Investments in municipal bonds is a bit 'like the kiss of your grandmother, it is comforting, but not particularly exciting. Recently, however, by an extraordinary media attention is the issuance of municipal bonds to a very uncomfortable topic for many investors. Recent headlines in national newspapers including celebrities like saying titles such as "mourning the Muni market", "Say disturb titles Muni Bond Investors" and "debts mounting fears were fed the crisis." EList goes on.

If the municipal bond market here in front of a real crisis, or is it really a case of journalistic sensationalism? Perhaps a more important question: what are the consequences if you market an investor in municipal bonds, or an investor in the stock market? For reasons I discussed shortly, I believe that investors in equity markets may not have the big picture, and actually had to bondholders lose most by the crisis than the actual municipal bondTo lose. In 2008, many stock investors suffered huge losses, because only the resources themselves, and usually do not borrow to pay attention to the problems taking place in the market for the bank during the night. Similarly, the ongoing problems in the municipal bond markets, the country should be closely monitored by investors because of the anti-growth taxes and expenses for all policies are implemented.

Let's start with the beginningmunicipal bond market itself, and then our attention on the financial implications for the broader stock market. Recent press reports suggest that 5-10 may local needs in the coming year are from. This would be a historically high number, even if true, this is a very small percentage of a whole. In particular, the state and municipal bond market about $ 2800000000000 in size, with over 60,000 different titles. So, even if by default, in addition to 100 numbersThis year represents only 0.2% of the total. Moreover, according to a recent article in the Wall Street Journal, in the last 40 years there have been only 54 cases of Moody's rating of municipal insolvency was. Of these, 78% in the seat and stand-alone health projects. (Wall Street Journal: "new risks emerge in Muni's" November 10, 2010). contains the number of individual titles, this is a very low rate of default history and shows that cases oftrue by default in the county of the city, and also at the state level is extremely rare.

The media love, in which Vallejo, California, and Harrisburg, Pennsylvania – two cities with serious financial problems – but nothing of the thousands of cities, counties and various government bodies that never misses a single payment, the bondholder said . As outlined in Moody's data, which are most common bond requirements of revenue bonds to project specifications. These are not general obligation bonds,by the full faith and taxing powers of the town of emission limits. Without doubt, the vast majority of general obligation municipal bonds continue to be very creditworthy and is a solid investment for tax-sensitive investors with a need remains of income.

However, as suggested above, even if our worst fears prove true, investors in municipal bonds are probably not linked to the most vulnerable groups – are the investors may lose more in thisCrisis. Why? First, we must first understand that every 7 workers actually work in the United States for a municipality, including the state, provincial and municipal authorities for transport, police, school districts, and so on. That's right, 15% of all workers in this country working for a municipal government or public nature together, this means that "Local America" ​​is by far the largest employer in the country, and the employer work aftera disastrous financial situation. In addition, 13% of the total U.S. economic output (ie gross domestic product) of municipal expenditure. This means that municipal spending to represent the second largest component of the total U.S. economy, consumption is the greatest. Consequently, the real danger to our financial system, the potential for dozens of municipal bonds in default is a real risk that thousands of communities are forced to flee or to leave hundreds of thousands of layEmployees and significantly reduce spending and services in order to tilt the fragile U.S. economy into recession. In turns out that all these developments have already begun.

In fact, states and municipalities have been cutting the wages and salary increases in speed over the past 12 months, with about 250,000 jobs in 2010 alone, lost, lost the top of 130,000 jobs in 2009. Even more interesting: In January 2008, the U.S. economy added 7.2 million jobs, but overall the state and has lostlistings of local employment fell only 225,000 cumulatively over the last three years. Since the latter group represents 15% of total employment, one would expect a proportional share of these jobs were lost here, but that was not the case. If so, then the state and local authorities over 1.1 million jobs have been lost. Because local authorities do not start cutting wages and salaries has been in large numbers up to one year after the onset of recession, it is reasonable to think thatsignificant losses, are now heavily upon us, and we can up to 1 million jobs from more state and local payrolls in the coming years to cut.

But even this understates the total economic impact of municipal waste economic policies, because it has only lost jobs, with the exception of the remuneration of employees who have seen only the leaves of absence, freezes, benefit cuts and so on. A recent New York Times titled "The crisis is looming in the U.S.," said that "government spending fell by 3.8 per cent in 2009The fiscal year and 7.3 percent more in fiscal year 2010. "

If you happen to be a municipal entity, it is likely that recently adopted a hiring freeze, a block with pay, restrictions on working hours and be seen so on. Many of the projects by the Recovery and Reinvestment Act of 2009 will soon be financed and communities are not engaged in large expenditures for new infrastructure projects. This will lead to a significant reduction in construction spending. Finally, ifThey occur in an unfortunate set of states as Illinois, will soon pay much higher rates and receive reduced services. Illinois has recently launched its state income tax from 3% to 5%, the average family of four will cost about $ 1,000 more per year. Similarly, the newly elected governor of California is proposing tax increases in $ 12000000000 $ 12500000000 more in spending cuts for next year, with cuts in health, welfare, community madeSchools, universities, institutes for the disabled to pay for state employees, and so on. This is very good news for bond holders Illinois and California, but bad news for nearly all residents, workers and the country's economy, as well as companies that do business with the state.

municipal councils are still painful decisions in 2011 and 2012, but most face their problems in a logical order: financial discipline. This is good news for municipal bondInvestors. But if the trend continues, as it almost certain that further reduces the prospects of a broad economic recovery in 2011 and 2012, which means that the municipal bond crisis is worrying for the stock market than most investors realize. Some types of businesses will be hit hard, of course, the construction companies, information technology and services, among others. Communities to return to new construction projects, and they will move to upgradeSystems and technologies for another year or more. Service companies, which depend on contracts with state and local authorities are also injured.

Remembering the lesson of 2008, investors are stocks as the markets pay attention to the continuing crisis in the municipal bond. Financial saving measures in all state and local agencies are to make the 2011 and 2012, very difficult year for many local businesses and create a significant downward pressure on consumerSpending and corporate profits in the process.

The stock market is money to earn a lucrative field, but only if you know what you're doing. So, who is planning to invest in the stock exchange, to be sure all the facts and information before an actual investment is made.

Information gathering has become so easy these days and all you have to do is go online and start searching. So, for the basic information you can visit some Web sites, the market tell you everything about the stock marketand how it works.

A bag very simplistic analogy is like real estate. You buy a piece of land, which vary in price and if it is higher than the price paid for it, you can sell and make a profit. Of course, this solution also lies in a very fundamental difficulty, and that is knowing when to sell and when not.

The sad truth is that absolutely none of the market with a 100% accuracy to predict. There is always speculation and assumption. So, if theValue of a stock is rising and you're waiting for sales, be aware that the stock could drop suddenly and you lose sales at its peak. On the other hand, if you want to sell quickly, you may regret it immediately if you see that you have sold for twice as much if they had waited a little 'longer.

There are several ways, the dealers will keep stock of their activities and keep the market in general. These include the continuous monitoring ofand use of software to keep the stock market who invested in shares,

An eye on the news is also important because the stock market is strongly influenced world events in the real world and all of a change of government, for a terrorist attack can greatly influence the development of stock markets around the world.

For this reason, you will notice that brokers often obsessively pursue financialTV news channels to know exactly what is happening and what the experts say. There are some famous analysts, which are often presented on television and for beginners and intermediate players, hear what they say about the industry could be very useful.

So it may be obvious from the description so far to maintain an active stock market portfolio is not an easy task. You must keep track of times the stock market in general. You need to now what happens in real time.There are many websites that will separate each of these functions, ie, the monitoring software, articles for professionals of all levels and financial TV. But there are some websites that offer an all-in-one solution for all your needs into action. This site offers a complete solution for all that you pursue in an affordable package easy to maintain. You can be a beginner or a veteran, continues to benefit from that place.

The total value of financial assets decreased 50 trillion dollars over the past two years, half because of the Bronco-busting journey in the stock market. Those who stand or with the courage necessary to take into account in order to return the horse (or should I say? bear) Could some learned their lesson from the painful experience to be considered:

We live in a global economy, with a global stock market. The United States is still the main engine of world economic growth. But the European Unionis now the largest single market economy in the world and the BRIC countries (Brazil, Russia, India and China) is most likely related to other emerging economies will drive global economic growth for generations to come. Ten years ago, the capitalization of the United States includes half of the global stock market, but now its share is about one fourth of the global stock market. U.S. investors, the risks and opportunities that are coming out look inextricably linked together,in this global market.

Diversification is still the only "free lunch" investment. Many believe that the recent crisis in all classes of shares means that diversification does not work. However, diversification promises only to reduce portfolio risk by reducing the risks specific to individual plants, he never promised to investors in general market risk, which is exactly what we have lived in seclusion for the last two years. Diversification is stillan important tool to mitigate risk resulting from the combination of asset classes (stocks, bonds, etc.) or the combination of diversity within a specific asset class such as equities. In fact, many experts believe that to maximize risk-adjusted returns, a portfolio mix of many types of assets, even more important than the mix of stocks in a portfolio. Therefore, you should first stop, where the allocation of resources for stocks, bonds, gold, etc. The share ratio issecondary importance. Within the class of shares, investors traditionally try to) the diversification by industry, geography, investment style (eg growth compared to the value) or market capitalization (eg nano, micro, small , medium, large, mega-cap to minimize the risks of specific investments in the long term.

Balance, if BE recent long-term INVESTMENTS.The dramatic increase in the volatility of equity markets in recent years, a professionalParadise Tour, but also to other investors created an unpredictable environment. Therefore, investors with a long-term investment horizon of at least 5 years and preferably 7-10 years for their stock portfolios. A long period of sustained and dramatic impact to provide the flexibility of the market recover. Strict-and-hold strategies for buying individual stocks are not recommended, but have to sell stock of items at short notice to raise funds for other purposesinvestment will not produce satisfactory results. Stocks "liquid" investments, but the "fire" sales dramatically discounted prices offered little party consolation.

INVESTMENTS IN "Blue Chip" companies can not guarantee the success of investment security. Last year, passed away a few years of venerable institutions or termination of the government's heroic rescue saved. AIG, Citigroup, Lehman, Fannie and Freddie, and many other familiar names on this list. A studyof the 30 stocks in the Dow Jones Industrial Average shows that even large companies outside the financial sector dramatically lost value, some under $ 10 per share, last year. The last two years has shown that the idea of buying stakes in large companies today and blindly believe that is a thing of the past '.

Part 2 will highlight the lessons specifically for managing your money in these turbulent and uncertain times.

Jack and Jill went up the hill to fetch a bucket of ?money. Money? They are continuing to fill their bucket with stocks without any consideration to the value of these equities. They are not worried at all as they are buying ?safe? mutual funds.

Everyone knows mutual funds are safe. Jack and Jill know they don?t know how to pick good stocks so they leave that to the fund manager. He is an expert.

When you look at the long term record of 99% of the mutual funds you will see that expertise has been sadly lacking. I hate to remind you of the 2000 to 2003 period, but I must. In fact I must tell you it is going to happen again. Now you want to know when?.and so do I.

And that is the problem with almost every fund manager. As long as the market is going up they can?t do much damage to your account, but when it rolls over and heads down they have no idea how to invest when a bear market is in progress. Not a single one of them will acknowledge that cash is a position.

Cash is a position? They are in shock. Of course they are. If brokerage customers put their money in a money market account while the market is falling it means they do not make any commission at all and if they recommend this to their customers the brokerage manager will fire them because he won?t make any money either. ?Keep your customers fully invested or I?ll show you the door? is the manager?s comment.

You must learn when to sell. Any fool can buy, but it is the wise man who knows when to sell. To see the condition of the overall market one of the best indicators is the SP500 Index. Your broker compares everything he does with the SP500 because it is a broad base of 500 stocks that are widely traded.

The finest indicator is the SP500 Index. Draw a 40-week chart of the closing prices. If you don?t know how ask your broker. He will tell you. Write it down and save it. It is very simple. Have him set up a 40-week Simple Moving Average to appear on that chart. Look at 5 years worth of prices. Immediately you will see that if you are in the market while the 40-week MA is going up you are making money and if you are out of all your positions while the index average is going down you will not lose money. It doesn?t get any easier that that.

Jack and Jill can fill their pail as the market is going up and need not spill their accumulation while they walk confidently down the hill holding their bucket full of cash not equities.

Al Thomas’ book, If It Doesn’t Go Up, Don’t Buy It! has helped thousands of people make money and keep their profits with his simple 2-step method. Read the first chapter at http://www.mutualfundmagic.com and discover why he’s the man that Wall Street does not want you to know.

Copyright 2005