Well, I’m about to find out if a good idea and great partners is enough of a foundation in the iPhone Application development world to make for a good investment.

This week, I’ve funded the development of an exciting new iPhone app.  The app is a productivity tool for moms and dads, and is “top secret”!

I admit, I know little to nothing about iPhone applications, but when a good idea rips you out of bed at 4:00 in the morning, the entrepreneur in me has to pay attention.  I’m truly excited to keep you all informed, and to consistently blog about the progress and performance of developing and marketing a new idea for the iPhone App Store…and please don’t hesitate to pipe in if you have some insight or perspective!

Anyways, I think it is important to open up a discussion with all you smart folks about HOW AND WHY the US stock market has been on suck a tear over the past couple of months.  If you made some good decisions 3 or 4 months ago, your investments are probably up 50% or more!

IF you believe that the US stock market is a “leading indicator” for the US economy, this run in the market would lead you to the conclusion that we are heading out of “The Great Recession” post haste…THE TROUBLE I have with this theory is that our home values are still falling, so the US consumer is feeling a negative “wealth effect”…also stunting our growth is the fundamental shift from consumption to savings.  I believe that most sensible people are going to save more and keep real tabs on their spending habits. 

I also fear that mutual fund managers have been chasing returns, and this is artificially pushing up stock prices ahead of the actual earnings growth of these companies.  (I hope I’m wrong though and that good companies were just SOOOO oversold that we are getting back to fair value)

All this to be said, I’m loving the run up in stock market values, but I’m worried that the market is getting ahead of its self and banking on a sharp uptick in the overall US economies growth and consumer spending. 

Do you guys really think that is going to be the case, or are we looking at a major pullback soon?  Will $3.00 gas pull us back down?  As always, any and all feedback and ideas are appreciated.  There is SO much knowledge left in the comments of this blog!

I purchased 15 companies over at Fristrade.  As of today, nine of them have lost money, five of them have made money…but my account is sitting at almost EXACTLY the $15,000 that I started with…so I’m flat overall.  That is ok, as I am generally investing for the next 4-6 years.  I did this in late 2002, andby 2007 my original $10,000 investment in stocks had quadrupled.  I liquidated around the time when the Dow Hit 13,000.  (I originally had thought I’d made a horrible decision as the Dow continued to climb past 14,000…but I stuck to my guns and did not get hammered in this market.)

So like I said, I tested the waters with $15,000 about 6 months ago.  My best RETURN was a 1 week trade on National City stock.  I bought in at $1.80 per share, and about a week later sold for over $3.00 a share. 

BUT MY BEST INVESTMENT HAS TO BE AMERICAN EAGLE OUTFITTERS INC. (AEO)

American Eagle is up 41.14% since I purchased it.  Same store sales are down at AEO, but not terrible.  I was a teenager once, I remember saving all my money to buy clothes.  (We really seem to care about clothing here in America, don’t we)  The company has next to zero debt, and almost $500 Million cash on its balance sheet.  It is also highly profitable.  I think as the economy softens, they do better than companies like Abercrombie & Finch…because the products is similar in style, very similar, but at a considerable value.  That has been a winning combination for my portfolio!

2nd best investment…APPLE COMPUTER STOCK…UP 17.54%

Again, I’m not offering specific investment advice, just letting you know what I’m up to.  Please seek professional advice when making any type of investment.  For informational purposes only!  Amen.

1.  People are scared!  Today’s sell off in the stock market was not just mom and pop investor scared about losing their retirement savings, there were huge institutional trades today that seem to be driven by fear.

2.  People are confused!   The world financial markets are so much more complex than the news anchors on CNBC make it appear to be.  Generally, when I’m having trouble understanding something, I run from it.  I believe folks all over the world did the same thing today.  Many folks are realizing that the stock market is not a game to play.

3.  People are irrational!  There are sectors of our ecomony that are having huge struggles.  In the middle of the struggles, there are companies that have made good decisions, and are doing extremely well because of those good choices.  Unfortunatly, on days like this, people don’t care about fundamental business metrics, they just want to get dollars away from the stock market.

4.  People are fed up!  If you are the average American, you get 99% of your market information from the media.  This makes it difficult to navigate past the personal opinions and biases of those bringing you the news.  With a presidential election on the horizon, the media seems to have gone extremely negative on the US economy.  I believe that lots of hard working folks are simply tired of the daily dose of bad news there have having to digest.  The natural way to combat that is to get your investments into cash, and turn off the tube.

5.  People are funny!  We really are funny.  We are all experts in our own right.  “We sure would do things differently if we were in charge.”  “I got out before the fall.”  “I wouldn’t have made that mistake.”  Etc.  I think that many people feel like if they get out now, their personal story is stronger.  We humans HATE to be wrong!