Safety is a relative word. What one investor considers safe, another may find too risky.

However, there are some stock sectors investors have looked to in troubled times as a safer haven than the general market.

No matter what the economy is doing, people still must eat and pay for utilities.

Wont Stop Buying

You can think of other goods and services that the public isnt going to stop buying, even in a recession – toilet paper is the classic example.

It is dangerous to assume that every company in these safe sectors is also a safe investment during tough times.

Investors should take a close look at individual companies before making decisions – not every consumer paper-goods company is a good investment.

How do you decide which companies to consider?

Look for a consistent pattern of earning across past periods of economic uncertainty.

You can do this on most financial sites.

A quick check using Yahoos stockscreener found 15 utilities with a five-year earnings growth of over 25 percent.

This is a way to get started with finding investment candidates. The next step is a more thorough analysis, but screens help you narrow down the field.

Many investors have a hard time dealing withfalling stock prices but for the wrong reasons. No matter how often you preach the virtues of the buy-and-hold method, the true test of courage comes when you watch your holdings nose dive twenty percent in one afternoon.

Anyone who has been through abear market knows that it takes tremendous discipline and dedication to stick to your guns while everyone elseliquidates their holdings. Plagued by images of depression,recession, and corporate layoffs, manic Wall Street becomes a breeding ground for chaos and faulty logic. Perfectly good companies begin selling for fractions of their true value, despite a lack of change in the long-term economics of the business.

Here are three fundamental truths that will help you deal with short-term market losses.

Truth One: You own a business, not a stock

What you are holding in yourportfolio is a piece of a business, not a stock. Investors who purchase shares of stock simply because they are going “up” or are going to be the “next big thing” are essentially gamblers. They buy a commodity with the belief (rational or not) that the next person in line will pay a higher price for it than they did. The problem is, this cycle can’t go on forever, and at some point, someone is going to look around, realize what happened, and bail ship.

In order to be a successful investor you must do two things. First, remove all emotions from each of your financial decisions. Romeo and Juliet were terrific lovers, but not very logical people (and look where that got them). Letting yourheart and emotions impact your actions is foolish in most circumstances, deadly ineconomic ones. Second, learn to separate the underlying business from the stock price; they are not the same thing (read that again). You’ve heard it said a million times;even a great company is a lousy investment if you pay too much for it.

Here is the problem: most investors rely on information about a company that comes from reports required by the Securities and Exchange Commission.

The best known of these reports is the annual report, however companies are required to file a more detailed report with the SEC known as the 10-K.

The 10-K strips away the color photos and self-lauding rhetoric and focuses on the numbers and other important disclosures.

When you look up a companys annual report or 10-K, you are looking at a snapshot of the business taken at the end of its fiscal year.

Problem Stocks

The problem for investors is that a lot can happen in a year, so if you are looking at the latest annual report or 10-K you may be studying information that is many months old.

If you study the annual reports of the big financial companies from the most recent fiscal year, which for many ended on December 31, you could be looking at information that has changed dramatically.

Most online services that track companies financial information update on a regular basis.

However, most update the information on a quarterly basis. They use a SEC report known as a 10-Q, which is filed on a quarterly basis.

Lag Time

There is some lag time between companies file their 10-Q and when the information is available to investors.

However, investors can view the reports as soon as they are posted on the SEC Web site.

Edgar is one service that lets investors retrieve 10-K and 10-Q reports along with all the other reports the SEC requires.

It is not particularly easy to use, but with some practice youll be able to navigate your way around the site.

The take away here is that if you are considering investing in a company that is in a fast-moving sector, take some time to view the most up-to-date information filed with the SEC.

You may find some interesting information, such as huge write downs of bad loans.

Dont people go to prison for that, we say. Yes, a little do, nonetheless most get off but prison time. Just for a record, Martha Stewart didnt go to prison for insider trading, she got destitute for fibbing about it to sovereign authorities.

What Im suggesting is ideally authorised as well as an additional apparatus we can make make use of of to urge your trading. All we need to do is watch what pass insiders of aim companies have been we do with their shares.

Insiders

The SEC classifies pass employees as well as directors as insiders as well as requires them to register their trades of association batch with dual traffic days. For example, if a CEO of a association buys or sells 500 shares he or she is compulsory to forewarn a SEC inside of dual days of a trade.

That report is open as well as accessible to any investor. As prolonged as a insider is traffic upon report which is in all accessible to a open no laws have been broken.

However, if a CEO knows a association is not starting to get a large stipulate as well as sells prior to revelation a world, thats illegal.

You can find insider trades upon a series of websites includingMSN Money.com andYahoo!Finance. On both sites, come in a batch pitch as well as navigate to a insider link.

How to Use Insider Trading

If a trades have been legal, what do they discuss it we as well as how can we make make use of of them?

When corporate insiders, generally comparison management team buy or sell association stock, it is value deliberation why. Lets demeanour during a sell side first.

The actuality which a corporate military officer is offered shares competence or competence not discuss it we something of value. People sell for a accumulation of reasons, usually a single of which competence be which a batch is headed down.

Much of senior manager remuneration is in a form of batch so this competence be a approach of converting which remuneration in to money as well as have zero to do with a fortunes of a company. The senior manager competence have a taxation bill, a divorce, or a eighth month to fund. Maybe he or she wants to variegate their portfolio. Frequently, companies will emanate press releases detailing because management team have been offered to ease fears in a market.

However, if we see multiform pass management team offered during a same time it competence be value receiving a tighten demeanour during a companys fundamentals again.

The Definition of Insider Trading

Insider trade occurs when someone creates an investment preference formed upon report that is not accessible to a ubiquitous public. In a little cases, a report allows them to profit, in others, equivocate a loss. (In a Martha Stewart ImClone scandal, a latter happened to be a case.)

Insider trade was not deliberate bootleg during a commencement of a twentieth century; in fact, a Supreme Court statute once called it a perk of being an executive. After a excesses of a 1920s, a successive decade of depression, as well as a ensuing change in open opinion, it was banned, with critical penalties being imposed upon those who intent in a practice.

The Penalties for Insider Trading

Depending upon a astringency of a case, insider trade penalties in all include of a financial chastisement as well as prison time. In new years, a Securities as well as Exchange Commission (SEC) has changed to anathema insider trade violators from portion as an senior manager during any publicly traded company.

What Constitutes Criminal Insider Trading

Just what constitutes insider trading? The subject is most trickier than it seems. In sequence for a SEC to take to court someone for insider trading, they contingency infer that a suspect had a fiduciary duty to a association as well as / or dictated to privately benefit from shopping or offered shares formed upon a insider information. This exam of duty, however, was significantly enervated by a Supreme CourtsUnited States vs. OHagan ruling. In 1988, James OHagan was a counsel during a organisation of Dorsey & Whitney. After a organisation began representing Grand Metropolitan PLC, that programmed to launch a proposal suggest for Pillsbury, Mr. OHagan acquired a vast series of options in a company. Following a proclamation of a proposal offer, a options soared, ensuing in a 4 million dollar gain. After being found guilty upon fifty-seven charges, a self-assurance was overturned upon appeal. The box in a future found a approach to a Supreme Court where a self-assurance was backed (for some-more information, readGetting a Appropriate Misappropriators: An Analysis of a Supreme Courts Decision inUnited States vs. OHagan).

Barry Switzer, then-Oklahoma football coach, was prosecuted by a SEC in 1981 after he as well as his friends purchased shares in Phoenix Resources, an oil company. Switzer was during a lane assembly when he beyond a review in in between management team connected with a murder of a business. He purchased a batch during around $42 per share, as well as after sole during $59, creation around $98,000 in a process. The charges opposite him were after discharged by a sovereign decider upon a lack of evidence.

On a alternative hand, formed upon dominance in alternative cases, Switzer substantially would have been fined as well as served prison time if a single of his players was a son or daughter of a executives, as well as referred to a tip to him off-handedly. The line in in between criminal as well as lucky, it seems, is roughly wholly confused in such cases.