Dr. Ron Paul Takes Over Chair of Domestic Monetary Policy, Including Fed Oversight

December 9th, 2010

Today it’s been announced that Congressman Dr. Ron Paul (R-TX) will become Chairman of the Domestic Monetary Policy House Subcommittee in 2011. If ever the US could benefit from a turning point in monetary policy it’s now. This is one of Congress’ most relevant entities for supervising that work, as a component of the overall House Financial Services Committee, the Domestic Monetary Policy and Technology Subcommittee oversees:

  • the Federal Reserve’s efforts to carry on its regular responsibilities, including bank examinations, consumer protection and data collection
  • the testimony of the Chairman of the Board of Governors of the Federal Reserve
  • Emergency Authority, including the Fed’s efforts to withdraw the extraordinary monetary stimulus it provided and reduce its balance sheet
  • the state of US coins and currency, including examining the roles of the Bureau of Engraving and Printing, US Mint, Federal Reserve, and Secret Service
  • audits of the Federal Reserve, or whatever is left of that possibility, based on the final version of the signed Dodd-Frank Act

Perhaps no congressman is more actively — or famously — engaged in the task of changing the current trends in monetary policy than Dr. Ron Paul, author of “End the Fed,” and a studied critic of how the US manages its money supply. He sees monetary reform as an eventual necessity and the dollar as unable to indefinitely operate as the reserve standard for the world.

As of today, it looks like he’s going to get his best chance to date.

This past Tuesday, the House of Representatives’ Republican leadership chose Congressman Spencer Bachus (R-AL) to serve as head of the House Financial Services Committee. Today, Bachus announced his appointments for the 112th Congress’ financial services committee leadership, including Dr. Paul.

It’s expected that Dr. Paul will make increased efforts to examine the Fed’s monetary policy decisions, open up more of the Fed’s interest rates and monetary easing deliberations to congressional scrutiny, and take a closer look at the US role in global economic coordination, especially the sort that takes place through the International Monetary Fund.

In his official statement, Bachus says:

“This is the leadership team that crafted the first comprehensive financial reform bill to put an end to the bailouts, wind down the taxpayer funding of Fannie Mae and Freddie Mac, and enforce a strong audit of the Federal Reserve.”

For better or worse, we’ll keep you posted on where Bachus, Paul, and the rest of the new Financial Services Committee leadership takes it from here.

Best,

Rocky Vega,
The Daily Reckoning

Dr. Ron Paul Takes Over Chair of Domestic Monetary Policy, Including Fed Oversight originally appeared in the Daily Reckoning. The Daily Reckoning, offers a uniquely refreshing, perspective on the global economy, investing, gold, stocks and today’s markets. Its been called “the most entertaining read of the day.”

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Dr. Ron Paul Takes Over Chair of Domestic Monetary Policy, Including Fed Oversight




The Daily Reckoning is a contrarian e-letter, brought to you by New York Times best-selling authors Bill Bonner and Addison Wiggin since 1999. The DR looks at the economic world-at-large and offers its major players – investors, politicians, economists and the average consumer – some much-needed constructive criticism.

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6 Catalysts That Could Send Apple’s Shares Soaring — or Plummeting — Very Soon

December 9th, 2010

6 Catalysts That Could Send Apple's Shares Soaring -- or Plummeting -- Very Soon

After an impressive two-year surge that has seen its stock rise more than +200%, shares of Apple (Nasdaq: AAPL) appear to have stalled. The stock has been stuck in a tight range between $300 and $320 for the past six weeks, as bulls and bears have at it.

Yet this stock is far too popular and far too controversial to stay stuck in a trading range for very long. The key question for investors now: Will Apple resume its upward climb toward the $400 mark? Or is the long-awaited pullback that brings shares down to somewhere near $250 close at hand? Here are six catalysts to monitor that could move shares this winter. [Read more about catalysts and how they shape the market's biggest winners]

The positives.
There's no shortage of reasons to like Apple. Just ask Wall Street analysts. They universally sing the company's praises, and most expect shares to eventually climb to $375 or higher. That's not a huge stretch, as $375 reflects a price-to-earnings (P/E) ratio of just 15 on earnings per share (EPS) of $25 in 2011. (The consensus calls for $22, but since Apple routinely tops forecasts by at least 10%, $25 is the most likely outcome).

Why are analysts so bullish?

1. Quarterly trends are scorching. Apple posted spectacular quarterly results in late October, and it looks very likely that results for the December quarter will be even stronger thanks to holiday spending patterns. For example, Apple shipped 14.1 million iPhones last quarter (up +92% from a year earlier), and analysts think more than 15 million units will be sold in the current quarter. Sales of iPhones may cool a bit in the March quarter, but should go on to hit new heights once Verizon (NYSE: VZ) starts selling its own version of the phone.

2. The Mac is back. Just a decade ago, Apple had a miniscule share of the desktop and laptop computing market as Microsoft (Nasdaq: MSFT) looked set to declare game, set and match. These days, the Mac is on the move, taking market share from the Windows crowd quarter after quarter. Sales of Macs rose +26% in the most recent quarter compared with a year ago, while the PC sector grew less than +10%.

All of this success — every bit of it — comes from the halo effect of the iPod, iPhone and iPad, which all operate in the same eco-system. The rising installed base of Macs (both laptops and desktops) further feeds the virtuous cycle of app development, which enhances the sales proposition of all of Apple's products. The solid performance of Apple's fast-expanding store base also provides a positive feedback loop in terms of attracting new customers.

3. A financial dynamo. Apple generated more than $16 billion in free cash flow in fiscal (September) 2010, boosting its cash holding to $51 billion ($55 a share). Unless Apple makes a major move in terms of buybacks, dividends or acquisitions, cash is likely to exceed $80 billion by the end of 2012. Excluding the current cash balance, shares trade for around 13 times likely 2011 profits. That's a very reasonable multiple in light of the company's strong growth, impressive operating margins (they exceed 25%), and powerful brand.

The negatives
If you're looking for potential negatives for Apple among the Wall Street analyst crowd, you won't find much. This stock is so universally loved by sell-side analysts, that you wonder why shares can't seem to break past the current trading range, even after reporting such a stellar quarter. But potential red flags surely do exist, including:

4. Yphrum's Law (also known as the opposite of Murphy's Law). Everything that could go right for Apple is going right. The iPad has no real competition, Microsoft has proven to be a feeble foe, and Apple has been able to secure premium pricing for its products. Also, the transition to digitally downloaded music continues (sales at iTunes were up +22% in the most recent quarter).

Yet each of these factors carries the potential for reversals. For example, the iPad will soon have many rivals. The early crop of tablet computers offered by rivals has been uninspiring, but the sheer number that will be on the market could quickly turn this into a commoditized segment with little pricing power. In addition, Microsoft's stumbles are soon to be obscured by Google's (Nasdaq: GOOG) rising momentum. [See: "Apple's Biggest Fear"] Google has the unsportsmanlike habit of giving things away and figuring out how to charge for it later. That can wreak havoc for rivals that like to make profits.

5. Margins headed for a fall? Apple recently caused a dust-up by noting in its 10-K filing that gross margins may drop in the current year. That's understandable. The new line of Macs have received major price drops as Apple finds it increasingly difficult to take further market share while its desktops and laptops are notably more expensive than PC units. Apple has also recently benefited from a fairly benign environment for component pricing, and any spike in costs for memory, touch screens and other outsourced items would surely pressure margins.

6. Early adopters and the weak economy. This final point is the major thesis of the few lonely bears. They contend that Apple has done a remarkable job of generating buzz among the most tech-savvy of consumers. But with those early adopters largely spoken for, these bears question why analysts expect Apple's unit sales to come in at a much higher pace in fiscal 2011, as is reflected in most analysts' earnings models. Apple is expected to boost sales +34% this year. But with rising competition in the tablet and smart phone space, and most of those competing products likely to be priced more aggressively, Apple could lose some major momentum.

To be sure, international sales are likely to spike well higher in the next few years. But global players like Samsung and Acer can't be taken lightly as they push back, either. The bears also wonder if Apple can meet sales targets if the economy remains in a funk. Recent sales data imply that consumers are starting to spend again, but we'd need to see these trends sustained before Apple and others can truly be enthused about 2011.

Action to Take –> Shares of Apple certainly aren't overpriced in relation to near-term sales and profit trends. It's the longer-term trends that are worrisome to some. That's why investors will be closely tracking Apple's operating metrics in the next quarter or two for signs of possible slippage.

Apple is currently priced as if it will be a far larger company in three to four years. Time will tell. If you don't own the stock, best off staying clear — you've missed a great run. A pullback to $250 is the best place to get in, and a move to $400 makes the case to short the stock.


– David Sterman

P.S. –

Uncategorized

6 Catalysts That Could Send Apple’s Shares Soaring — or Plummeting — Very Soon

December 9th, 2010

6 Catalysts That Could Send Apple's Shares Soaring -- or Plummeting -- Very Soon

After an impressive two-year surge that has seen its stock rise more than +200%, shares of Apple (Nasdaq: AAPL) appear to have stalled. The stock has been stuck in a tight range between $300 and $320 for the past six weeks, as bulls and bears have at it.

Yet this stock is far too popular and far too controversial to stay stuck in a trading range for very long. The key question for investors now: Will Apple resume its upward climb toward the $400 mark? Or is the long-awaited pullback that brings shares down to somewhere near $250 close at hand? Here are six catalysts to monitor that could move shares this winter. [Read more about catalysts and how they shape the market's biggest winners]

The positives.
There's no shortage of reasons to like Apple. Just ask Wall Street analysts. They universally sing the company's praises, and most expect shares to eventually climb to $375 or higher. That's not a huge stretch, as $375 reflects a price-to-earnings (P/E) ratio of just 15 on earnings per share (EPS) of $25 in 2011. (The consensus calls for $22, but since Apple routinely tops forecasts by at least 10%, $25 is the most likely outcome).

Why are analysts so bullish?

1. Quarterly trends are scorching. Apple posted spectacular quarterly results in late October, and it looks very likely that results for the December quarter will be even stronger thanks to holiday spending patterns. For example, Apple shipped 14.1 million iPhones last quarter (up +92% from a year earlier), and analysts think more than 15 million units will be sold in the current quarter. Sales of iPhones may cool a bit in the March quarter, but should go on to hit new heights once Verizon (NYSE: VZ) starts selling its own version of the phone.

2. The Mac is back. Just a decade ago, Apple had a miniscule share of the desktop and laptop computing market as Microsoft (Nasdaq: MSFT) looked set to declare game, set and match. These days, the Mac is on the move, taking market share from the Windows crowd quarter after quarter. Sales of Macs rose +26% in the most recent quarter compared with a year ago, while the PC sector grew less than +10%.

All of this success — every bit of it — comes from the halo effect of the iPod, iPhone and iPad, which all operate in the same eco-system. The rising installed base of Macs (both laptops and desktops) further feeds the virtuous cycle of app development, which enhances the sales proposition of all of Apple's products. The solid performance of Apple's fast-expanding store base also provides a positive feedback loop in terms of attracting new customers.

3. A financial dynamo. Apple generated more than $16 billion in free cash flow in fiscal (September) 2010, boosting its cash holding to $51 billion ($55 a share). Unless Apple makes a major move in terms of buybacks, dividends or acquisitions, cash is likely to exceed $80 billion by the end of 2012. Excluding the current cash balance, shares trade for around 13 times likely 2011 profits. That's a very reasonable multiple in light of the company's strong growth, impressive operating margins (they exceed 25%), and powerful brand.

The negatives
If you're looking for potential negatives for Apple among the Wall Street analyst crowd, you won't find much. This stock is so universally loved by sell-side analysts, that you wonder why shares can't seem to break past the current trading range, even after reporting such a stellar quarter. But potential red flags surely do exist, including:

4. Yphrum's Law (also known as the opposite of Murphy's Law). Everything that could go right for Apple is going right. The iPad has no real competition, Microsoft has proven to be a feeble foe, and Apple has been able to secure premium pricing for its products. Also, the transition to digitally downloaded music continues (sales at iTunes were up +22% in the most recent quarter).

Yet each of these factors carries the potential for reversals. For example, the iPad will soon have many rivals. The early crop of tablet computers offered by rivals has been uninspiring, but the sheer number that will be on the market could quickly turn this into a commoditized segment with little pricing power. In addition, Microsoft's stumbles are soon to be obscured by Google's (Nasdaq: GOOG) rising momentum. [See: "Apple's Biggest Fear"] Google has the unsportsmanlike habit of giving things away and figuring out how to charge for it later. That can wreak havoc for rivals that like to make profits.

5. Margins headed for a fall? Apple recently caused a dust-up by noting in its 10-K filing that gross margins may drop in the current year. That's understandable. The new line of Macs have received major price drops as Apple finds it increasingly difficult to take further market share while its desktops and laptops are notably more expensive than PC units. Apple has also recently benefited from a fairly benign environment for component pricing, and any spike in costs for memory, touch screens and other outsourced items would surely pressure margins.

6. Early adopters and the weak economy. This final point is the major thesis of the few lonely bears. They contend that Apple has done a remarkable job of generating buzz among the most tech-savvy of consumers. But with those early adopters largely spoken for, these bears question why analysts expect Apple's unit sales to come in at a much higher pace in fiscal 2011, as is reflected in most analysts' earnings models. Apple is expected to boost sales +34% this year. But with rising competition in the tablet and smart phone space, and most of those competing products likely to be priced more aggressively, Apple could lose some major momentum.

To be sure, international sales are likely to spike well higher in the next few years. But global players like Samsung and Acer can't be taken lightly as they push back, either. The bears also wonder if Apple can meet sales targets if the economy remains in a funk. Recent sales data imply that consumers are starting to spend again, but we'd need to see these trends sustained before Apple and others can truly be enthused about 2011.

Action to Take –> Shares of Apple certainly aren't overpriced in relation to near-term sales and profit trends. It's the longer-term trends that are worrisome to some. That's why investors will be closely tracking Apple's operating metrics in the next quarter or two for signs of possible slippage.

Apple is currently priced as if it will be a far larger company in three to four years. Time will tell. If you don't own the stock, best off staying clear — you've missed a great run. A pullback to $250 is the best place to get in, and a move to $400 makes the case to short the stock.


– David Sterman

P.S. –

Uncategorized

Use This Unique Twist on an Old Income Strategy

December 9th, 2010

Use This Unique Twist on an Old Income Strategy

I once had a subscriber write in response to some questions I asked about readers' long-term investing goals.

“At this age, I don't buy green bananas,” he said.

I had to laugh; my father used the same line for years. But it does bring up a great point. I'm willing to bet that if you are reading this, you aren't 22 years old and starting your first job out of college (and if you are, good job — you're ahead of the game).

But one of the main tenets of my income investing strategy — what I call the “

Uncategorized

Use This Unique Twist on an Old Income Strategy

December 9th, 2010

Use This Unique Twist on an Old Income Strategy

I once had a subscriber write in response to some questions I asked about readers' long-term investing goals.

“At this age, I don't buy green bananas,” he said.

I had to laugh; my father used the same line for years. But it does bring up a great point. I'm willing to bet that if you are reading this, you aren't 22 years old and starting your first job out of college (and if you are, good job — you're ahead of the game).

But one of the main tenets of my income investing strategy — what I call the “

Uncategorized

I’ve Uncovered a Trade That Could Pay off Big…

December 9th, 2010

I've Uncovered a Trade That Could Pay off Big...

The rules of a paired trade are quite simple. Find a good company and make a bullish investment while also finding a lousy company in the same industry and make a bearish short investment against it.

That logic surely applies when two companies appear comparably valued. But what do you do when the solid operator appears quite overpriced and the lousy operator appears to be far too cheap? Well, you have to turn the paired trade theory on its head.

That's precisely the dynamic in place in the supermarket industry. Whole Foods (Nasdaq: WFMI) is a very well-managed company with a stellar track record. Supervalu (NYSE: SVU) has clearly been the dog of the industry for quite some time. Yet this dog may soon have it day, and paradoxically is the better investment.

Differing business models… for now
Whole Foods has single-handedly altered what consumers think of in terms of grocery stores. Its emphasis on healthy foods in an inviting shopping environment has allowed it to charge premium prices. That's why it can generate 5% EBITDA margins while most grocers must make do with 2% to 3% margins — at best. And business at Whole Foods has rebounded impressively in 2010, despite a still-weak economy. Moreover, Walmart's (NYSE: WMT) aggressive push into groceries has surely hurt business at traditional supermarket chains like Supervalu and Kroger (NYSE: KR) to a much greater extent than Whole Foods.

That helps explain why Whole Foods is boosting revenue at a +10% clip (aided by store openings), while Supervalu's sales are shrinking more than -5% (partially due to selective store closings). But food retailing is a funny business. Grocery chains can — and often do — re-invent themselves. By upgrading stores, changing the merchandise mix and tinkering with pricing, they can alter the perception among consumers and draw back lost shoppers. And that's precisely what Supervalu is doing, spending more than $500 million in the current fiscal year to remodel stores. (Despite that spending, the company will still generate more than $1 billion in free cash flow this year, according to UBS.)

It will be likely be several years before consumer perceptions of Supervalu's stores can improve, so you shouldn't look for it to morph into an industry leader overnight. Nor should you expect this company to eventually be seen in the same light as Whole Foods, which has a strong grip on the premium end of the market. That said, as rivals like Supervalu and Kroger try to replicate the look and feel of successful grocers like Whole Foods, all of the players should see their operating metrics revert to the mean.

By the numbers
Even before Supervalu takes steps to improve results, its shares are already stunningly cheap by a variety of investment metrics. For example, it trades for less than six times projected earnings — that's one-fifth of the multiple garnered by Whole Foods. And both of these companies are comparably valued in terms of enterprise value, even though Supervalu's sales base is four times as large and its EBITDA is twice as high.

Shares of Supervalu are also in the doghouse because of a stubbornly high debt load, which still exceeds $6 billion. The company's equity is worth less than $2 billion. And that, in a nutshell, is the primary reason why you should be bullish on Supervalu, even as its operations stumble right now. Any company with very high levels of debt often sees its equity come under pressure due to concerns about potential financial distress. But Supervalu, even with its subpar results, generates ample cash flow to cover its interest expenses and take down some principal. So over time, that debt load is likely to shrink, taking the total enterprise value down with it.

For example, let's say Supervalu reduces debt from $6 billion to $4 billion in the next three years thanks to operating cash flow and selective asset sales. For its enterprise value to stay constant, equity would rise by a commensurate amount that the debt falls. That means its market value would rise from the current $1.8 billion to $3.5 or $4.0 billion. Shares would likely double from this — without the company's enterprise value changing one iota.

There's a decent chance that Supervalu won't be around as a public company long enough to see that change. Rumors have popped up that private equity (PE) firms are sniffing around. Yes, this grocer has more debt than PE shops would like, but the cash flow capabilities relative to its existing debt load are awfully enticing. I have no idea if the rumors are true, but the logic is solid.

Action to Take –> It's hard to see how shares of Whole Foods can rise any higher, already trading for nearly 30 times projected fiscal (September) 2011 results. If anything, shares are vulnerable to a slow downward drift as other grocers start to replicate its business model. If you want to use a paired trade strategy, that's the short side of it.

Meanwhile, on the long side, shares of Supervalu look significantly undervalued in the context of the grocer's still-strong cash flow. Management needs to proceed with some financial engineering to unlock shareholder value. But with shares now trading at levels last seen in 1990, they get the message.


– David Sterman

David Sterman started his career in equity research at Smith Barney, culminating in a position as Senior Analyst covering European banks. David has also served as Director of Research at Individual Investor and a Managing Editor at TheStreet.com. Read More…

Disclosure: Neither David Sterman nor StreetAuthority, LLC hold positions in any securities mentioned in this article.

This article originally appeared on StreetAuthority
Author: David Sterman
I've Uncovered a Trade That Could Pay off Big…

Read more here:
I’ve Uncovered a Trade That Could Pay off Big…

Uncategorized

I’ve Uncovered a Trade That Could Pay off Big…

December 9th, 2010

I've Uncovered a Trade That Could Pay off Big...

The rules of a paired trade are quite simple. Find a good company and make a bullish investment while also finding a lousy company in the same industry and make a bearish short investment against it.

That logic surely applies when two companies appear comparably valued. But what do you do when the solid operator appears quite overpriced and the lousy operator appears to be far too cheap? Well, you have to turn the paired trade theory on its head.

That's precisely the dynamic in place in the supermarket industry. Whole Foods (Nasdaq: WFMI) is a very well-managed company with a stellar track record. Supervalu (NYSE: SVU) has clearly been the dog of the industry for quite some time. Yet this dog may soon have it day, and paradoxically is the better investment.

Differing business models… for now
Whole Foods has single-handedly altered what consumers think of in terms of grocery stores. Its emphasis on healthy foods in an inviting shopping environment has allowed it to charge premium prices. That's why it can generate 5% EBITDA margins while most grocers must make do with 2% to 3% margins — at best. And business at Whole Foods has rebounded impressively in 2010, despite a still-weak economy. Moreover, Walmart's (NYSE: WMT) aggressive push into groceries has surely hurt business at traditional supermarket chains like Supervalu and Kroger (NYSE: KR) to a much greater extent than Whole Foods.

That helps explain why Whole Foods is boosting revenue at a +10% clip (aided by store openings), while Supervalu's sales are shrinking more than -5% (partially due to selective store closings). But food retailing is a funny business. Grocery chains can — and often do — re-invent themselves. By upgrading stores, changing the merchandise mix and tinkering with pricing, they can alter the perception among consumers and draw back lost shoppers. And that's precisely what Supervalu is doing, spending more than $500 million in the current fiscal year to remodel stores. (Despite that spending, the company will still generate more than $1 billion in free cash flow this year, according to UBS.)

It will be likely be several years before consumer perceptions of Supervalu's stores can improve, so you shouldn't look for it to morph into an industry leader overnight. Nor should you expect this company to eventually be seen in the same light as Whole Foods, which has a strong grip on the premium end of the market. That said, as rivals like Supervalu and Kroger try to replicate the look and feel of successful grocers like Whole Foods, all of the players should see their operating metrics revert to the mean.

By the numbers
Even before Supervalu takes steps to improve results, its shares are already stunningly cheap by a variety of investment metrics. For example, it trades for less than six times projected earnings — that's one-fifth of the multiple garnered by Whole Foods. And both of these companies are comparably valued in terms of enterprise value, even though Supervalu's sales base is four times as large and its EBITDA is twice as high.

Shares of Supervalu are also in the doghouse because of a stubbornly high debt load, which still exceeds $6 billion. The company's equity is worth less than $2 billion. And that, in a nutshell, is the primary reason why you should be bullish on Supervalu, even as its operations stumble right now. Any company with very high levels of debt often sees its equity come under pressure due to concerns about potential financial distress. But Supervalu, even with its subpar results, generates ample cash flow to cover its interest expenses and take down some principal. So over time, that debt load is likely to shrink, taking the total enterprise value down with it.

For example, let's say Supervalu reduces debt from $6 billion to $4 billion in the next three years thanks to operating cash flow and selective asset sales. For its enterprise value to stay constant, equity would rise by a commensurate amount that the debt falls. That means its market value would rise from the current $1.8 billion to $3.5 or $4.0 billion. Shares would likely double from this — without the company's enterprise value changing one iota.

There's a decent chance that Supervalu won't be around as a public company long enough to see that change. Rumors have popped up that private equity (PE) firms are sniffing around. Yes, this grocer has more debt than PE shops would like, but the cash flow capabilities relative to its existing debt load are awfully enticing. I have no idea if the rumors are true, but the logic is solid.

Action to Take –> It's hard to see how shares of Whole Foods can rise any higher, already trading for nearly 30 times projected fiscal (September) 2011 results. If anything, shares are vulnerable to a slow downward drift as other grocers start to replicate its business model. If you want to use a paired trade strategy, that's the short side of it.

Meanwhile, on the long side, shares of Supervalu look significantly undervalued in the context of the grocer's still-strong cash flow. Management needs to proceed with some financial engineering to unlock shareholder value. But with shares now trading at levels last seen in 1990, they get the message.


– David Sterman

David Sterman started his career in equity research at Smith Barney, culminating in a position as Senior Analyst covering European banks. David has also served as Director of Research at Individual Investor and a Managing Editor at TheStreet.com. Read More…

Disclosure: Neither David Sterman nor StreetAuthority, LLC hold positions in any securities mentioned in this article.

This article originally appeared on StreetAuthority
Author: David Sterman
I've Uncovered a Trade That Could Pay off Big…

Read more here:
I’ve Uncovered a Trade That Could Pay off Big…

Uncategorized

3 Forgotten Energy Stocks That Could Fatten Your Wallet

December 9th, 2010

3 Forgotten Energy Stocks That Could Fatten Your Wallet

If you started the year with three wishes and one of them was for more consistency from the energy sector, you wasted a wish.

Although many energy stocks are up this year, by double-digits in some cases, others are flat and still others are down (also by double-digits in some cases). Basically, the sector is all over the place.

The stock of domestic oil and gas giant ConcoPhillips (NYSE: COP), for example, has gained about +30% so far this year. Meanwhile, shares of exploration and production firm Devon Energy (NYSE: DVN) have gone pretty much nowhere. Brazilian energy behemoth Petroleo Brasileiro (NYSE: PBR) has seen its stock fall nearly -30%. [Click here for my colleague Ryan Fuhrmann's views on "Petrobras," which he thinks could become the world's first $1 trillion company.]

This phenomenon is common in the earliest stages of economic recovery — just where we are now — and you should welcome it. It offers rare chances to buy great stocks cheap, with the potential for mouth-watering long-term returns.

I've found three stocks in the energy sector that fill that bill quite nicely: Noble Corp. (NYSE: NE), Total (NYSE: TOT) and Ultra Petroleum (NYSE: UPL).

A full recovery next year
Noble has the distinction of being one of the sector's double-digit losers, dropping about -15% so far this year. The main reason: during the drilling moratorium in the Gulf of Mexico, earnings suffered greatly, falling -43% and -79%, respectively, in the second and third quarters. Noble generates much of its revenue in the Gulf by providing offshore drilling services to the oil and gas industry.

But the stock could easily recover much or all of this year's loss by the end of 2011 and rise at least +90% through 2016. That's because drilling has resumed in the Gulf and Noble has a contract backlog worth up to $10 billion, so earnings should dramatically improve. Indeed, analysts project the company's five-year growth rate will approach +14% annually.

Importantly, Noble has an especially well-maintained rig fleet, high customer satisfaction ratings and an excellent safety record. After a disaster like the Gulf oil spill, its strong reputation will mean a lot going forward.

A top-notch French company
Shares of French oil giant Total have also receded about -15% year-to-date. But the problem isn't the company, it's the euro. Sovereign debt problems in Europe and the possibility of more bailouts like the one Ireland recently received have hurt the euro. That, in turn, has hurt Total, since it reports results and pays dividends in euros.

Nevertheless, analysts predict the stock will appreciate by at least +45% and maintain its nearly 5% yield during the next three or four years. Weak euro aside, Total is a top-notch oil and gas company with a profitable history and plans for a bright future.

Those plans include lots of exploration for new fields to drive long-term growth and hedge against declining production at existing fields. Already, West Africa and Asia have yielded promising new discoveries, and potentially lucrative projects are being explored in the North Sea and Middle East.

Total is exploiting a key competitive advantage in the oil sands of Canada, too — a superior ability to develop tougher fields like oil sands, thanks to prior experience with similar fields in Venezuela.

A fast-growing mid-cap
Oil and gas exploration and production firm Ultra Petroleum has by far the most exciting return potential of the three stocks profiled here, despite going virtually nowhere this year. Earnings for this fast-growing mid-cap are projected to rise by +18% to +23% annually for the next four or five years. Its stock could return at least +120% during that time — perhaps much more if natural gas goes above $5.40 per thousand cubic feet.

A key development that makes such estimates feasible is the recent acquisition of valuable natural gas fields in the Marcellus Shale of Pennsylvania. Ultra Petroleum now has nearly 500,000 acres and 31 productive wells there, with many more planned.

The Marcellus assets are excellent additions to existing and already highly productive operations in Wyoming's Green River Basin. It also helps immensely that, at roughly $1.20 per thousand cubic feet, Ultra Petroleum's production costs are among the lowest in the industry — a trend that should continue for at least a few more years.

Assuming costs stay low and natural gas prices get to around $5.00 per thousand cubic feet pretty soon, earnings before interest, taxes, depreciation, amortization and exploration expenses (EBITDAX) could top $1.1 billion next year. That's an estimated +45% gain from this year's EBITDAX.

Action to Take –> Take advantage of a rare chance to buy three superior energy stocks cheap: Noble, Total and Ultra Petroleum. Their wallet-fattening potential is great.

Remember, though, energy stocks like these can be volatile, especially Ultra Petroleum. And unforeseen weakness in energy prices could deal a serious blow to any of them.

Uncategorized

Follow the Trend with Small-Cap Growth ETFs

December 9th, 2010

Ron Rowland

With exchange traded funds (ETFs), global stock markets can be sliced and diced in hundreds of different ways. You can invest by country, by geographic region, by industry sector, and by various combinations of all these.

Another way to look at the picture is by company style. Some stocks are more tilted toward growth and others toward value.

In a growth stock, the company is still trying to expand and probably reinvests a big part of any profits back into its business. Apple (AAPL) is a good example.

Value stocks, typically found in more mature industries, tend to be more stable and throw off regular income via dividends. Altria (MO) is a well-known value stock.

Style-based investing is frequently combined with market capitalization that breaks down companies by their size. From smallest to largest, you might have micro-cap, small-cap, mid-cap, large-cap, and mega-cap.

Put the two methodologies together and you get the familiar 9-square “style box,” originated by Morningstar, containing segments like large-cap growth and mid-cap value. Momentum shifts around through these categories based on economic and market conditions.

Stay ahead of the wave and you can make a tidy profit. Get behind it and you can lose your shirt.

Small-Cap Growth Zooming Ahead!

Right now, my proprietary indicators show a sharp divergence between the best and worst corners of the style box. Small-cap growth is moving up way faster than anything else. Over the last few months, my analysis shows a key small-growth benchmark is climbing at a 40 percent annualized rate!

Meanwhile, large-cap value, while not trending down, is nowhere near as attractive. The large value index I watch is growing at a relatively mild 10 percent annualized rate.

Why is this happening?

One reason may be that stock market investors are increasingly willing to take on risk — something that is definitely found in small-growth stocks. At the other end of the scale, large-value benchmarks are dominated by banks and other sectors that are relatively unattractive right now.

Yes, we’re looking in the rear-view mirror here, and the near future may or may not resemble the recent past. That’s always the case. Nevertheless, I’ve found that following the trend is usually a good strategy.

If you’re an equity trend-follower, then you need to take a strong look at the small-growth niche. Here are some ETFs you may want to consider.

These two track the Russell 2000 Growth Index:

  • iShares Russell 2000 Growth (IWO)
  • Vanguard Russell 2000 Growth (VTWG)

And these ETFs try to match the S&P 600 Small Cap Index:

  • iShares S&P SmallCap 600 Growth (IJT)
  • Vanguard S&P Small-Cap 600 Growth (VIOG)

This raises an interesting question …

If Two ETFs Follow the Same Index,
Which Should You Buy?

There are a couple of factors to consider …

First, which fund has the lowest expense ratio?

Operating costs are critical in an index fund. As long as the fund sponsor is a large, well-known firm (as both iShares and Vanguard are), there is no reason to pay any more than you must. The two Vanguard ETFs have a slight edge with expense ratios of 0.20 percent vs. 0.25 percent for both iShares offerings.

Second, look at liquidity and trading costs.

IWO and IJT are both heavily traded and have minimal bid-ask spreads. VTWG and VIOG are relatively new and haven’t built up large trading volumes yet. But I think it’s just a matter of time.

For individual investors, trading commissions may be a bigger factor. And if you have an account at the right brokerage, you can trade the above four ETFs for free.

For instance, clients of Fidelity Brokerage can trade IWO, IJT and some other iShares products with no transaction fee. Vanguard offers fee-free trading for VTWG and VIOG through its own brokerage affiliate.

So if you are already set up with Fidelity, you are probably better off with the iShares ETFs. Vanguard fans will likely find their firm’s proprietary ETFs are more cost-effective.

For more sophisticated traders, now may be a good time to capitalize on the wide momentum spread between small-growth and large-value. You can do this by pairing one of the small-growth ETFs with ProShares UltraShort Russell 1000 Value (SJF).

This ETF seeks daily investment results, before fees and expenses, that correspond to twice (200 percent) the inverse (opposite) of the daily performance of the Russell 1000 Value Index. Since SJF is leveraged and the other ETFs named above are not, you’ll need to adjust the amount you invest in each accordingly.

Will the trend change?

You bet it will! I fully expect to see the tables turned at some point, when we will see small-cap growth lag behind large-cap value. Will it be soon? That’s a tougher question. All I can say is that right now, small-growth is the style to consider owning.

Best wishes,

Ron

P.S. This week on Money and Markets TV, we check in on the health of the U.S. economy, and offer our prognosis for the pace of recovery in 2011.

So for some concrete investment ideas, based on the economic outlook of all the Weiss Research editors, be sure to tune in tonight, December 9, at 7 P.M. Eastern time (4:00 P.M. Pacific).

Simply go to www.weissmoneynetwork.com and follow the on-screen instructions. Access is free and no registration is required.

Read more here:
Follow the Trend with Small-Cap Growth ETFs

Commodities, ETF, Mutual Fund, Uncategorized

Active ETFs Allow For Product Differentiation

December 9th, 2010

Actively-managed ETFs have continued to get attention from both the investing public and the manufacturers of the products that investors put their money in. The buzz generated about the Active ETF space since 2008 has no doubt been increasing because of the large number of major financial players that have filed applications with the SEC to receive approval to launch these products. These include the likes of Legg Mason, PIMCO, JP Morgan, Vanguard, T. Rowe Price and Eaton Vance – which just acquired assets of Managed ETFs LLC, a firm that owns patents which could provide the necessary trading framework for non-transparent actively-managed ETFs to exist.

The large amount of interest shown from various firms has naturally lead to the question of what the firms are trying to achieve by entering this new and nascent space in the ETF market. What’s their motivation? Scott Burns, Director of ETF Research at Morningstar, speaking to ignites.com probably hit the nail on its head. “When you open up with an active strategy in an asset class, they don’t become a ‘me too’ product. The active manager changes the timbre of the fund. That’s why you can have 8,000 active mutual funds”, said Burns.

That highlights one of the main reasons why we are seeing so much interest in Active ETFs from issuers. The US ETF market, at last count by the National Stock Exchange, had 1,092 exchange-traded products, including ETFs and ETNs, with assets close to $950 million. Globally, the ETF industry well exceeds $1 trillion in assets now. Nearly every nook and creek of the investable spectrum has been covered off by ETFs, sometimes many times over, with several duplicate products competing on price. In other words, the passive ETF world has become highly commoditized. Anything that one passive ETF provider can offer is easily duplicated by another provider because there are hardly any barriers to entry or differentiating factors. Innovations such as fundamental indexing, inverse and leveraged ETFs have commanded some sort of a premium in the early stages of their introduction to the market, but they too are now commoditized, with competition coming down to price.

In that context, the Active ETF space has provided issuers with some breathing room. There are currently only 32 actively-managed ETFs in the US with a total capitalization of about $2.9 billion. Needless to say there’s lots of room to grow and niches to occupy. Most importantly, the prospect of active management actually allows issuers to erect some barriers to entry around successful products – barriers which can be held up by strong outperformance by their managers. In passive ETFs, the value-add of the manager – tracking the index closely – is easily duplicated. However, value-add for actively-managed ETFs comes from the skill and ability of the portfolio manager, something that is not as easily copied. Of course, this whole discussion is predicated on the assumption that there are some managers behind Active ETFs who can actually outperform. That is an assumption yet to be tested fairly because of the relatively short history of these products. The first actively-managed ETFs will achieve their 3-year track records only in April 2011.

Another post on SmartMoney addressed the same question in a different way. Jonnelle Marte argues that the motivation behind the interest show in Active ETFs is a desperate attempt from active managers to retain some portion of their higher fees, which they have been losing due to the wide-scale move to passive indexing. That is quite definitely true to some extent. However, one point is lost in that argument. Many of the major firms clamouring to get into the Active ETF space are in fact leaders in passive investment products. Just to name a few – iShares, Vanguard, State Street and PowerShares. These companies, not coincidently, are the top 4 providers of passive ETFs, combining to hold some 89% of all assets in the ETF space. So from their point of view, these companies are trying to extend the benefits of the ETF structure to another group of investors – namely, those looking for active management. Yes, traditional active managers such as Legg Mason and Eaton Vance are likely using this opportunity to participate in the move towards ETFs and to continue keeping revenues inside their firm, albeit in a different product instead of a mutual fund. However, that’s not the sole motivation of all potential entrants to the Active ETF space.

ETF, Mutual Fund

Is The Herd Trading Gold & SP500?

December 9th, 2010

Over the past 2 weeks we have seen the market sentiment change three times from extreme bullish to bearish and back to bullish as of today. Normally we don’t see the herd (average Joe) switch trading directions this quickly. Over the past 10 years I found that the average time for the herd to reach an extreme bullish or bearish bias takes between 4-6 weeks in length. It is this herd mentality which makes for some excellent trend trading opportunities. But with the quantitative easing, thinner traded market, and lack of trading participants (smaller herd) I find everyone is ready to change directions at the drop of a hat.

The old school traders/investors who don’t use real-time data or charts, and who dabbled in stock picks, and options trades here and there have mostly exited the trading arena from frustration or losing to much money. This group accounted for a decent chuck of liquidity in the market and was also the slowest of the herd to change directions.

The new school, today’s smaller herd is much more aggressive and quicker to act on market gyrations. I think this is because the only people left in the market are those who make a living pulling money from the market and those who feel they are really close to mastering the stock market. It is these individuals who are using trading platforms with real-time data, charts and scanners to help get a pulse on the market so they can change directions when the big boys do. I feel this is the reason why the market is able to turn on a dime one week to another over the past 8 months… The easy prey (novice and delayed data traders) are few and far between and the fight to take money for other educated traders seems to be getting a little more interesting to say the least.

Anyways, enough about the herd already…

It’s been an interesting week thus far with stocks and commodities. The week started with a large gap up only for strong selling volume to step in and reverse direction the following day. It is this negative price action that starts to put fear into the market triggering a downward thrust in the market. During an up trend which we are in now, I look for these bearish chart patterns to form as they tend to trigger more selling the following days which cleanses the market of weak positions. Once a certain level of traders have been shaken out of their positions and are entering positions in order to take advantage of a falling market, that’s when we get the next rally, catching the majority of traders off guard as they panic to buy back their short positions. It’s this short covering which sparks a strong multi day rally and kicks off the new leg up in the market.

Currently we getting some mixed signals. The market sentiment is the most bullish it has been since 2007, just a little higher than the Jan & March highs this year. This makes me step back and think twice about taking any sizable long positions. Any day now the market could roll over. Another bearish signal is the fact that we just had a very strong reversal day for stocks and metals to the down side. That typically leads to more selling.

But if we look at the positive side of things, the trend is still up, this is typically a strong time for stocks as we go into Christmas/Holiday season, also the market breadth is really strong with the number of stocks hitting new highs has really taking off.

SP500 – Daily Chart

Below you can see the reversal candles along with short term and intermediate support levels. Although the market sentiment is screaming a correction is near, we must realize that sentiment can remain at this level for an extended period of time while the market continues to trend. This is one of the reasons why we say “The Trend Is Our Friend”.

I am hoping for a pullback and would like to see market sentiment shift enough on an intraday basis to give us a low risk entry point.

Gold – Daily Chart

A reversal candle is seen as a sell signal or a profit taking pattern. Short term aggressive trades use these to lock in quick price movements. With so many traders watching gold, it caused a flood of sell orders to push gold down today.

Mid-Week Conclusion:

In short, each time we see some decent selling in the market its get bought back up. Today was another perfect example as we had an early morning sell off, then a light volume rally for the second half of the session and a end of day short squeeze during the last 30 minutes. Gold has pulled back to the first short term support level. Because of the large following in gold I would like to see if there will be another day of follow through selling before possibly looking to take a trade.

If you would like to get my daily pre-market trading videos, intraday updates, chart analysis and trades just subscribe to my trading service here: www.TheGoldAndOilGuy.com

Chris Vermeulen

Read more here:
Is The Herd Trading Gold & SP500?




Chris Vermeulen is a full time daytrader and swing trader specializing in trading (NYSE:GLD), (NYSE:GDX), XGD.TO, (NYSE:SLV) and (NYSE:USO). I provide my trading charts, market insight and trading signals to members of my newsletter service. If you have any questions feel free to send me an email: Chris@TheGoldAndOilGuy.com This article is intended solely for information purposes. The opinions are those of the author only. Please conduct further research and consult your financial advisor before making any investment/trading decision. No responsibility can be accepted for losses that may result as a consequence of trading on the basis of this analysis.

Commodities, OPTIONS

Three Reasons Small & Mid-Cap ETFs Are Outperforming

December 9th, 2010

Small cap and mid-cap stocks and ETFs have been known to be at the forefront of growth during times of economic recoveries, and over the past few months, they have been leaving large caps in the dust. 

In fact, historical data shows that small-cap stocks have outperformed their large-cap counterparts during three of the past five recessions, while mid-cap stocks have outperformed their large-cap counterparts in each of the past five recessions.  A major reason behind this outperformance is due to the flexibility and nimbleness of small and mod-cap companies.  These companies are generally able to quickly ramp up headcount and production as the economy improves, which further enables them to take advantage of a growing environment and produce gains in revenue and earnings. 

A second force which enables small and mid-caps to outperform large-caps is the inherent performance boost they witness when mergers and acquisitions activity increases as valuations become favorable and larger companies with excess cash on their balance sheets look for ways to expand their businesses. Lastly, small and mid-cap companies generally are riskier than large-caps and therefore witness higher returns and are more susceptible to positive price support in the early stages of an economic recovery.

Some ETFs influenced by this phenomenon include:

  • PowerShares Dynamic Small Cap (PJM), which is up 27% over the last year.
  • Vanguard Small-Cap ETF (VBR), which is up nearly 25% over the last year.
  • S&P Mid-Cap 400 SPDR ETF (MDY), which is up nearly 28% over the last year.
  • iShares Russell Midcap Index Fund (IWR), which is up nearly 26% over the last year.

Disclosure: No Positions

Read more here:
Three Reasons Small & Mid-Cap ETFs Are Outperforming




HERE IS YOUR FOOTER

ETF, Uncategorized

Betting on Gold a Bet Against Currency Management

December 9th, 2010

While stocks have been going nowhere, guess what’s been going up. You know. Gold! That’s right, gold has been in a bull market for the last 10 years. And this year, gold is up 28%.

That’s a trend we like. Because it is long. Solid. And it shows no sign of stopping anytime soon.

Why?

Because the world monetary system has a rendezvous ahead of it too…a rendezvous with destruction. Until that’s behind us, it’s still ahead of us.

“Wait a minute, Bill… How do you know the monetary system is going to crack up? You admit that you don’t get to read tomorrow’s headlines before everyone else.”

Good point.

Of course, we don’t KNOW anything. We’re just guessing. But it seems like a good guess. Let’s put it this way, it’s an extrapolation of current trends in which we have great confidence.

Ben Bernanke admitted this week that he didn’t see the problem coming. Which confirms what we knew all along – the people running US monetary policy have no idea what they are doing.

Gold is a bet against Ben Bernanke. It’s a bet against the feds. It’s a bet against a system that is corrupt and reckless. It’s a bet that the managers of a managed currency will sooner or later manage to mess it up.

Bill Bonner
for The Daily Reckoning

Betting on Gold a Bet Against Currency Management originally appeared in the Daily Reckoning. The Daily Reckoning, offers a uniquely refreshing, perspective on the global economy, investing, gold, stocks and today’s markets. Its been called “the most entertaining read of the day.”

Read more here:
Betting on Gold a Bet Against Currency Management




The Daily Reckoning is a contrarian e-letter, brought to you by New York Times best-selling authors Bill Bonner and Addison Wiggin since 1999. The DR looks at the economic world-at-large and offers its major players – investors, politicians, economists and the average consumer – some much-needed constructive criticism.

Uncategorized

Betting on Gold a Bet Against Currency Management

December 9th, 2010

While stocks have been going nowhere, guess what’s been going up. You know. Gold! That’s right, gold has been in a bull market for the last 10 years. And this year, gold is up 28%.

That’s a trend we like. Because it is long. Solid. And it shows no sign of stopping anytime soon.

Why?

Because the world monetary system has a rendezvous ahead of it too…a rendezvous with destruction. Until that’s behind us, it’s still ahead of us.

“Wait a minute, Bill… How do you know the monetary system is going to crack up? You admit that you don’t get to read tomorrow’s headlines before everyone else.”

Good point.

Of course, we don’t KNOW anything. We’re just guessing. But it seems like a good guess. Let’s put it this way, it’s an extrapolation of current trends in which we have great confidence.

Ben Bernanke admitted this week that he didn’t see the problem coming. Which confirms what we knew all along – the people running US monetary policy have no idea what they are doing.

Gold is a bet against Ben Bernanke. It’s a bet against the feds. It’s a bet against a system that is corrupt and reckless. It’s a bet that the managers of a managed currency will sooner or later manage to mess it up.

Bill Bonner
for The Daily Reckoning

Betting on Gold a Bet Against Currency Management originally appeared in the Daily Reckoning. The Daily Reckoning, offers a uniquely refreshing, perspective on the global economy, investing, gold, stocks and today’s markets. Its been called “the most entertaining read of the day.”

Read more here:
Betting on Gold a Bet Against Currency Management




The Daily Reckoning is a contrarian e-letter, brought to you by New York Times best-selling authors Bill Bonner and Addison Wiggin since 1999. The DR looks at the economic world-at-large and offers its major players – investors, politicians, economists and the average consumer – some much-needed constructive criticism.

Uncategorized

Bernanke Ignores 4,500 Years of Failed Monetary Policy

December 8th, 2010

I naturally wanted to get my two-cents in about Ben Bernanke’s interview on 60 Minutes where he answered softball questions by explaining that everything will be fine and there is no cause for alarm because he and the Federal Reserve were “on the job,” although things will probably get worse for a long time, while he is “100 percent” certain that he could prevent inflation in prices by (get a load of this!) raising interest rates!

This is the same guy who has pounded interest rates to historic lows, near zero, less than the rate of inflation that is perking along at more than 2%, according to the GDP Deflator, and yet he would raise rates! Hahahaha!

Unfortunately, I could not write a thing with my hands, as I was still trussed up in a straightjacket and tied to a chair so that I could watch the spectacle on TV, a situation that was the result of a compromise.

The family knew from the years of my watching Alan Greenspan (the horrid little man who is directly, personally responsible for getting this whole bankrupting, inflationary mess started when he was chairman of the Federal Reserve) on TV, that watching Bernanke would make me go likewise crazy with outrage and anger, and their position was that I should not be allowed to watch it.

Or, if I did watch it, then I should be immediately killed, which I thought was a little extreme.

My bargaining position, on the other hand, was that I watch it, and then we go to Washington, DC to storm the Federal Reserve building, take over monetary policy, put the dollar back on a gold standard, and then I would be famous and everyone would love me, and everywhere I would go people would say, “Mogambo! Come and have a free donut or perhaps a free slice of pizza, which I give you because I, like all Americans, love you and revere you for putting us back on the glorious gold standard, which has kept prices from rising while giving us higher quality goods and services as the miracle of capitalism and free enterprise provide their blessings upon us!”

Back and forth the negotiations went, with the final compromise being that I was allowed to watch it, but only while being tied up in a straightjacket and lashed to a chair.

So, I did get to watch the spectacle, and I noticed that he did not say that he thinks he is the smartest man who ever lived, but it is implied since every other dirtbag government in the last 4,500 years that borrowed too much money and was facing the inevitable bankruptcy, a falling GDP and rising unemployment that listened, in desperation, to a blustering moron like Bernanke who had a “theory” that one could buy oneself out of debt by creating more money and more debt, or a government which heeded the cacophony of likewise blustering morons like we have today in the mainstream media and the majority of universities who parrot such a preposterous “theory,” none of whom see anything wrong in this monetary insanity.

Unfortunately, it always failed to “fix” things because a tidal wave of inflation swept in and destroyed everything, which is the moral of the story.

Thus, quantitative easing has failed very time in the last 4,500 years, although Ben Bernanke thinks he will be the first person to pull it off. After 4,500 years of everybody else trying and failing.

As I watched him blubbering, one thing I noticed is that I wanted a voice-stress analyzer, so that I could more accurately pinpoint exactly when he was lying and what he was lying about, instead of merely watching and listening to him on TV, his dry lips trembling in fear, his voice stammering and obviously nervously aware that I am watching him.

Oh, you could see by the way he squirmed that he knew that my Beady Mogambo Eyes (BME), although bloodshot, were upon him, and still capable of boring into his head like a laser, penetrating his brain to read his mind, analyzing his every word, examining his every move, watching him for the tell-tale giveaways that will cause me to suddenly leap to my feet and exclaim, “That proves he’s a lying bastard who is destroying the dollar, the economy and the world by inflation due to his constantly creating more and more money, and enrolling foreign central banks in his wicked schemes to do the same thing, and all in some bizarre mental illness parading around as neo-Keynesian econometric theoretical swill wherein he actually hears voices, or sees visions, or somehow gets the message to institute a long-term plan to purposely create constant inflation in prices in the range of 2% by purposely creating constant inflation in the money supply, instead of it being the most stupid thing that a banker ever said!”

Secretly, in my dark heart full of anger, I think he should have his face slapped over and over and over until he pleads, “No more, Mighty Mogambo Man (MMM)! I admit I am a lying scumbag, but since nothing can be done, I figure what’s the harm in trying anything, no matter how outlandish?”

Or is it just assumed that since he is the chairman of the foul Federal Reserve, a secretive bank that has destroyed 97% of the buying power of the dollar since 1913 and destroyed a quarter of it in the last few years alone, he is lying all the time because everything that the Federal Reserve has done has been a Bad, Bad Thing (BBT) of higher inflation and more government intrusion about which they always lie?

Well, to be sure, everything the Fed has done has turned out badly, as just looking around will prove. The only bright spot in such monstrous monetary inflation is that it causes the prices of gold, silver and oil to go up, and they will go so much that all my idle dreams of indolence, gluttony and sloth will all soon be coming true.

And the best part is that it’s so easy that I happily say, “Whee! This investing stuff is easy!”

The Mogambo Guru
for The Daily Reckoning

Bernanke Ignores 4,500 Years of Failed Monetary Policy originally appeared in the Daily Reckoning. The Daily Reckoning, offers a uniquely refreshing, perspective on the global economy, investing, gold, stocks and today’s markets. Its been called “the most entertaining read of the day.”

Read more here:
Bernanke Ignores 4,500 Years of Failed Monetary Policy




The Daily Reckoning is a contrarian e-letter, brought to you by New York Times best-selling authors Bill Bonner and Addison Wiggin since 1999. The DR looks at the economic world-at-large and offers its major players – investors, politicians, economists and the average consumer – some much-needed constructive criticism.

Uncategorized

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