By Clyde Noel

Stock Report

here’s an old saying that to be successful on the stock market you should buy on the rumor and sell on the news. The problem is all the news is negative.

The lack of investor confidence because of current accounting scandals and probes on Wall Street means people don’t feel any need to get into the market.

Despite the huge 300-point advance on the Dow industrials last Wednesday, the market finished lower by Friday. The Dow started Monday morning at 10,006 and finished at 9,939, down close to one percent. The Nasdaq had the same pattern.

We are living in a 1-percent losing market, but are stymied on what to do. A cash alternative like the money market earns scarcely more than 1 percent a year. After considering tax and inflation your money market is a zero investment.

Market pros say it’s still to early to put savings into stocks, especially technology companies. Technology companies still have earnings difficulties and high valuations.

Many market professionals agree there is nothing in the way of the both the Dow and the Nasdaq to test new lows. There is no news to stop the drop and with no volume don’t be surprised to see core portfolio stocks like IBM go down to 50 and carry other technology stocks down. With IBM announcing they are cutting up to 9,500 workers, there’s problems with big blue.

Looking for a bright spot in the Town Crier index, Cisco was up 17 percent for the week after an optimistic announcement. It was one of the few Town Crier index stocks up last week, but still down 14.85 percent for the year.

With further pull-backs, it might be a good time to gradually accumulate stocks - old economy stocks.

Capital goods, machinery, construction and basic industrials like paper could be looked into.

One local stock that looks promising is Heritage Bank (HTBK). It’s the parent company of Bank of Los Altos. It started the year at $7.80 a share and went down as low as $6.50, but has gradually increased and has been over $10. Community banks across the country are providing good results because of low interest rates and refinancing of homes.

Noel, a seasoned investor, covers the stock market for the Town Crier.