It might be too early to tell, but it might seem that Dow’s technical picture is starting to gain some short momentum. A large gap at the Moving Average Convergence/Divergence is manifesting while as you can see, the momentum is starting to slow down. Is it a flag and penchant formation? Or a sideways movement manifestation? Let the market and the traders judge on how Industrial America is heading.

It’s a well known fact that Money is only as useful as other people think it is. During times of inflation, people feel that it’s worth less, and 20 years from now, a single unit of currency will be worth far less than it is today.

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However, that’s not the case with natural resources like oil and food. This makes them fairly reasonable long term bets when you want to stabilize your portfolio. If anything, over the very long term, oil prices simply have to keep going up, if for no other reason, than that oil is becoming more scarce, and the demand for oil is increasing.

But if it’s such a great idea, why isn’t everyone doing it? It seems that most people should be betting on oil already if it’s such a great idea. The reason is, that no one can predict what is going to happen to the prices, since they typically rise and fall in response to factors other than simple demand and supply.

It’s an interesting option to keep at least a small part of your savings into natural resources like oil, and companies that deal in agriculture. Of course you can’t depend on them, but the indications are, that they will be providing your portfolio with some much needed stability, albeit at somewhat lower return rates.

However, you can be sure, that over the long term, your oil stocks are just going to keep rising.

Just a short while back, when the US economy was on an upswing, there were huge stories about private equity doing very well. People were funneling cash into companies, and were earning huge returns, as they took the brunt of the risk.

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All this was very nice when the days were good. But now, with the credit crisis, no one wants to advance money anymore, since no one is sure that assets are going to be liquid. So what does this mean for companies that have raised huge amounts of capital, and don’t really know what to do with it? It’s difficult to do business that rely on credit, when there is no credit to be had in the first place.

One possible strategy that has been taking root among smart guys, is that they are starting to buy back the loans that they took at a discounted rate, taking advantage of the fact that the market is really bad at the time.

This is like a second harvest, where you have the benefit of the first loan, and now, when you have the ability to do so, get a profit from the second discounted loan as well!

It makes your head spin, but then, this is probably why some people are simply richer than others…they’re smarter.

Even though the dollar seems to be doing well, you can’t feel that it’s problems are over. In an article about the Weakened Dollar, David Ellis feels that it might be too early to celebrate. Even though exports benefit from this, imports really take a beating, and it can hurt the economy, and even boost inflation.

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So what can you do to battle this situation? According to George Mannes of Money Magazine, the best thing that can be done, is to invest in Foreign Funds. He says, that since the dollar has been steadily losing ground against other major currencies like the Yen, the Pound, and the Euro recently, the best thing to do is to invest overseas.

However, he also cautions that most people hear rumors about certain stocks, and keep pulling out and reinvesting. This, as he points out, is called ‘Chasing Performance’, and can really hurt your investments. The idea, he says, is to put your money into certain overseas funds, and then keep it there. He goes on to say, that putting 20% of your money into foreign funds is more than enough, and even suggests Vanguard overseas funds to invest them in.

Stories abound about the quick successes that Venture Capitalists (VC’s) have had in the past. Chances of starting the next Google, are every VC’s dream come true.

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However, it’s probably true that most venture capitalists lose their money altogether. Most VCs gain their returns through an IPO, or some other form of liquidation. The chances however, of a successful venture is very low, according to Philip Bronner, a general partner at Novak Biddle Venture Partners.

Most venture capitalists lose their money in the entreprise, and hope to gain it all back by the one or two that do manage to work out. The lesson is, that you musn’t put more money into a venture than you can afford to lose.

This restricts the range of venture capitalists to those who have a very high net worth, since only such individuals or firms can afford the cost. Most venture capitalists of course, vet their applications, and demand thorough business plans. The problem is, that even with all this, it is impossible to determine which businesses are going to succeed, and which ones are going to fail.

Even for business that do succeed, it may be several years before the investment can be recouped. Typically, if you wait for an IPO, then that will take time. The chances of the business becoming profitable enough to buy out it’s investors is very slim indeed.

So the rule is, you can afford to be a VC only if you have dozens of projects, and can bear the loss of several failed ventures.

The Bogleheads’ Guide to Investing is a book released by the ‘Bogleheads’, who are self proclaimed admirers of John Bogle, founder of the Vanguard group.

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It’s a straight forward guide to investing, and starts at the very basics with choosing a lifestyle. It goes on to describe the various concepts and themes that are found in the investing world, and then proceeds to talk about brokers, retirement, and how to pass on your estate.

A particularly interesting chapter is on ‘How costs Matter’, where it shows you how expensive it can get to pay for mutual funds that have huge percentage costs.

As an advocate of the simple ways of investing myself, I like a book that shows people just how investing should be done, and totally agree with the authors on ‘Keep it simple’.

Another refreshing chapter is on ‘How to handle a windfall’. Suppose you come into a huge amount of money suddenly and unexpectedly, what does one do with it, and how do you prevent it from just going down the drain? Tips like this for the common man, are precisely what make the book so useful.

The book winds up with a discussion of Vanguard investments, which isn’t really surprising, given the fact that the authors eulogize John Bogle, who just happens to be the CEO!

The best way to bring yourself to your senses when you eye a new fund that has shot up, is to look into the past, and see what has happend to all those great investments that posted returns of over 100% in a year.

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An article in the Wall Street Journal, takes a look at 275 such funds in that year, and has analysed what their status is now using Morningst Inc. Fund Tracker.

Of these 275 funds, 97 of them no longer exist! Due to a variety of reasons including being merged with other funds, liquidation, or simply dropping out of the database, these funds are just not on the market anymore.

Out of 179 survivors, if you had invested in a third of them, you would have had double digit negative returns by now! Only 37 of them topped the market average by very slim margins.

It turns out that this is the ultimate lesson. Past performance does not in fact, guarantee future performance. Like I said in the beginning of this article, this little piece of news should make investors come to their senses.

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1.       Humility

We people, especially investors, tend to exaggerate things. Aren’t you tired with your story telling about the killing you made 10 years ago? Humility helps us take a new perspective of things. It also helps us to identify, accept, and learn from our mistakes. We are all human. We make mistakes, and when we do make one, learn from it.

2.       Prudence
Are you always going to act on the hot tip you got from a friend during the barbeque party over the weekend? What separates investors from speculators is that we, investors, knows the company we are buying; believes in the company’s management, and of course, it’s industry standing. When doing something as simple as crossing the corner, try to utilize your inner prudence, you’ll just notice another version of yourself is still alive.

3.       Patience
Okay, we did our homework. We now call our broker to fill our order; the broker now tells you your order is executed. Now what happens next? You watch the newswire and get worried with the index plummeting. Some people get burned big time is because the thought trading the pink sheets were like playing the slots. Others, by simply cutting losses too short.

4.       Scepticism

Approach every noise you hear on the street with scepticism. Some people who are too lazy to do their homework rely on the newswire. The newswire not only makes you worried with your position by doubting how right or wrong your entry or buy, it also subconsciously produces stress. Do you homework and validate your sources.

5.       Discipline

What else could I tell you? A gambler is separated from an investor in only one way. A gambler throws the darts on the board while an investor implements trading strategies and symbols. They only cut their systems with discipline. They cut the losses on how they see the recommendation of the system. If you could do manage this type of attitude, I better leave my business card to him.

Everyone knows that our income is meant to be spent. In fact, consumer spending accounts for two thirds of economic growth. With that figures, a change in consumer behaviour could even create a recession. But how do we properly allocate our personal resources to meet our desired objectives in an environment where there is high inflation?

1.    Commodities

Commodities is not only inversely proportional to the greenback, but also it is considered a hedge against inflation as commodities itself creates inflation. Take a look at Gold; gold was playing at $700 an ounce last year until recently where it hit a high of $1030 an ounce. If you were hedging yourself from the depreciation of the greenback back then and you bought Gold, you just not only purchased your portfolio an insurance policy against inflation, but you may have also made a lot of money with the Gold play.

2.    Bond Markets

When people are scared and are running away as fast as they could on equities, people do tend to prefer fixed income which also a symbol of capital preservation over the equities market or maximum growth potential. This has been proven with the Bond Rally of the 1970s where yields went at their records. So when fear is the market’s sentiment, stay on the sidelines or switch to fixed income.

Let’s face the fact that recession is part of the economic cycle. And what we need to do is not to blame the markets for our own mistakes but adjust our sails with the wind. In this kind of environment, my mentor would always reiterate that “Cash is always King”.

Johnson & Johnson’s Board of Directors has declared a 10.8% increase in the quarterly dividend rate, from $.415 per share to $.46 per share.

The increase was announced this morning at the Annual Shareholders Meeting in New Brunswick, NJ.

“In recognition of our solid results in 2007, our strong financial position, and our confidence in the future of Johnson & Johnson, the Board has voted to increase the dividend for the 46th consecutive year,” said William C. Weldon, Chairman and Chief Executive Officer of the Company.

At the new rate, the indicated dividend on an annual basis is $1.84 per share compared to the previous rate of $1.66 per share. The next quarterly dividend is payable on June 10, 2008 to shareholders of record as of May 27, 2008.