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Tag Archives: Schwab

October 2008 Issue

Don’t give up the ship! No, we haven’t heard the last of the financial
explosions that have wracked Wall Street for the past year or more. In
September alone, Lehman Brothers vanished, hard on the heels of Fannie
Mae and Freddie Mac. AIG, under the gun, sold 80% of itself to the
federal government. And another major bank or brokerage firm may face a
life-or-death struggle before calm returns.

As awful as the headlines may seem, though, the crisis is closer to its end
than its beginning. Better times are coming, probably before year-end but
almost certainly in 2009.

In this month’s visit, I’ll share with you three reasons to be hopeful about
the economy and stock market over the next 12�15 months. Pundits are
largely ignoring these positives, which means that share prices could leap
higher, and faster, than most folks expect if just a couple of things go right.
I’ll also reveal the one type of stock that will likely outpace 75% of the
market in the year ahead–and a simple way to add this winning horse to
your stable. (Hint: The ticker symbol is MDY!)

Difference of Opinion

An interesting question came in from a reader the other day. This gentleman points out that Liz Ann Sonders, chief investment strategist at Schwab, is predicting a recession and urging investors to adopt a defensive stance. How, he asks, do I explain the fact that Liz Ann and I are “180 degrees apart” in our thinking?

ARM-WRESTLING SCHWAB

Tip the cap to Chris Davis, fearless skipper of Selected American Shares (SLASX), one of my longtime favorite mutual funds. Davis had the guts to face down the fee hogs at Charles Schwab & Co., even though it will undoubtedly cost him some assets under management.

LOOKING FOR THE BOTTOM

When will this stock market �correction� be over? Monday may have marked the bottom, but more likely the final low still lies a week or two off.

Normally, the market forms an initial bottom (as it did March 11 and 15) with a great deal of downside energy. Then, after an interval of a couple of days to a few weeks, prices trace out a second, quieter bottom. At the second bottom, some stock indexes may touch new lows for the pullback, while others don’t.