Dow Jones Industrial Average

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http://www.usatoday.com/story/money/markets/2013/0…1. Please paste the link above into your browser and read the USA Today article about the stock market. The Dow surpassed 14,000 years ago and is now much higher. Be sure to click on the two tabs for the stock performance graph (1896-1972 & 1972 – Present) so you can fully grasp the increase.What do you think? Will it continue to rise or will there be a correction downward? Is now a good time to invest in stocks or has the opportunity passed. If you had $10,000 to invest, how much would you invest in stocks? How much of the $10,000 would invest in bonds. Give reasons why for both investment decisions.Where do you think the Dow will close at the close of the stock market on the last class for the term?2. Please make a comment on this post regarding the topic talked above. This is an opinion from my classmate. The Dow Jones is 26486.78 today. We can invest in individual stocks, but we have to be very selective. Only buy quality stocks when they are undervalued. Here’s how you know if it’s a quality stock, follow my 12 Rules of Simply Investing:1. Do you understand the product or service offered by the company?2. Will people still be using this product or service in 20 years?3. Does the company have a low-cost durable (lasting) competitive advantage?4. Is the company recession proof?5. Has the company had consistent earnings growth?Generally, the EPS growth must be at least 8%6. Has the company had consistent dividend growth?Generally, the dividend growth must be at least 8%7. Does the company have a low payout ratio?Payout ratio must be 75% or less.8. Does the company have low debt?Debt must be 70% or less.9. Does the company have a good credit rating?Company must have a minimum S&P Credit Rating of “BBB+”.10. Does the company actively buy back its shares? (optional)11. Is the stock undervalued?a. The P/E Ratio must be 25 or below.b. The current dividend yield must be higher than the average dividend yield.c. The P/B Ratio should be 3 or less.12. Keep emotion out of investing.A reminder to keep emotion out of the selection process. Discipline and patience are the keys to successful investing.If I had $10,000 to invest, A strategic asset allocation recommendation might suggest that I should have 70% stocks/20% bonds/10% cash, or 60% stocks/40% bonds

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