Stock Market Investing Technique #1

                                     The Interesting Interest-Rate

This is the perfect buy low, sell high stratagem and it is very simple to use.  All you have to do is buy any utility (electric company) or bank stock with a good balance sheet during a time when interest-rates are high.  Then wait for the interest-rates to go back down then sell your stock and collect your profits.  It’s that easy.  Now, the reason you are buying during high inflationary times is because utility and banks are very heavy borrowers.  So when inflation is high it cost them more money to operate, so they are not making as much money as they were plus their dividend yield’s are not as good as an investment for people seeking income from dividends.  Also, other investments are showing better returns because of high inflation.  Because of this people will not buy those particular income producing stocks.  Instead, people will put their money in places where they will get a better yield on their money, so the stock prices will go down because no one is buying-but eventually the interest rates will go down again and utility and banks will be able to borrow money cheaply.  Also, since the other investments people were buying will not show as good as a return as they once did because of decreasing inflation.  People will start to like the dividend yields on the utility and bank stocks so they will start buying those stocks and the prices will go up.   Since you were smart enough to realize this, you bought low, you sold high, and you made money!

Note:  The best way to tell if interest rates are going up is if the Dow Jones utility average is going down and the best way to tell if interest rates are going down is if the Dow Jones utility average is going up.

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Joshua Fogle

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