Miscellaneous Stock Tips: Issue #1

1. As one fund manager has noted, there is a reason to not like companies with a very low tax rates: because it's a sign that IRS will eventually catch up with them or that the company is possibly manipulating the earnings. With an average corporate tax rate of 35%, companies with a tax rate of 15-20% seem suspicious.


2. Avoid homebuilding stocks as they are difficult to value: it is not always clear whether the gains come from the business growth or from the higher valuation of their land assets.


3. Bank stocks are still not a good buy since global credit boom is most likely in its last days and even good banks are likely to suffer or trade sideways. (Having said that, if you have a long-term investing outlook you can find a few financial giants that may rock your world, such as Bank of America (BAC) and Capital One Financial (COF), which I've recently reviewed).
   


4. Gold is considered as a hedge investment (or insurance) against an equity market slowdownsince it usually goes up when the stock market goes down.