My Financial Tips

Online stock trading can expose market conditions and history for anybody who is paying attention.

It takes a little investigation, but snap shots of market history and conditions are available.

Doubtless the most important thing is to recognize the various bubbles that come along. This is where the strength of on-line stock trading and options trading can be front and center. So much data is within our reach. There is no reason to float up in any bubbles up higher than you want to go. Acting as online stock brokers or options brokers, the data is all at our fingertips.

In the 1990’s, we had the technology stocks bubble. There was to be no end to the increase in technology stocks.

The internet had reached a critical mass of sorts, though it was (and is) still evolving; yet, like the climb of past communication systems — telephone and ra-dio– there was a huge run up in the stock of many companies that really had no viable business plan.
IPOs were made on the basis of promises that held no more heft than a cool breeze in the tropics. Venture capitalists emptied their pockets into the piggy banks of kids still in college that started companies with names that sounded like a baby talk, such as “Google”.

A few obviously made it, Google being the shining example. Most startups of the time didn’t. Even some older companies that had a solid history in technology left their straight and narrow and tried to innovate way beyond their curve, most with disastrous results.

Then September 11 interrupted the markets and threatened to send the country and the markets into a tailspin. Interest rates were lowered and even though many had lost millions and billions in the tech stock bubble, the easy and now cheap money was pouring into a so-called bedrock investment: real estate.

There have always been bubbles and manias. Just ask the Dutch, who saw tulips trade for more than gems centuries ago. The madness of the masses not wanting to be left out creates a “me too” type of thinking. All the lemmings buy.

Real estate has always had a speculative side. Levittown, NY, the first mass market tract housing suburb, was built mainly on speculation. However, it was not pie- in- sky, as a number of factors such as better roads, returning World War II service men and the longing to leave the inner cities came together in the right fashion to make the smart money spend a little there.

Today’s issues in real estate have been intensified by government distortions in the lending standards and free and easy money. These two prongs of the pitch fork have been added to a third prong of packaging up this devil’s brew of promises and selling them across the world.

All is well and good when the bubble is floating upward; a real stab to the heart when the bubble starts to lose altitude.