-to-earnings ratio.

Of course, just because a stock shows up on this list doesn't mean that it's automatically a good value. However, given the fact that many members of The Motley Fool's CAPS community believe that these stocks have solid prospects, it's worth a look to try to figure out why they've missed out on the ongoing rally.

Falling behind or staying ahead?
Obviously, several companies that have lagged the market can point to specific announcements that justify their underperformance. GameStop, for instance, has seen its once-lucrative niche market for used video games and game consoles finally attract the interest of competitors, and in a tough retail market, the company guided second-quarter earnings projections downward. Similarly, troubles with the IRS and fear of health-care reform have kept shares of Cardinal Health from participating in the rally.

With some of the other companies, though, recent underperformance masks longer-term strength in share prices. For instance, even though it's up only 7% since March, PG&E shares are actually up over the past year, as opposed to a loss of more than 30% for the S&P 500. Similarly, since mid-2007, Altria and Exxon have both held their own despite the weak overall market. They're down an average of 6% and 4% per year, respectively, with the S&P down more than 20% per year.

In other words, these stocks haven't lagged during the most recent rally because they're not good stocks. It's just that they never fell as much as the market in the first place -- so they didn't have to put in triple-digit returns just to get closer to breakeven.

Forget the rally
The takeaway from this is that you shouldn't focus on stock performance over short periods of time to judge whether a stock is a good value. Sometimes, stocks with amazing short-term returns will continue to outshine their peers for months or even years to come. Those that stay flat or fall when the rest of the market is rising may also continue to lag behind well into the future.

You won't find good value stocks just by seeing how their short-term returns compare to those of other stocks. How shares have done over three months is much less important than how a company's actual business compares to its competition. Only by looking at a company's long-term record and prospects will you find the best companies that truly are great values.

Stocks end flat as unemployment rate checks gains

NEW YORK -With unemployment still rising, investors are questioning if stocks should be, too.

Stocks ended a volatile day Friday little changed after the government reported a spike in the unemployment rate to 9.4 percent in May, the highest level in more than 25 years, even as the pace of layoffs eased more than expected.

The Dow Jones industrial average finished up almost 13 points at 8,763.13, just 14 points below where it started the year. The index had advanced as much as 89 points and moved in and out of positive territory for 2009 during the day, but the jump in the unemployment rate proved to be too tough to ignore.

"When nearly 10 percent of people are out of work, it's hard for me to say things are so positive," said Anthony Conroy, head trader for BNY ConvergEx Group.

Bond prices tumbled again, sending long-term yields to their highest levels this year. Those yields are closely tied to interest rates on mortgages and other kinds of consumer loans.

Investors track unemployment closely since jobless people are far more likely to default on their debts and slash their spending, potentially exacerbating two of the most troubled spots in the economy right now: Consumer spending and the ailing financial industry.

Despite the troubling jobs data, the Dow and other major stock indexes finished the week higher. Although the Dow is still 38.1 percent below its October 2007 high, it has charged ahead 33.9 percent since hitting a 12-year low in early March.

"The markets are feeling better even though the economy is still sick," Conroy said.

The Dow rose 12.89, or 0.2 percent, to 8,763.13. The Standard & Poor's 500 index fell 2.37, or 0.3 percent, to 940.09, and the Nasdaq composite index fell 0.60, or less than 0.1 percent, to 1,849.42.

The Dow is up 3 percent for the week, while the S&P 500 is up 2 percent and the Nasdaq is up 3.7 percent. It was the major indexes' third straight week of gains.

The Labor Department said employers cut 345,000 jobs in May, far less than the 520,000 economists predicted, a hopeful sign for the job market. But the report also showed that the unemployment rate surged to 9.4 percent from 8.9 percent in April, suggesting that companies are still reluctant to hire.

The jobless rate is considered a "lagging" indicator, meaning that it usually recovers after the rest of the economy does. But economists expect the rate to keep rising.

"That is difficult to get comfortable with," said Richard Hughes, co-president of Portfolio Management Consultants.

May's job losses, the fewest since September, appeared too good to be true to some investors. Speculation swept the trading floors Friday morning that the government had misreported the job cut figure, sending stocks lower in midmorning trading before the Labor Department shot down the rumor.

Bond prices plunged as investors viewed the jobs data as a positive sign for the economy and shifted more funds out of bonds. Investors tend to load up on bonds, which are considered a safe-haven investment, during times of economic distress, and sell them when signs of recovery emerge.

The yield on the benchmark 10-year Treasury note, a widely used benchmark for interest rates on mortgages and other kinds of loans, jumped to a fresh high for the year of 3.91 percent from 3.71 percent late Thursday. By late Friday, the 10-year note's yield was 3.84 percent.

"There is pretty good evidence that the recession is bottoming," said Doug Roberts, chief investment strategist of ChannelCapitalResearch.com. "The real question is the type of recovery. Just because we're reaching a bottom doesn't mean a bounce is imminent."

Next week, investors will decide whether to extend the market's advance or cash in profits as they confront data from the Federal Reserve on regional economies; a report on retail sales from the Commerce Department; and a reading on consumer sentiment from the University of Michigan.

Stocks have rallied sharply over the past three months as improving economic data and better performance at banks gives investors hope that the recession could end some time this year.

But the banking system is hardly on firm footing. On Friday, The Wall Street Journal reported that the Federal Deposit Insurance Corp. is pressing for a management shake-up at Citigroup Inc. The embattled New York-based bank has already received $45 billion in government rescue funds. Last month, the government determined that it would need to raise an additional $5.5 billion as a buffer against future losses.

Citigroup fell 11 cents, or 3.1 percent, to $3.46.

Many analysts believe the stock market should keep rising, but in recent weeks investors have become worried about rising commodity prices and the sinking dollar, which can lead to inflation. Those inflation fears are lifting Treasury yields, which in turn are boosting mortgage rates and impeding borrowers' plans to refinance.

Arthur Hogan, chief market analyst at Jefferies & Co., said he has been recommending to clients that they invest in industries that do well if inflation accelerates. That means companies dealing in hard assets, such as energy, materials and industrial companies. Hogan has been advising against investing in financial firms and companies that rely on discretionary spending by consumers, such as retailers.

Oil prices briefly surpassed $70 a barrel following the jobs report, but retreated to close down 37 cents at $68.44 a barrel.

In other U.S. trading, the Russell 2000 index of smaller companies fell 1.32, or 0.3 percent, to 530.36.

Declining stocks narrowly outnumbered advancers on the New York Stock Exchange, where consolidated volume came to 5.2 billion shares, up from 5.1 billion Thursday.

Overseas, Japan's Nikkei stock average gained 1.0 percent. Britain's FTSE 100 rose 1.2 percent, Germany's DAX index rose 0.2 percent, and France's CAC-40 rose 0.8 percent.

―

The Dow Jones industrial average closed the week up 262.80, or 3.1 percent, at 8,763.13. The Standard & Poor's 500 index rose 20.95, or 2.3 percent, to 940.09. The Nasdaq composite index rose 75.09, or 4.2 percent, to 1,849.42.

The Russell 2000 index, which tracks the performance of small company stocks, rose 28.78, or 5.7 percent, for the week to 530.36.

The Dow Jones U.S. Total Stock Market Index ― which measures nearly all U.S.-based companies ― ended at 9,654.77, up 246.52, or 2.6 percent, for the week. A year ago, the index was at 14,339.94.

Copyright 2009 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

TOP STOCKS:When It Pays to Hire a Financial Professional

Paying a financial planner an ongoing fee to handle every aspect of your financial plan can make sense if you're extremely time-pressed or if your finances are particularly complicated. Ditto if you're very rich. Paying for ongoing financial advice (and hand-holding) may also be worth it if you've had trouble sticking with your investment plan through the market's many ups and downs. The best advisors earn their keep many times over by saving investors from their own worst tendencies to buy high and sell low.

About the Author

Christine Benz is Morningstar's director of personal finance, editor of Morningstar PracticalFinance, and author of the Morningstar Guide to Mutual Funds. Meet Morningstar's other investing specialists.

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For most other investors, however, I'd argue that it's not that difficult to create a sensible investment plan on your own, and helping you do that is the focus of my newsletter, Morningstar PracticalFinance. At the same time, I'd also tell you that you're better off delegating certain financial tasks--some of them investment-related, some of them only tangentially so--to a professional. Paying for advice on an a la carte basis enables you to pick and choose the best professional for a given job. For example, you should turn to an attorney to draft your estate plan, whereas a well-versed accountant or advisor may help you manage your stock options.

I'm all for keeping your finance-related costs as low as they can be, but here are a few of the key tasks where paying for professional advice is apt to be money well spent. (Note: This is not an inclusive list.)

Setting Up an Estate Plan
A quick Google search turns up scores of Web sites geared toward helping you write your own will. Creating a will in this fashion may be better than doing nothing, and an estate-planning kit may suit your needs if your situation is particularly uncomplicated and "vanilla."

However, it's hard to know whether your situation is truly generic or out of the ordinary unless you have basic knowledge of estate-planning issues and terminology. For example, you may want to treat your free-spending son differently in your estate plan than you would your financially fit daughter. Having a high net worth, previous marriages, a special-needs beneficiary, or strong charitable interests--just to name a few situations--may also call for a more customized estate plan.

That's where a competent estate-planning attorney comes in. He or she will ask you scores of questions about your own situation and what you hope to achieve with your estate plan and then ensure that your estate-planning documents are a reflection of your wants and needs. A good estate-planning attorney can also help you with the aspects of estate-planning that extend beyond your will, including setting up trusts, appointing powers of attorney, and making sure that your beneficiary designations are simpatico with the rest of your estate plan. Finally, an estate-planning attorney can help you keep your plan up to date as your life changes. For a discussion of some of the pitfalls of improperly drafted estate plans, read this article.

Handling Stock Options
Over the years, I've frequently served as an informal teacher and coach to friends and colleagues on the topic of stock options. In the course of these discussions, I've often wondered why the tax treatment of options is as Byzantine as it is and how anyone navigates this minefield without some outside help.

Because stock options can prompt knotty tax questions (and the exercise of incentive stock options may trigger the dreaded Alternative Minimum Tax), an accountant who has had plenty of experience with stock options should be your first resource if you're attempting to navigate the stock-option maze. You don't want to settle for an accountant who deals with stock options just once or twice a year--you want someone who has witnessed many different scenarios and can propose a range of solutions.

But stock options aren't just complicated because of taxes. In fact, most accountants would acknowledge that an assessment of your company's future stock performance trumps taxes when it comes to deciding how to manage your stock options. Thus, if your accountant isn't comfortable discussing investment issues, you may also want to turn to an investment advisor to decide how to manage your options. An advisor or accountant can also provide a much needed "fresh set of eyes" in this situation, thereby helping ensure that you're looking at your company's prospects in an objective light.

In a similar vein, you may also want to turn to an accountant and/or financial advisor for guidance if your portfolio includes company stock or restricted stock.

Creating a Retirement Plan If You're Self-Employed
In addition to being able to make their own hours and work in their slippers on occasion, self-employed individuals have another perk that the rest of us worker bees don't enjoy: They have the opportunity to save even more in their retirement plans. Whereas most individuals can put as much as $16,500 in their company retirement plans in 2009 ($22,000 if you're older than 50), the self-employed can receive tax breaks on as much as $49,000 in retirement savings. And if you're the one setting up the plan, you can select the plan that best suits your needs.

On the downside, entrepreneurs have a dizzying array of retirement plans from which to choose, ranging from SEP IRAs to 401(k)s to profit-sharing plans to defined-benefit plans. Selecting the right one for you depends on many different factors, including the size of your business, the number of employees you have, the administrative costs of getting it up and running, and the size and frequency of your expected contributions. Hiring a financial advisor, preferably one who specializes in setting up these plans, can help you navigate the many choices.

Getting Ready for Retirement
With inflation spiking, figuring out whether you'll have enough to retire is complicated enough. To further complicate matters, many individuals retire with multiple sources of retirement income--a company retirement plan, multiple IRAs, taxable assets, and of course Social Security. (If your spouse has retirement assets in his or her name, that adds an additional layer of complexity.) That raises the question of whether your current assets will generate an adequate income stream, as well as what sequence you should use when tapping those assets. This article provides a primer on some of the key considerations for pre-retirees looking to begin tapping their assets, but as you'll see, it's plenty complicated. Hiring a financial advisor at this juncture can be invaluable in helping you think through all of the key issues, project cash flows from your various sources of retirement income, and arrive at a retirement strategy that makes sense for you.

Oil closes the week down after breaking through $70

Earlier this week we were looking at oil prices, and wondering if we would see the precious crude break through the psychological $70 barrier, and that is exactly what we saw today.

For the first time since last November, oil prices were briefly above $70 today, moving up as high as $70.32 before profit taking pushed oil prices down on the day. We finished up the week at $68.44, down 37 cents.

We were seeing a rally once more in oil following a better than expected report today on May jobless claims. While unemployment did move higher, to a national 9.4% rate, the number of new jobless claims was well below what experts had been expecting to see, another sign that the U.S. may be starting to come out of its current recession.

Prices have definitely been moving sharply higher the past couple of months, and there is really no reason to believe that we should expect a pull back any time soon. Summer months always put a strain on oil supplies as more people on the road traveling and using more gasoline. Gasoline prices have also been moving with oil, with the national average now sitting at $2.59 a gallon. Let's remember that it was not that long ago that most analysts predicted we would top out at $2.50 a gallon during the peak summer months.

Goldman Sachs (NYSE: GS) is now forecasting that we could be looking at oil moving up as high as $85 a barrel by the end of this year. The company believes that the current economic slowdown is going to continue to ease and we are in store for an energy shortage in the months to come. Large oil producers in OPEC, Saudi Arabia in particular have already stated that they believe oil would be reasonably priced somewhere between $75 and $80 a barrel, and this is a level that is not only fair, but one that global economies can bear.

After hitting a fresh 7 month high today, oil was hit pretty hard by profit takers which pushed the prices sharply lower, all the way down to $67.54, but it was able to hold above support at the $67.50 level.

Will oil prices continue to climb next week? Only time will tell, but I would not be surprised to see at least another $2 or $3 jump next week as we continue to move deeper into the heavy summer driving months.

What are you seeing in your part of the country in terms of gasoline prices? Let us hear what you are paying, and if the recent run up in gasoline prices has you second guessing your summer vacation plans.

BEST STOCKS:Comfort Zone Investing: Is Ford a buy?

Ford (NYSE: F) is the last of the "Big" Three standing on its own two feet. Chrysler and General Motors (OTC: GMGMQ) are on crutches supplied by the federal government. While they're both still upright, those crutches are mighty expensive (the government will own 60% of GM when it emerges from bankruptcy).

Speaking of bankruptcy, Chrysler is already on the other side and now a partner with Fiat. That was perhaps the fastest legal action ever seen. Usually bankruptcy takes between 18 months to two years before a new company emerges.

That wasn't the case with Chrysler, nor will it be for GM. It's not in the government's best interest to have a protracted GM bankruptcy. The sooner it emerges as the "new" GM, the faster it has the potential to make money. Whether it can is another question. But the usual drawn out legal proceedings (having to do with creditors and how much each one gets) will not be part of the GM deal. All creditors have agreed to their settlement amounts. Look for GM to be out of the court system within weeks, not months. When it emerges, will it be competitive? It's a whole new ballgame with the government looking over management's shoulders and being involved in major decisions as to what cars to build and what advertising to use, etc. Do you like the way the federal government is run now? Wait until they take control of GM and see how well that works.

So that leaves Ford, the blue oval. It still is printing red ink. But it doesn't have any government money. It's free and clear from government managerial interference. Of course, it still has regulatory issues, but those are different from day to day decisions as to what models to build and where to allocate funds. Ford is free to choose. Of course, if you look at its track record, that could be troubling. It's managed to lose market share year after year after year. Now there's an opportunity to regain some of that as its two normal rivals have been shaken to their very plants. And it has a new CEO: Alan Mulally who has been very right about raising capital when he could and selling certain assets that weren't profitable. He's making a positive difference.

But as we all know, the car business is not just about Chrysler and GM. There's also Toyota Motors (NYSE: TM) and Nissan (NASDAQ: NSANY) and Honda (NYSE: HMC) from Japan (though many of these cars and SUVs are now made in the U.S. ... the parent is headquartered in Japan and that's where the money ends up). South Korea has entered full force with Hyundai and its Genesis sedans and coupes, both big hits and big bargains. Then there's one more giant lurking offshore: the Chinese. They can't wait to get here and start selling their Geeleys and Cherys. The Beijing auto show was where several new models were introduced by global manufacturers, a first for many of them. The Chinese love their cars, and they're building lots of them. They're happy to build more for us.

Another element to consider: the auto suppliers have been decimated by Chrysler and GM's demise. They also make seats and radios and tires and many parts for Ford cars. And if some go out of business from lack of volume, then Ford will have to scurry to find replacements, never an easy task, especially if a company has supplied parts for many years. The learning curve for getting the shipments right and on time is long and frustrating.

Ford is still running its plants, looking to add capacity to help fill the vacuum that GM and Chrysler will leave, at least for a while. That has to mean more sales, at least in the short run, doesn't it? True enough for the sales part but not necessarily for Ford. Toyota and all the other manufacturers are going after the same customer. And the vacuum won't be too large because the models GM and Chrysler will eliminate are the ones not selling well. Their numbers have declined for many years. They weren't competitive so they had to go. The vacuum may not be as large as some would think.

One more element: car nuts, the people who buy new cars every year or every couple of years. They are emotional about their purchases, not rational. A car is not just a car to them. They are in love with their cars. With that emotional bonding, it's hard for a car manufacturer to get them to switch brands. In other words, if you've fallen in love with the new Camaro, you're not going to buy a Mustang. They're two completely different cars, at least in style. One appeals to some, but not the other. No amount of advertising will convince a buyer otherwise. How large is this group? Hard to put a number on them, but it is large.

Even in bankruptcy, GM and Chrysler are making cars and will continue to do so. Are their warranties worth anything? The government says they are, backing them up with its own guarantee. That should keep the Chevy and Jeep buyers coming to the showrooms, but it's a question every buyer is asking. Ford doesn't have that concern.

Furthermore, Ford is the most eco-friendly producer, making more hybrid models than any other manufacturer. If consumers want green cars, Ford has more choices. However, if gas stays below $3 a gallon, it's already been shown that hybrids are worth only a glance as customers head for the cars and trucks with powerful, gas swilling engines. People may voice their concern for the planet, their desire for electric cars, but their wallets are opening for cars and trucks that sound and drive like what they're used to.

Ford is definitely in better shape than GM and Chrysler. That's obvious. But whether it can capitalize on the current opportunity is another. All other non-government aided manufacturers are going after the same customer. And if hybrids really are what customers want, Ford will benefit. It seems hybrids are if gas prices are high. If gas goes up again, that will certainly help Ford.

The stock is trading around $6 a share, well above its low of $1.01 hit on June 2 of last year. That's up 500% in a year. Considering that analysts see a loss of $2.35 this year and 39 cents loss next year, the stock may well be ahead of the numbers. Its book value is negative $6.12 a share. Add those other two years of losses, if analysts are correct, and its book value goes to a negative $8.86. It takes a lot of faith in hybrids and market share growth to justify Ford at this time.