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The more low-key of L Brands Inc.’s [stckqut]LB[/stckqut] brands is ready to be thrust into the spotlight.

During a Tuesday conference for stock analysts, the Columbus-based retailer and owner of Victoria’s Secret said it is putting more investment into its more than 1,600-store Bath & Body Works chain, including rolling out more White Barn candle shops, the brand it quietly revived last year.

CFO Stuart Burgdoerfer said the remodeled stores are producing a 25 percent increase in sales, so next year the company is looking at 39 new stores with 150 remodels, most of which will have a White Barn.

CEO Les Wexner stressed the importance of finding growth within existing stores and real estate. He talked about being able to change stores to stay with the customers of the day and preserve those real estate investments the company made in new stores 10 to 15 years ago.

“This is way bigger than the Internet,” he said, noting that analysts always ask him about Internet sales. “It’s not as sexy, but to remodel a 10-year-old store and be able to get a 25 percent lift? … 5, 7, 10 percent would be remarkable.”

Source: L Brands plans to invest more in Bath & Body Works, White Barn brands – Columbus – Columbus Business First

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start investing now, the water is deepThe most frequent question that I get is, “When should I start investing?” My typical answer is, “Now!” However, perhaps I should offer a bit more guidance than a simply one-word answer to help you to prepare to start investing.

In the opening of my book, “The Confident Investor”, I actually tell some people to put the book back on the shelf. These are people that are not ready to start investing any money. The people that are not ready to start investing yet are people that say the following:

  1. I cannot give 10% of my money to my fellow man simply because money is too tight and I can’t make ends meet.
  2. I cannot put 10% of my money into the bank before I pay any bills simply because I spend every dime that I make to make ends meet.
  3. I cannot save 6 months of my income into an emergency fund because I need all the money I can spare to survive.

In general, the reason that people cannot (or will not) do the above three things is because they have not prioritized their life correctly. Everyone can live on 80% of their income. If you are living in the United States or Canada (which covers 98% of those that read this site), you have more than enough wealth to live on 80% of your income. People all over the world are forced to survive on much less than you are making – they would be thrilled to live on your 80%. As an old friend of mine used to say, “If I had all of your money, I wouldn’t need mine.”

There are a few more things to consider before you start investing

You have realistic expectations about investing
It’s quite sad how many people I come across with insanely unrealistic expectations about investing. In fact, it appears this describes a sizable minority of the general public. Why else would the “earn 20% per month investing in xyz” scams be so prevalent? Somebody must be buying into those pitches. If it sounds too good to be true, it probably is. You aren’t going to earn more than 20% per year with a properly diversified portfolio. You’re just not. If you’re expecting more than that, you probably shouldn’t be investing because odds are good you’ll fall victim to a scam and lose all your money eventually.

You understand the basics
I don’t care if you aren’t interested in investing. You probably aren’t all that interested in brushing your teeth or flossing either, but you do it. Why? Because it’s good for you. It’s just something you have to do. It’s the same with learning about personal finance. Not being interested isn’t an excuse. There are probably a thousand good personal finance blogs on the internet (I consider mine to be among the best), tons of good books on the subject (once again, I cannot think of a better one than my own, “The Confident Investor“), and you can always watch Jim Cramer on Mad Money to get a bit more perspective. The information is out there and investing isn’t difficult. Just do it. Start investing NOW!

You can purchase my book wherever books are sold such as Amazon, Barnes and Noble, and Books A Million. It is available in e-book formats for Nook, Kindle, and iPad. 

Photo by UW Digital Collections

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You may have seen this ad by Prudential. I am not receiving financial payment for putting their ad on my site, I am using this great video to communicate the same basic idea that Prudential is suggesting. My question is the same as theirs,”Who is the oldest person that you know and do you have enough money to live that long?”

It is a simple enough question. If you know someone that is 90, shouldn’t you expect to live to 90? If you know someone that is pushing 100 (especially if that person is in your family) doesn’t it make sense that you might live to be 100? If you are planning to retire at the young age of 65, that means 35 years of living off of your savings!

How much do you need to live on when you are retired?  Some say a fairly conservative number that will pay their bills and leave them sitting on the porch for 35 years. I actually want to enjoy my retirement life. I want to Retire in Luxury!

I don’t care if you want to use Prudential as your broker. That is a personal decision. You probably shouldn’t just give them your money and trust that they will maximize your investment. You should probably use your brokerage account at Prudential (or any broker that you choose) to invest in the stock market according to my book, The Confident Investor. You can purchase my book wherever books are sold such as Amazon, Barnes and Noble, and Books A Million. It is available in e-book formats for Nook, Kindle, and iPad.

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Company name Peabody Energy Corporation
Stock ticker BTU
Live stock price [stckqut]BTU[/stckqut]
P/E compared to competitors Good
MANAGEMENT EXECUTION
Employee productivity Fair
Sales growth Good
EPS growth Good
P/E growth Poor
EBIT growth Poor
ANALYSIS
Confident Investor Rating Fair
Target stock price (TWCA growth scenario) $6.11
Target stock price (averages with growth) $9.18
Target stock price (averages with no growth) $14.84
Target stock price (manual assumptions) $21.55

The following company description is from Google Finance: http://www.google.com/finance?q=btu

Peabody Energy Corporation is a coal company. The Company owns majority interests in 28 coal mining operations located in the United States and Australia. In addition to mining operations, it markets, brokers and trades coal. It operates in four segments: its three mining segments and Trading and Brokerage segment. The three mining segments are Western U.S. Mining, Midwestern U.S. Mining and Australian Mining. Its fifth segment, Corporate and Other, includes mining and export/transportation joint ventures, energy-related commercial activities, as well as the management of its coal reserve and real estate holdings. The principal business of its U.S. Mining segments is the mining, preparation and sale of thermal (steam) coal, sold primarily to electric utilities. Through the Trading and Brokerage segment, the Company brokers coal sales of other coal producers both as principal and agent, and trade coal, freight and freight-related contracts.

Confident Investor comments: At this time, I think that a Confident Investor can cautiously invest in this stock as long as the price is correct (which it currently is not). Most of the fundamentals of this company are good but there are some concerns.

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The Wall Street Journal had an interesting column on Monday.  The article warned that the technicals of the market imply that a downturn is quite likely.

Investors are desperate for any map to help navigate today’s treacherous stock markets. One that might leave them seasick is relying on technical analysis from charts. First, there is the question of whether stocks are filling out a "head-and-shoulders" pattern, or an "island reversal." If the S&P 500 falls below its June lows, it would complete the head-and-shoulders (a high, a low, a higher high, a low, a lower high). Meanwhile, there are ominous signs of an island reversal. In that case, indexes fall rapidly between sessions, forming a "gap" in the days’ trading ranges, and then quickly "gap" back higher. Should they occur, the two patterns are thought to signal a downturn ahead.

Before these patterns could be completed, the S&P would have to fall under its 200-day moving average, 1277, itself another key chart figure. To complete the head and shoulders, the number is 1265—only 3.1% below Monday’s closing level of 1305.

It is important to understand technical analysis but I honestly do not believe that you can completely rule your investment life by looking at charts. There has to be some understanding of the business of the company that you are choosing for an investment. You need to understand how the company makes money and its historical ability to grow. However, there is momentum in the market and sectors tend to move together so technical analysis does give us insight into the market direction.

It is also important to remember that some companies will still be winners during a market downturn.  Just like there are loser companies during boom times. So while the market may be doing badly, your particular choice for an investment may be doing quite well.

Should you react to this thought process?  Maybe.  You should at least be a bit defensive in your positions.  If you have made a significant gain in a stock, it may be time to take some of that profit off the table. Also, major market moves invariably hit larger cap stocks more heavily, so you may want to be a bit more defensive in your position in large caps. This would surely apply to the DOW 30.

Just as all boats rise and fall with the tide, stocks are influenced by the other companies in their sector and in the market in general. When news of government defaults are constantly in the news, it is simply wise to be extremely cautious with your hard-earned money.

In the next 4-6 weeks, I strongly advise you to watch the technical indicators. I personally watch the 10- and 20-day EMA for my investments. If you think that is too quick, you should at least be watching the 35- or 50-day averages.