This economic slow down is very scary for everyone.  Daily we are hearing about companies going under and watching our portfolios dwindle.  Those with the spare cash have an extremely unique opportunity, though.

Why do people go to Wal-Mart or dollar stores?  To buy things more cheaply than in other places.  This is a very smart shopping policy.  If you went in to your favorite clothing store and saw jeans for $0.50 when they are normally $75.00, would you panic and sell all the clothes in your closet?  Heck, no!  You would clear the racks.

Why do we all panic now when our stocks prices are falling?  This is like the ultimate holiday sale.  Sure, if you are close to retirement age or were planning on using that money for another purpose in the short term it is a real bummer.  One thing to keep in mind for the future is when you are within a few years of needing the money you have invested, put it into something solid like savings bonds or CDs.

There are actually people dumping the stock they have and placing even less into the automatic investing plans they have.  I understand it is really scary and there is no perceivable bottom to this drop in the market, but history has proven the market will rebound.  In fact, on average it has risen 13% a year over the last century.  Remember the Great Depression, Savings and Loan issues in the 80’s, etc.?  Still the average has been this high.

My advice is to find a solid company like General Electric (GE) or Coca-Cola (KO) and invest in them.  Both pay dividends and have not been hit extremely hard with the recession.  It is likely their numbers will once again drop a little lower but in a three to five years I bet they go up again.

My personal stock pick for the month is GE.  Their yields are sitting at 6.36.  This means whatever I invest today, and allow the dividends to re-invest, will double every eleven years.  Imagine investing even more over the next decade.

Don’t you love it when you get that order of French fries and find an onion ring in the container? What about getting an extra soda from the vending machine? Free things tend to make your day or at least make the moment. Why not keep the spirit alive in your investment strategy?

My friend Chris Hubinsky and I recently formed an investing company called H&L Ventures, Ltd. Our goal for the first few years is to build a strong portfolio with a solid base. We want a structure that will last for years and solidify our financial futures. We are employing a dividend grabbing strategy that I will call the Check, Please! Strategy or CPS.

The CPS focuses on buying stocks from secure companies that pay dividends numerous times each year. Many of the big corporations pay dividends quarterly. These dividends are free bonuses to the shareholders (you) that can be rolled right back into your investment. More often than not, the dividends are between 10-50 cents per share. “This Joe Lawrence guy is a moron!” you must be saying to yourself.

You would be right on many occasions, but not here. Let me show you some numbers. If you bought $300 worth of General Electric (GE) back on January 6, 2006, you would own 8.45 shares (I went to 2006 to use real numbers). GE paid $.25 per share dividends throughout 2006. After the first quarter you would have made $2.11. Again, not much but work with me here.

Allow the dividends to be reinvested (most brokers do this automatically, like Sharebuilder.com) and you will have .06 of a share. Your new total shares are 8.51. Keep this up until today, and you now made $24.74 in dividends and own 9.18 shares. That is $25 for free in two and a half years. Sure, it is not a retirement check, but give it a few more years and that number will continue to grow.

H&L Ventures uses Sharebuilder.com because it allows for fractional stock purchases and only $4 fees per trade. To learn more check out Quality Over Quantity.

We all have heard it is smart to invest in the stock market. The problem is so few of us actually know much about it. That is why I decided to write this to tell you how to spend the extra $100 you wrestled from the couch cushions this month.

First off, I want to prove my opening statement. From the early 1900’s to today the market has averaged a 13% annual increase. Similar statistics show the dollar bill has lost 95% of its spending power. To put that into different terms: In 1919 one share of Coca-Cola cost $40. If you decided to take $40 and bury it in the yard, the spending power of that cash would be $2. Instead if you took that cash and bought one share of Coca-Cola, today it would be worth over $5 million, if you reinvested the dividends. Hmmm…tough decision.

With that out of the way, onto the application. Some people buy shares of certain stocks because their online broker requires them to. Example: you want to invest in Amazon and it is trading at $74.15 a share. You have $100 to invest. Your company will only allow you to buy a whole share costing $74.15 plus a $9.99 fee. That leaves you with $15.86 left over doing nothing for you. In time you will build up enough extra cash this way to buy another whole stock…in time.

The problem with this is that you are not investing to your full potential when you buy whole shares of stock. In an ideal world you could buy “fractional” stocks. Example: that same $100 would buy you 1.213 shares of Amazon. That extra .213 of a share is working for you and not rotting away in an account somewhere. Obviously, this is the best way.

Sharebuilder.com is the only online trading company I know of that will allow you to buy fractional stocks. On top of that, if you set up an automatic investing plan, trades are only $4 opposed to the standard $9.99! Finally, a company that cares about us.

Stop reading this right now. Go and set up an account. Invest a dollar amount, NOT a set number of whole shares each month. GO!!

One of the great truisms of investing is the Cockroach Theory of surprises.  Like cockroaches, unpleasant surprises rarely show up alone.

Take the travails of Bear Stearns, one of the pillars of the Wall Street establishment.

At the beginning of the year, Bear Stearns was trading at over $80/share.

As the subprime mess took its toll, Bear Stearns drifted downwards, until last week’s news that JP Morgan had to bail it out caused the stock to drop to $30/share on Friday.

At that point, the inexperienced investor might say, “Looks like the situation is stabilized.  Maybe it’s a buying opportunity.  After all, it’s down over 50% from the beginning of the year.”

On the other hand, followers of the Cockroach Theory would avoid Bear like it was radioactive, assuming that there was worse to come.

And they were right.

Over the weekend, JPMorgan announced a plan to buy out Bear at $2 per share.  No, that’s not a misprint.  The stock is currently trading at $3.82, presumably because investors are betting that alternate bidders will step up to the plate.

As numerous folks have pointed out, Bear Stearns’ HQ is worth about $10 per share on its own, meaning that Bear Stearns’ business is valued at NEGATIVE $1 billion based on the buyout offer.

So when bad news leaks, and you’re tempted to go bargain hunting, remember the Cockroach Theory.  Otherwise you’re portfolio might end up in the dump with the real cockroaches.

I am a romantic, hopeful for the perfect Valentine’s Day gift.  However, having received my share of poorly chosen gifts, e.g. a reflective running vest and coffee, I know that a charming gift can be elusive.

Many men take the position that as long as the gift sparkles, smells wonderful, or is blooming they are all set.  For some women that may be true, but I want a gift that is chosen thoughtfully.  Sure, a pair of diamond earrings is wonderful, but if you always have purchased jewelry for your girlfriends, how does that make me special?

So, what are you supposed to do?  Why not purchase a gift that will last forever, can be as generous as you want to spend, and can have sentimental value?  The gift that I am suggesting is stock. 

Sound crazy?  A former colleague of mine was given Kimberly-Clark stock as a wedding gift from her husband.  Because she had seasonal allergies, he knew they’d buy lots of tissues during their marriage.  She was touched by his unique gift.

So, what should you get for your valentine?  You should buy stock to a company that has personal meaning.  Be creative - think of what would mean the most to her.  If you’re not certain, why not try a romance-inspiring company, such as Tiffany & Company? 

Once you’ve purchased the stock, add a hand-written note declaring your love, and add a bow.  Your one-of-a-kind gift is ready for giving on Valentine’s Day.

One of hottest areas in technology right now is Software-as-a-Service, or SaaS for short. SaaS is the B2B equivalent to the consumer Web, and just as the B2B sector is much larger than the B2C sector in general, SaaS promises to be far larger than the consumer Internet.

SaaS lets businesses rent applications on an on-demand basis (generally paying per user per month) rather than purchasing an up front “perpetual license” and paying an ongoing annual maintenance fee for upgrades and customer service (generally about 20% of the license cost).

This makes SaaS very attractive for its customers, who don’t need to shell out millions up front for software that might end up as shelfware. As a result, SaaS companies like Salesforce.com (CRM) have outperformed traditional software stocks like Oracle (ORCL).

But what happens now that the economy is slowing? Will SaaS high-fliers plunge back to Earth, or will they continue to outperform?

My belief is that the lower up-front investments required for SaaS, coupled with the continuing trend towards on-demand, will cause SaaS stocks to outperform during an economic downturn.

This belief was reinforced by a recent lunch I had with a friend who is a well-known hedge fund investor who specializes in technology stocks. We discussed this very subject, and he brought up a conversation he had with one of his CIO buddies.

He had asked this CIO if he planned to cut back on his SaaS investments if the economy slowed. The CIO pointed out that because he had signed a 2-year contract with Salesforce.com, committing to a higher volume to get a lower price, he would have to cut at least 50% of his seats just to come out ahead. As a result, he planned to maintain his planned spending, and possibly even increase it if he could use it to avoid hefty capital expenditures on traditional software.

So if the prospect of a recession leaves you wondering where to allocate your tech industry investments, consider upping your exposure to SaaS.

Stocks: CRM, RNOW, BBBB, OMTR

We all have gotten those calls from a boiler room with a stockbroker on the other end trying to have us buy some particular stock. But what is a stockbroker?

It is usually defined as a person that charges a fee or receives a commission for executing buy and sell orders submitted by an investor. They can work at small or large firms and have often been replaced by online firms that give investors the direct control. Stockbrokers can be important part of personal finance.

So the next time you get a call from a stockbroker you will be well informed and you will know that a stockbroker is someone who is more than a guy that has a personal finance blog.

LOS ANGELES, American Metal & Technology, Inc. (OTC Bulletin Board: AMMY - News) today announced that its Board of Directors has approved a 1-for-150 reverse stock split of its common stock, following approval by the Company’s stockholders owning a majority of its shares on November 15, 2007. The reverse stock split will be effective for trading purposes on or about December 3, 2007.

The 1-for-150 reverse stock split will convert 150 shares of the Company’s common stock into 1 share of common stock. The reverse stock split affects all issued and outstanding shares of the Company’s common stock immediately prior to the effectiveness of the reverse stock split. The Company’s common stock will start trading on a split-adjusted basis on or about market open on December 3, 2007.