Pick Your Own Retirement Age

October 19th, 2010

To work or not to work? That is their question…

Unpopular austerity measures across Europe are brining entire nations to their knees…and politicians back from seaside resort towns! America, is this your future?

Gas stations run dry…flights remain grounded…and half a million jilted upstarts take to the streets daily in France, “defending,” as the Associated Press puts it, “their right to retire at age 60.”

“Production at French oil refineries has been shut down since last week and fuel shortages have hit more than 2,600 petrol stations, or around one in five nationwide, according to an AFP tally of oil industry figures.”

Such is the scale of discontent over having to work in France that President Sarkozy is threatening to return to Paris from the resort town of Deauville, where he is holed up after a summit with Russian and German leaders.

It’s no secret that the French don’t like to work. Neither do most westerners, in fact. It’s just that the French are particularly good at convincing their government to enact laws and rules forcing them to down tools earlier than most nations. At 35 hours per week, the French already enjoy the shortest workweek on the continent. Multiply those five lost hours per week by the period of the average workers’ lifetime and you know what you get? Four years spent watching football and looking impossibly stylish in cafés. To hell with 62. Sarkozy should be hiking the retirement age to 64!

We can’t fault the French though. After all, they have some of the best cafés in the world. Who wouldn’t want to spend their afternoons sipping wine and winking at the pretty passersby? It’s good “work,” if you can get it.

Here’s an idea: NO retirement age. How would this work? Well, for one, the government stays out of your business, allowing you to keep the fruits of your own labor, that which is rightfully yours anyway. Then, when you’ve saved enough money to sponsor your own café-lounging twilight years, and when you’ve decided the humdrum of the workaday life is no longer for you, you clock out and spend your days living off your very own nest egg. Viola!

We’re only half joking, of course. There’s nothing peculiar about the French feeling they have a right not to work. All across the western hemisphere folks are fed up with having to put in a full day’s labor.

“Belgian strike cripples train traffic to Europe neighbours,” reads one headline.

“Spain Strike Sees Industry Halts, Slow Transport,” announced another, recently.

And over the pond, in Ol’ Blighty, crowds of malcontents made their voices heard in London’s city center today.

“Thousands protest against looming cuts,” reads the headline, as if the brave souls were merely trying to dodge the unapologetic scythe of the Grim Reaper himself.

England’s prime minister, David Cameron, is expected to reveal details of his spending review tomorrow, which will be aimed in large part at reducing the country’s crippling deficit. You might think an effort to return a nation running a current account deficit equal to TK percent of GDP to a modicum of frugality would be a step in the right direction, no? Not according to the mob.

“The theatre industry alone brings in more than a billion pounds each year, but we can’t do that without some public subsidy,” Billy McColl, a freelance actor who had come to protest about cuts to arts funding told AFP.

To which your editor replies, “Billy, if you can’t do something without someone else’s involuntary contribution, you shouldn’t do it at all.” In other words, “No, Billy, you can’t have some more.”

The problem, however, is that the Billy McColls of the world – our US readers will recognize them as GM, Fannie Mae and Freddie Mac, AIG, etc. – are simply following the example set by their own governments. The entire western hemisphere is living at the expense of its creditors, mostly those in the east. Unemployable film studies graduates, early retirees and too-stupid-to-succeed businesses gripe that they need special assistance, provided by their government and borrowed from abroad, if they are to compete with their eastern neighbors on the world stage. They need subsidies, handouts, bailouts, protections and assorted other boondoggles to sharpen their blunt, uncompetitive edge. Otherwise, they cry, it’s just unfair.

“The Taiwanese work too hard…the Chinese too cheaply…the Koreans too intelligently. How are we expected to keep up?”

Haven’t you read the news, Billy? Nobody in their right mind expects you to keep up. That’s the point.

Joel Bowman
for The Daily Reckoning

Pick Your Own Retirement Age 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:
Pick Your Own Retirement Age




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

Alan Greenspan and the Effects of “Creating More”

October 19th, 2010

Junior Mogambo Ranger (JMR) Phil S. sent me a link to an article in The Economist titled “Let’s Get Fiscal,” which is an obvious reference to the song “Let’s get physical,” which is not about, as I originally thought, how you should be holding a lot of physical gold and silver before you start investing in the paper world of ETFs.

The subhead was “Effective tax rates,” with the teaser, “Which government takes the biggest bite out of an income of $100,000?”

“Hmm!” I think to myself. “Government taxes compared to government taxes? Hahaha! Well, I hear a lot of reports that tax evasion in many places around the world is rampant, and in some places it is a matter of historical pride. Therefore a lot of income for many people is, effectively, tax-free.

“This means that one guy being taxed at 100% and 99 people evading taxes would result in an effective tax rate of 1%! Hahaha!”

Well, The Economist magazine did not like my little statistical joke, and without ever mentioning it, or me, again, reports that they have an opinion from somebody with more gravitas than a paranoid lunatic gold-bug hiding in the closet under the stairs, wearing nothing but some ratty underwear and a shoulder-holster “packing heavy heat” while relentlessly hammering out on his computer a stream of weird, disjointed diatribes of outrage about the idiots in Congress turning America into a welfare-state and making vague threats against the foul Federal Reserve for creating too, too, too much money for too, too, too long, a monetary sin for which they must be punished for having unleashed the devouring demon of inflation in prices, releasing the misery and suffering of inflation from the Hellhole Of Things You Don’t Want Unleashed (HOTYDWU), which, for the record, is as bad as it sounds.

The guy responsible for all of this suffering and misery is, of course, Alan Greenspan, the lunatic former chairman of the Federal Reserve who personally created all the excess money for all the years that produced the bubbles in stocks, in bonds, in houses, in derivatives and in the cancerous size of a gargantuan deficit-spending government.

And since Greenspan is an old man now, if we are going to wreak vengeance upon him for the inflationary bust that is unfolding all around us, so that all future chairmen of the Federal Reserve will remember with a shudder the fate of those who foster crazy monetary booms and allow the money supply to rise to produce inflation in prices, we had better do it soon.

If not, we will be whacking on a dead guy which loses something in the “lesson” department when video footage could show Greenspan begging for his life and saying how he is sorry for having created so much money, that created so much consumption, that created so much new debt, that created so much new deficit-spending government, which produced so much more government, which created so many new people now dependent upon government, which created the “need” for more taxes and more deficit-spending, which was accommodated by the creation of more money by the Federal Reserve and the demonic Alan Greenspan, turning government deficit-spending and Federal Reserve over-creation of money into a hellish, poisonous brew that will combine, like a tornado inside a hurricane inside a tsunami during an earthquake caused by getting smashed with a huge killer-asteroid, to produce horrific inflation in prices.

Well, The Economist magazine did not like THAT little diatribe of mine, either, even though I included some terrific explanatory photographs, one of which is me being adorable and photogenic, as usual, while shooting two AR-15s, one in each hand, on full-auto with extended clips containing explosive bullets that catch fire when they hit something, and then whatever they hit catches on fire, too, which, in this case, is a couple of bales of hay with Alan Greenspan’s picture, as a target, stuck to one of them, and the wide, expansive area behind the bales of hay is where my missed shots set everything on fire.

Off in the distance you can see deer and other wildlife running for their lives, adding another other ugly metaphor to this nasty Alan Greenspan and the Federal Reserve thing.

I had carefully cropped out of the photograph the guy, apparently a farmer, whose land and hay bales these were, and who was a real moron who could not seem to understand why I am trespassing on his land or why everything is on fire, which I had to patiently explain, over and over, is crucial to the allegory of the widespread, ruinous, cancerous, catastrophic destruction that Alan Greenspan has caused with his continual, relentless, senseless creation of excess money, from the time he took over the Fed in 1987 to when he “retired” in 2006.

The farmer never understood what I was talking about, and the whole thing turned out to be a bummer for us both. If he had bought gold, silver and oil like I told him, he would have been OK, but he was probably too busy trying to put out his barn, which was also on fire.

But don’t you make that mistake! With monsters like Alan Greenspan, and now Ben Bernanke, in control of inflationary monetary policy, buy gold, silver and oil! It’s the right thing to do, it is the only thing to do, and it is so easy that you gotta say, “Whee! This investing stuff is easy!”

The Mogambo Guru
for The Daily Reckoning

Alan Greenspan and the Effects of “Creating More” 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:
Alan Greenspan and the Effects of “Creating More”




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.

ETF, Uncategorized

US Dollar Rises on QE2 Theories

October 19th, 2010

It was fairly uneventful in the currency market yesterday, but the dollar held the hammer at the end of the day, as there were only two currencies that posted gains. I’ll jump into currencies in a moment, but first, we’ll take a look at the results of the economic reports released here in the US. Right out of the gate, we had the TIC flows (security purchases by foreigners), Industrial Production, and Capacity Utilization, which were then followed by a measure of housing.

The net long term TIC flows for August were more than double the July figure, coming in at $128.7 billion compared to $61.2 billion, however, the total net TIC flows fell to $38.9 billion. The total net figure takes into account short-term securities, and as Chuck mentioned yesterday, the markets used to focus on this piece of data but it seems to have fallen out of graces.

Looking back to August, we saw the dollar enter into a sustained weakening pattern only taking a break later in the month so incentive to buy US Treasuries by foreigners would be higher rates, which we’re not going to see for quite some time, or cheaper prices via the dollar. As the dollar weakens, foreigners can buy Treasuries at a discount and that coupled with bouts of flight to safety would be the main reasons for any increases in this figure.

China increased their holdings by $21.7 billion in August to $868.4 billion and remains in the top spot, followed by Japan raising their stake to $836.6 billion. Looking specifically at Treasury notes and bonds, total foreign purchases amounted to $117 billion in August, compared to $30 billion in July, and is what’s needed to finance our debt.

Moving on to September Industrial Production, we saw the figure disappoint by falling 0.2% and marked the first decline since June of last year. It was expected to gain 0.2% but we’ll see in the coming months if this becomes a trend or if foreign demand for US product will pick up the slack. And remember, a weaker currency is good news for exports.

The closely related Capacity Utilization figure, which is a percentage of plant use, came in a bit lower than expected. The September number dropped to 74.7%, from the revised and estimated September number of 74.8%, so nothing of any great significance. Just to give some type of perspective, Capacity Utilization has averaged about 80% over the last two decades so there aren’t any inflation pressures peeking through on this front as of yet.

And looking at the final data release from yesterday, we had the October NAHB Housing Index surprise on the upside by rising to 16 from 13 in September. This measure is simply a gauge of homebuilder confidence and has risen a bit from its record low of 8 in January 2009, but still remains in the cellar. Although this number is second-tier data, I just don’t see any sustained improvement in housing until the employment picture brightens significantly.

I know looking at these numbers can be pretty dry sometimes, so I’ll try and get through it as quickly as possible. Due first thing this morning, we have September housing starts and building permits on the docket and both aren’t expected to show any bright spots. Housing starts are expected to slow a bit to 580K and building permits are forecast to rise slightly to 575K… In other words, nothing really to see here. The only other report due is a consumer confidence measurement released late in the day, and unless there is any large swing one way or the other, it will most likely be swept under the rug.

As I mentioned above, the US dollar gained strength throughout the day as traders try to guess when and how much stimulus the Fed plans to pump in with QE2. With the Fed remaining tight-lipped, rumors keep floating around that more money than expected will be added to the economy, and yet, others think they have the inside track and are calling for less.

Taking it one step further, we have those who believe it will be added incrementally and those who believe it will be added in one swoop. It’s been a constant tug-of-war and those who anticipate a lower addition of stimulus were winning yesterday causing a rise in the dollar. We also had Geithner speaking yesterday, which was dollar positive.

Basically he said that the US would preserve confidence in a strong dollar and will not engage in currency devaluations. That rhetoric is great and everything, but we’ve heard this before and its obvious the US isn’t in a position to maintain and support a strong currency. There were a lot of short dollar positions that have built up over the past several weeks, so some traders might be looking for any excuse to buy dollars at the moment. Again, the direction of the dollar lately has been tied to market perception of future QE.

There were only two currencies that gained yesterday, which were the Mexican peso (MXN) and Japanese yen (JPY), as they primarily rode on the coattails of the USD. We haven’t talked too much about the peso lately, but there really isn’t anything attractive at this point so it rose on thoughts additional stimulus would give a boost to economic growth in the US. Again, not exactly a reason to get excited about the peso, especially with doubts as to how much contribution this would actually provide to the US economy.

The Japanese yen gained just under 0.25%, not necessarily on any merit of the underlying economy, but just on the general buying of dollars. We keep flirting with the post-World War II high of 79.75 as it traded into the 80 handle yesterday, so as you can expect, rumors of additional intervention from the BOJ could start flying around again.

Moving on to one of our favorite currencies and the worst performer yesterday, the Norwegian krone (NOK) lost 0.75% on the day. There wasn’t anything specific other than dollar strength to push the currency lower, but just looking bigger picture, the krone hasn’t seen the same kind of appreciation that the Australian dollar (AUD) or even the Swiss franc (CHF) have seen so far this year. Norway has the fundamentals that being a commodity-based currency and a surplus economy use to provide future support. And not to mention, a central bank that still has room for higher rates.

Today, the Bank of Canada meets on rate policy and they are fully expected to keep them on hold for the moment. All eyes will then focus on the statements released afterwards to see if any hints are provided on future direction as well as the tone policymakers may leave with us. The loonie briefly broke through parity late last week but has sold off a bit to between 0.99 and 0.98. The internal economy could probably stand a hike, but external factors don’t make a likely scenario.

Before I let you go today, Brazil is back in the news as they are trying everything to stem their currency’s appreciation. The Finance Minister announced they will increase a tax on foreign investment in fixed income securities to 6% from 4% and a tax on margin deposits for the futures market is expected to climb to 6% from the current 0.38%.

Neither one of these policy changes impact our EverBank Brazilian CDs, but this is just another attempt to cool speculation on the real (BRL) and make it somewhat less attractive to purchase. At the end of the day, these higher taxes and government intervention in the market won’t offset their interest rate differential and the overall market appetite for the currency. In the end, the market as a whole usually wins.

Lastly, an Australian policymaker said the Aussie’s rise to parity last week reflects the strength of the underlying economy and they have no intention of intervening in the currency market. They said government efforts to try and lower the currency’s value would encourage retaliation from trading partners and that’s not in the best interest of their export industry. Finally, a central banker using logic.

As I came in this morning, the dollar strength from yesterday has carried over and there’s not much to report. The pound sterling (GBP) has taken the biggest hit as factory orders fell to a 6-month low in October due to a slowing of exports, but other than that, most are wearing the same clothes from yesterday. We also have the euro trying to hang onto the 1.39 handle, which has risen slightly to 1.3925 since I first turned the screen on this morning.

To recap…Foreign investment in US Treasuries rise, which finances our debt. US industrial output slowed in September and Capacity Utilization dropped a bit, neither of which are supportive of growth, as inventory building slowed. The dollar appreciated yesterday on speculation of the Fed’s QE plans and Brazil is trying another tactic to deter traders from buying the currency. We have housing numbers here in the US and a rate decision from the Bank of Canada.

Mike Meyer
for The Daily Reckoning

US Dollar Rises on QE2 Theories 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:
US Dollar Rises on QE2 Theories




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

US Dollar Rises on QE2 Theories

October 19th, 2010

It was fairly uneventful in the currency market yesterday, but the dollar held the hammer at the end of the day, as there were only two currencies that posted gains. I’ll jump into currencies in a moment, but first, we’ll take a look at the results of the economic reports released here in the US. Right out of the gate, we had the TIC flows (security purchases by foreigners), Industrial Production, and Capacity Utilization, which were then followed by a measure of housing.

The net long term TIC flows for August were more than double the July figure, coming in at $128.7 billion compared to $61.2 billion, however, the total net TIC flows fell to $38.9 billion. The total net figure takes into account short-term securities, and as Chuck mentioned yesterday, the markets used to focus on this piece of data but it seems to have fallen out of graces.

Looking back to August, we saw the dollar enter into a sustained weakening pattern only taking a break later in the month so incentive to buy US Treasuries by foreigners would be higher rates, which we’re not going to see for quite some time, or cheaper prices via the dollar. As the dollar weakens, foreigners can buy Treasuries at a discount and that coupled with bouts of flight to safety would be the main reasons for any increases in this figure.

China increased their holdings by $21.7 billion in August to $868.4 billion and remains in the top spot, followed by Japan raising their stake to $836.6 billion. Looking specifically at Treasury notes and bonds, total foreign purchases amounted to $117 billion in August, compared to $30 billion in July, and is what’s needed to finance our debt.

Moving on to September Industrial Production, we saw the figure disappoint by falling 0.2% and marked the first decline since June of last year. It was expected to gain 0.2% but we’ll see in the coming months if this becomes a trend or if foreign demand for US product will pick up the slack. And remember, a weaker currency is good news for exports.

The closely related Capacity Utilization figure, which is a percentage of plant use, came in a bit lower than expected. The September number dropped to 74.7%, from the revised and estimated September number of 74.8%, so nothing of any great significance. Just to give some type of perspective, Capacity Utilization has averaged about 80% over the last two decades so there aren’t any inflation pressures peeking through on this front as of yet.

And looking at the final data release from yesterday, we had the October NAHB Housing Index surprise on the upside by rising to 16 from 13 in September. This measure is simply a gauge of homebuilder confidence and has risen a bit from its record low of 8 in January 2009, but still remains in the cellar. Although this number is second-tier data, I just don’t see any sustained improvement in housing until the employment picture brightens significantly.

I know looking at these numbers can be pretty dry sometimes, so I’ll try and get through it as quickly as possible. Due first thing this morning, we have September housing starts and building permits on the docket and both aren’t expected to show any bright spots. Housing starts are expected to slow a bit to 580K and building permits are forecast to rise slightly to 575K… In other words, nothing really to see here. The only other report due is a consumer confidence measurement released late in the day, and unless there is any large swing one way or the other, it will most likely be swept under the rug.

As I mentioned above, the US dollar gained strength throughout the day as traders try to guess when and how much stimulus the Fed plans to pump in with QE2. With the Fed remaining tight-lipped, rumors keep floating around that more money than expected will be added to the economy, and yet, others think they have the inside track and are calling for less.

Taking it one step further, we have those who believe it will be added incrementally and those who believe it will be added in one swoop. It’s been a constant tug-of-war and those who anticipate a lower addition of stimulus were winning yesterday causing a rise in the dollar. We also had Geithner speaking yesterday, which was dollar positive.

Basically he said that the US would preserve confidence in a strong dollar and will not engage in currency devaluations. That rhetoric is great and everything, but we’ve heard this before and its obvious the US isn’t in a position to maintain and support a strong currency. There were a lot of short dollar positions that have built up over the past several weeks, so some traders might be looking for any excuse to buy dollars at the moment. Again, the direction of the dollar lately has been tied to market perception of future QE.

There were only two currencies that gained yesterday, which were the Mexican peso (MXN) and Japanese yen (JPY), as they primarily rode on the coattails of the USD. We haven’t talked too much about the peso lately, but there really isn’t anything attractive at this point so it rose on thoughts additional stimulus would give a boost to economic growth in the US. Again, not exactly a reason to get excited about the peso, especially with doubts as to how much contribution this would actually provide to the US economy.

The Japanese yen gained just under 0.25%, not necessarily on any merit of the underlying economy, but just on the general buying of dollars. We keep flirting with the post-World War II high of 79.75 as it traded into the 80 handle yesterday, so as you can expect, rumors of additional intervention from the BOJ could start flying around again.

Moving on to one of our favorite currencies and the worst performer yesterday, the Norwegian krone (NOK) lost 0.75% on the day. There wasn’t anything specific other than dollar strength to push the currency lower, but just looking bigger picture, the krone hasn’t seen the same kind of appreciation that the Australian dollar (AUD) or even the Swiss franc (CHF) have seen so far this year. Norway has the fundamentals that being a commodity-based currency and a surplus economy use to provide future support. And not to mention, a central bank that still has room for higher rates.

Today, the Bank of Canada meets on rate policy and they are fully expected to keep them on hold for the moment. All eyes will then focus on the statements released afterwards to see if any hints are provided on future direction as well as the tone policymakers may leave with us. The loonie briefly broke through parity late last week but has sold off a bit to between 0.99 and 0.98. The internal economy could probably stand a hike, but external factors don’t make a likely scenario.

Before I let you go today, Brazil is back in the news as they are trying everything to stem their currency’s appreciation. The Finance Minister announced they will increase a tax on foreign investment in fixed income securities to 6% from 4% and a tax on margin deposits for the futures market is expected to climb to 6% from the current 0.38%.

Neither one of these policy changes impact our EverBank Brazilian CDs, but this is just another attempt to cool speculation on the real (BRL) and make it somewhat less attractive to purchase. At the end of the day, these higher taxes and government intervention in the market won’t offset their interest rate differential and the overall market appetite for the currency. In the end, the market as a whole usually wins.

Lastly, an Australian policymaker said the Aussie’s rise to parity last week reflects the strength of the underlying economy and they have no intention of intervening in the currency market. They said government efforts to try and lower the currency’s value would encourage retaliation from trading partners and that’s not in the best interest of their export industry. Finally, a central banker using logic.

As I came in this morning, the dollar strength from yesterday has carried over and there’s not much to report. The pound sterling (GBP) has taken the biggest hit as factory orders fell to a 6-month low in October due to a slowing of exports, but other than that, most are wearing the same clothes from yesterday. We also have the euro trying to hang onto the 1.39 handle, which has risen slightly to 1.3925 since I first turned the screen on this morning.

To recap…Foreign investment in US Treasuries rise, which finances our debt. US industrial output slowed in September and Capacity Utilization dropped a bit, neither of which are supportive of growth, as inventory building slowed. The dollar appreciated yesterday on speculation of the Fed’s QE plans and Brazil is trying another tactic to deter traders from buying the currency. We have housing numbers here in the US and a rate decision from the Bank of Canada.

Mike Meyer
for The Daily Reckoning

US Dollar Rises on QE2 Theories 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:
US Dollar Rises on QE2 Theories




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

Urgent Alert: China Raises Rates! What it means …

October 19th, 2010

Larry Edelson

Thank you, Beijing!

By raising interest rates this morning for first time since 2007, China has triggered profit taking in everything from currencies to commodities!

Great! That is now triggering precisely the correction in these markets that I’ve been waiting for — so I can soon go ahead with the new buys I’m planning for Martin Weiss’ $1,000,000 portfolio!

It’s good timing. And it’s also very ironic …

  • While the world’s leading countries have sworn on a stack of bibles that they’re going to keep their interest rates as low as possible for as long as possible in order to DEVALUE their currencies …
  • Decision-makers in Beijing are doing precisely the OPPOSITE, putting more pressure on their currency to become MORE valuable … and reinforcing our long-held view that they’re in the catbird seat globally.

Look. Here in the U.S., two game-changing decisions are coming down the pike on November 2nd — the elections and the Fed’s mass money printing. That could set off a whole NEW chain reaction of events beyond Washington’s control. China, meanwhile, is moving pro-actively to shore up its economy and finances.

In the new video I’ve just uploaded this morning, I tell you how I’m calling the shots for Martin’s portfolio to harness these explosive markets.

So if you haven’t seen it yet, you can do so right now. You don’t have to register or anything. Just click here … or on the video player above.

Best wishes,

Monty

Related posts:

  1. Debt Auctions Bombing … China Heading for the Hills … Higher Rates Dead Ahead!
  2. Biggest Ever Yen Intervention – and What It Means for You!
  3. RED ALERT: Next debt crisis near!

Read more here:
Urgent Alert: China Raises Rates! What it means …

Commodities, ETF, Mutual Fund, Uncategorized

Urgent Alert: China Raises Rates! What it means …

October 19th, 2010

Larry Edelson

Thank you, Beijing!

By raising interest rates this morning for first time since 2007, China has triggered profit taking in everything from currencies to commodities!

Great! That is now triggering precisely the correction in these markets that I’ve been waiting for — so I can soon go ahead with the new buys I’m planning for Martin Weiss’ $1,000,000 portfolio!

It’s good timing. And it’s also very ironic …

  • While the world’s leading countries have sworn on a stack of bibles that they’re going to keep their interest rates as low as possible for as long as possible in order to DEVALUE their currencies …
  • Decision-makers in Beijing are doing precisely the OPPOSITE, putting more pressure on their currency to become MORE valuable … and reinforcing our long-held view that they’re in the catbird seat globally.

Look. Here in the U.S., two game-changing decisions are coming down the pike on November 2nd — the elections and the Fed’s mass money printing. That could set off a whole NEW chain reaction of events beyond Washington’s control. China, meanwhile, is moving pro-actively to shore up its economy and finances.

In the new video I’ve just uploaded this morning, I tell you how I’m calling the shots for Martin’s portfolio to harness these explosive markets.

So if you haven’t seen it yet, you can do so right now. You don’t have to register or anything. Just click here … or on the video player above.

Best wishes,

Monty

Related posts:

  1. Debt Auctions Bombing … China Heading for the Hills … Higher Rates Dead Ahead!
  2. Biggest Ever Yen Intervention – and What It Means for You!
  3. RED ALERT: Next debt crisis near!

Read more here:
Urgent Alert: China Raises Rates! What it means …

Commodities, ETF, Mutual Fund, Uncategorized

The Top Performing Markets in Emerging Europe

October 19th, 2010

Well-known author and investment consultant Roger Gibson recently hosted a webcast where he educated investors on the importance of diversifying into international markets and we believe it is an opportune time to explore new areas with your portfolio.

Global investment guru Nicholas Vardy says “there’s always a bull market somewhere” and it’s up to investors to find it. We think there’s a bull market emerging in Eastern Europe.

Russia may be the first country that comes to mind when you think of Eastern Europe, but it’s the other countries of Emerging Europe, countries such as Poland, the Czech Republic and Turkey, that have outperformed.

While the S&P 500 Index was only up 3.89 percent as of September 30, Turkey had risen nearly 31 percent, extending a large lead on other Emerging Europe countries. The Czech Republic (up 8.19 percent) and Poland (up 11.16 percent) have also outperformed most emerging markets. Meanwhile, Russian markets have only gained 4.39 percent.

Even with the good performance of these markets so far this year, Emerging Europe markets still have attractive valuations. Emerging markets generally trade at a higher—many times in the double digits—price-to-earnings ratio than the developed markets, but Forbes reports that five of the six cheapest emerging equity markets in terms of price-to-earnings ratio are from Emerging Europe. Russia, Hungary, Czech Republic and Turkey are all currently trading at or below 10 times earnings and Poland comes in at 11 times earnings.

Historically, the German economy has held high importance for Emerging Europe economies because its relatively wealthy population consumed large amounts of goods such as cars, dishwashers and refrigerators imported from the region.

That’s not the case in today’s world. A report out this week showed that German exports into the Eastern Europe region were up 20 percent during the first half of the year from the same time last year. In addition, total trade between Germany, Europe’s largest economy, and Emerging Europe totaled $143.6 billion.

This chart from the International Monetary Fund (IMF) shows the strong rebound in both private consumption and fixed asset investment that Emerging Europe is currently seeing. Private consumption includes retail sales and orders of durable goods while fixed investment represents productive assets like power plants, factories and other infrastructure.

During the depths of the economic crisis, Emerging Europe experienced substantial contractions in both. This year, private consumption and fixed investment will contribute to nearly half of the region’s GDP and it is expected to contribute to nearly all of it next year.

The IMF estimates Emerging Europe will see 3.7 percent GDP growth this year and then dip slightly to 3.1 percent in 2011. But that doesn’t tell the full story.

Poland, which is the only country in the region that avoided recession, grew by 3.4 percent this year and is forecast for higher GDP growth next year. This growth is Poland’s opportunity to close the gap with other members of the European Union.

After contracting nearly 5 percent in 2009, Turkey has notched the highest level of growth for any country in Europe this year—up almost 8 percent. Turkey’s strength is in its robust banking sector and strong domestic demand.

Things are also looking up for Russia. BCA Research upgraded Russian stocks this week, based on increases in household income and spending, improved employment figures and a decrease in household savings rates. Russia also plans to expand oil production in the near term which should be a positive driver for energy stocks that are trading 30 percent below global peers.

We’re positive on Russia because recent weakness in the U.S. dollar bodes well for the country’s energy and commodity exports.

Recognizing these changes and identifying catalysts for outperformance is something our experience investing in the region brings us. We were able to recognize the softness in Russian markets early, allowing us to move larger portions of the portfolio into the better-performing countries. This week, Zack’s named our Eastern European Fund (EUROX) in the Top 5 for European Mutual Funds—click to here to read what they said.

Regards,

Frank Holmes,
for The Daily Reckoning

P.S. Tim Steinle, co-manager of the U.S. Global Investors Eastern European Fund (EUROX), contributed to this commentary. Tim and Evan Smith have just returned from Russia and Turkey, obtaining that tacit knowledge you can only gain from being on-the-ground. For more updates on global investing from me and the U.S. Global Investors team, visit my investment blog, Frank Talk.

The Top Performing Markets in Emerging Europe 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:
The Top Performing Markets in Emerging Europe




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.

Mutual Fund, Uncategorized

The Top Performing Markets in Emerging Europe

October 19th, 2010

Well-known author and investment consultant Roger Gibson recently hosted a webcast where he educated investors on the importance of diversifying into international markets and we believe it is an opportune time to explore new areas with your portfolio.

Global investment guru Nicholas Vardy says “there’s always a bull market somewhere” and it’s up to investors to find it. We think there’s a bull market emerging in Eastern Europe.

Russia may be the first country that comes to mind when you think of Eastern Europe, but it’s the other countries of Emerging Europe, countries such as Poland, the Czech Republic and Turkey, that have outperformed.

While the S&P 500 Index was only up 3.89 percent as of September 30, Turkey had risen nearly 31 percent, extending a large lead on other Emerging Europe countries. The Czech Republic (up 8.19 percent) and Poland (up 11.16 percent) have also outperformed most emerging markets. Meanwhile, Russian markets have only gained 4.39 percent.

Even with the good performance of these markets so far this year, Emerging Europe markets still have attractive valuations. Emerging markets generally trade at a higher—many times in the double digits—price-to-earnings ratio than the developed markets, but Forbes reports that five of the six cheapest emerging equity markets in terms of price-to-earnings ratio are from Emerging Europe. Russia, Hungary, Czech Republic and Turkey are all currently trading at or below 10 times earnings and Poland comes in at 11 times earnings.

Historically, the German economy has held high importance for Emerging Europe economies because its relatively wealthy population consumed large amounts of goods such as cars, dishwashers and refrigerators imported from the region.

That’s not the case in today’s world. A report out this week showed that German exports into the Eastern Europe region were up 20 percent during the first half of the year from the same time last year. In addition, total trade between Germany, Europe’s largest economy, and Emerging Europe totaled $143.6 billion.

This chart from the International Monetary Fund (IMF) shows the strong rebound in both private consumption and fixed asset investment that Emerging Europe is currently seeing. Private consumption includes retail sales and orders of durable goods while fixed investment represents productive assets like power plants, factories and other infrastructure.

During the depths of the economic crisis, Emerging Europe experienced substantial contractions in both. This year, private consumption and fixed investment will contribute to nearly half of the region’s GDP and it is expected to contribute to nearly all of it next year.

The IMF estimates Emerging Europe will see 3.7 percent GDP growth this year and then dip slightly to 3.1 percent in 2011. But that doesn’t tell the full story.

Poland, which is the only country in the region that avoided recession, grew by 3.4 percent this year and is forecast for higher GDP growth next year. This growth is Poland’s opportunity to close the gap with other members of the European Union.

After contracting nearly 5 percent in 2009, Turkey has notched the highest level of growth for any country in Europe this year—up almost 8 percent. Turkey’s strength is in its robust banking sector and strong domestic demand.

Things are also looking up for Russia. BCA Research upgraded Russian stocks this week, based on increases in household income and spending, improved employment figures and a decrease in household savings rates. Russia also plans to expand oil production in the near term which should be a positive driver for energy stocks that are trading 30 percent below global peers.

We’re positive on Russia because recent weakness in the U.S. dollar bodes well for the country’s energy and commodity exports.

Recognizing these changes and identifying catalysts for outperformance is something our experience investing in the region brings us. We were able to recognize the softness in Russian markets early, allowing us to move larger portions of the portfolio into the better-performing countries. This week, Zack’s named our Eastern European Fund (EUROX) in the Top 5 for European Mutual Funds—click to here to read what they said.

Regards,

Frank Holmes,
for The Daily Reckoning

P.S. Tim Steinle, co-manager of the U.S. Global Investors Eastern European Fund (EUROX), contributed to this commentary. Tim and Evan Smith have just returned from Russia and Turkey, obtaining that tacit knowledge you can only gain from being on-the-ground. For more updates on global investing from me and the U.S. Global Investors team, visit my investment blog, Frank Talk.

The Top Performing Markets in Emerging Europe 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:
The Top Performing Markets in Emerging Europe




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.

Mutual Fund, Uncategorized

Further Limiting Your Risk with CDs (or Bonds)

October 19th, 2010

Nilus Mattive

It’s now official: As I suggested last week, Social Security recipients are not getting any cost-of-living increase in 2011. This marks the second straight year of flat monthly checks.

That fact, combined with the paltry interest rates on many traditional income investments, is certainly causing a lot of people major angst right now.

The key question: How do you secure reasonable income from your personal nest egg without taking on big risks?

If you read this column regularly, you know that my primary answer is “conservative dividend stocks.”

But I have also been discussing other alternatives, including CDs. Two weeks ago, in fact, I went so far as to suggest that even CDs are safer than Treasury bonds.

Now I want to talk about a technique that can further limit your risk whether you’re buying CDs, bonds, or both.

Laddering: A Terrific Way to Hedge
Against Interest Rate Swings …

As I mentioned in my comparison of CDs and Treasuries … assuming you hold them until maturity, both are “risk-free” investments. In other words, your principal is protected against losses by the full faith and credit of the U.S. government. (Hey, stop snickering!)

But seriously, barring a complete collapse in Washington, the biggest risk of CDs and Treasuries is not related to your principal … it’s related to interest rates and inflation.

Say you lock up your money for ten years at 2 percent interest a year. And within two years, inflation is running at 4 percent a year. You’re not losing principal but you are losing purchasing power for at least the next eight years. In reality, that’s just as bad, especially if you’re a fixed-income retiree.

So what’s a CD or bond investor to do?

While there’s no perfect antidote to this dilemma — short of perfect timing — there is a strategy that allows you to mitigate the risk.

It’s called laddering, and it’s pretty easy for anyone to implement.

Here’s how it works in two simple steps:

Step #1. You buy fixed-income investments with various maturities.

Step #2. As they mature, you re-invest the proceeds into new investments at the higher rungs of the “ladder” (i.e. investments with the longest maturities).

The approach allows you to always put some money to work at current rates while protecting your portfolio from taking a big hit in the event of sharp moves.

That way …

If rates are falling, you have some of your money in longer-dated bonds.

If rates are rising, you get to keep buying at higher and higher rates.

How would this work with CDs?

Well, let’s say you have $20,000 you want to invest in CDs right now.

You could put $5,000 in each of the following:

A. A 1-year CD with a rate around 1.2 percent

B. A 3-year CD with a yield of about 1.6 percent

C. A 5-year CD with a rate near 2.3 percent

D. A 7-year CD with an APR of 3.5 percent

Your overall ladder will be paying an average one-year rate of 2.1 percent, twice as high as you could get with all your money at the short-end of the spectrum.

Plus, over the next few years, you’ll have the opportunity to reinvest the proceeds from your 1- and 3-year CDs.

So if interest rates have risen sharply, you can buy new 7-year CDs and boost the overall return of your ladder. Meanwhile, your existing 5- and 7-year CDs have essentially become your shorter-duration investments because they’ll be closer to maturity.

There you have it: The basic idea of a ladder!

And as I mentioned earlier, the same strategy works for bonds, too.

Together with a solid portfolio of dividend-paying stocks, a fixed-income ladder can be a great way to build a better overall retirement nest egg.

Best wishes,

Nilus

Related posts:

  1. Risk Aversion vs. Risk Taking: What’s in Store for 2010?
  2. Risk Aversion vs. Risk Taking: What’s in Store for 2010?
  3. Risk Aversion vs. Risk Taking: What’s in Store for 2010?

Read more here:
Further Limiting Your Risk with CDs (or Bonds)

Commodities, ETF, Mutual Fund, Uncategorized

Further Limiting Your Risk with CDs (or Bonds)

October 19th, 2010

Nilus Mattive

It’s now official: As I suggested last week, Social Security recipients are not getting any cost-of-living increase in 2011. This marks the second straight year of flat monthly checks.

That fact, combined with the paltry interest rates on many traditional income investments, is certainly causing a lot of people major angst right now.

The key question: How do you secure reasonable income from your personal nest egg without taking on big risks?

If you read this column regularly, you know that my primary answer is “conservative dividend stocks.”

But I have also been discussing other alternatives, including CDs. Two weeks ago, in fact, I went so far as to suggest that even CDs are safer than Treasury bonds.

Now I want to talk about a technique that can further limit your risk whether you’re buying CDs, bonds, or both.

Laddering: A Terrific Way to Hedge
Against Interest Rate Swings …

As I mentioned in my comparison of CDs and Treasuries … assuming you hold them until maturity, both are “risk-free” investments. In other words, your principal is protected against losses by the full faith and credit of the U.S. government. (Hey, stop snickering!)

But seriously, barring a complete collapse in Washington, the biggest risk of CDs and Treasuries is not related to your principal … it’s related to interest rates and inflation.

Say you lock up your money for ten years at 2 percent interest a year. And within two years, inflation is running at 4 percent a year. You’re not losing principal but you are losing purchasing power for at least the next eight years. In reality, that’s just as bad, especially if you’re a fixed-income retiree.

So what’s a CD or bond investor to do?

While there’s no perfect antidote to this dilemma — short of perfect timing — there is a strategy that allows you to mitigate the risk.

It’s called laddering, and it’s pretty easy for anyone to implement.

Here’s how it works in two simple steps:

Step #1. You buy fixed-income investments with various maturities.

Step #2. As they mature, you re-invest the proceeds into new investments at the higher rungs of the “ladder” (i.e. investments with the longest maturities).

The approach allows you to always put some money to work at current rates while protecting your portfolio from taking a big hit in the event of sharp moves.

That way …

If rates are falling, you have some of your money in longer-dated bonds.

If rates are rising, you get to keep buying at higher and higher rates.

How would this work with CDs?

Well, let’s say you have $20,000 you want to invest in CDs right now.

You could put $5,000 in each of the following:

A. A 1-year CD with a rate around 1.2 percent

B. A 3-year CD with a yield of about 1.6 percent

C. A 5-year CD with a rate near 2.3 percent

D. A 7-year CD with an APR of 3.5 percent

Your overall ladder will be paying an average one-year rate of 2.1 percent, twice as high as you could get with all your money at the short-end of the spectrum.

Plus, over the next few years, you’ll have the opportunity to reinvest the proceeds from your 1- and 3-year CDs.

So if interest rates have risen sharply, you can buy new 7-year CDs and boost the overall return of your ladder. Meanwhile, your existing 5- and 7-year CDs have essentially become your shorter-duration investments because they’ll be closer to maturity.

There you have it: The basic idea of a ladder!

And as I mentioned earlier, the same strategy works for bonds, too.

Together with a solid portfolio of dividend-paying stocks, a fixed-income ladder can be a great way to build a better overall retirement nest egg.

Best wishes,

Nilus

Related posts:

  1. Risk Aversion vs. Risk Taking: What’s in Store for 2010?
  2. Risk Aversion vs. Risk Taking: What’s in Store for 2010?
  3. Risk Aversion vs. Risk Taking: What’s in Store for 2010?

Read more here:
Further Limiting Your Risk with CDs (or Bonds)

Commodities, ETF, Mutual Fund, Uncategorized

How "Progress" Created a $174 Billion Epidemic

October 19th, 2010

How

Two things happened you should know about: food got cheap and work got easy.

Sounds simple when put like that, but it was enough to change the world. Consider a personal example…

On my family's farm in Kansas, my grandfather's wheat crop was considered good if it made 10 bushels to the acre. It was planted largely by hand and harvested the same way. Bringing in the crop took two weeks of back-breaking, sunrise-to-sunset labor.

Today, because of agricultural advances, that same bottom ground, which is still in our family, can grow 70 bushels an acre. Bringing in the wheat crop still takes nearly two weeks, but it's more tedious than back-breaking. And now my family plants more than 10 times Grandpa's original quarter and still harvests it with half as many people. That's helped the price of consumption plummet.

And because of the advances, I didn't have to hang around the farm to get a job. I don't till the land or run cattle. I make a living in an office, behind a desk. Most days I don't do anything more physically strenuous than chew. I am productive, but I am nevertheless effectively sedentary. I'm in nowhere near the shape that Grandpa Ted was when he was my age, nor am I in as good a shape as my family members who stayed on the farm. Like I said, work got easy. They call it “progress.”

My story isn't uncommon. In the early 20th century, the USDA says, nearly half the country worked in agricultural production. Today, it's less than 1%.

As the Chief Strategist behind Game-Changing Stocks, I'm always on the lookout for what I call “game-changing” situations. These are instances where a major shift is taking place. I've found these shifts are usually accompanied by spectacular opportunities to profit.

You just read about two game-changing shifts — technology has brought us both cheap food and easy work.

And that's leading to another shift… and an opportunity to profit. Cheap food and easy work are the new reality. And unfortunately, that means diabetes.

Fourteen million Americans have been diagnosed with the disease. Another six million have it and don't know it, and — astonishingly — another 41 million have pre-diabetes — overtaxed metabolisms combined with poor eating habits and a lack of exercise. Diabetes in this country, and around the world, is a ticking time bomb.

Even now, the cost of the disease is already astronomical. The American Diabetes Association (ADA) says the national cost of the disease in the U.S. alone exceeded $174 billion in 2007. (Health stats take forever to collect, so those three-year-old stats are the best we have.) The ADA's estimate includes $116 billion in medical costs like drugs and doctor's visits and hospitalizations, and $58 billion from sick time. I've been a Type I diabetic (juvenile onset, thought to be genetic) for 30 years. I can attest to just how easily this disease can keep you from a day's work.

I wouldn't wish diabetes on anyone; I can tell you firsthand, it's a lousy burden to carry. But from an investment standpoint, this medical condition is just about perfect — it has a huge and growing patient base. Those patients can live a relatively normal and long life, every day of which will require them to consume diabetic supplies, and there is no cure on the immediate horizon.

Usually when I find game-changing opportunities, it's in a nascent field. The discovery usually comes with plenty of small companies sitting on the edge of a breakthrough — think of how Netflix (Nasdaq: NFLX) changed the game when it came to something as simple as renting a movie.

But in the case of diabetes, many of the firms are larger. Bristol-Myers Squibb (NYSE: BMY) and Johnson & Johnson (NYSE: JNJ) are working on potential blockbuster drugs called SGLT-2 inhibitors. And Medtronic (NYSE: MDT) makes the gold standard in insulin pumps and should see a nice bump in business as the diabetes epidemic grows.

Action to Take –> These aren't the tiny up-and-comers that I've made a living off of discovering, but when it comes to investing, you can't argue with profits.

If you're interested in game-changing stocks, I think you'll love my latest report — The Hottest Investment Opportunities for 2011. From tiny nuclear power plants that can be buried in your lawn, to revolutionary pain killers made from cobra venom, I'm convinced these game-changing ideas could take off in the coming year. To get briefed on these opportunities, and several others that I think could return many times your money, please read this memo.


–Andy Obermueller

Andy spent a decade as a financial journalist writing for some of the largest newspapers in the nation. His acumen helped guide the financial news read by over a million people each day. Read more…

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

This article originally appeared on StreetAuthority
Author: Andy Obermueller
How “Progress” Created a $174 Billion Epidemic

Read more here:
How "Progress" Created a $174 Billion Epidemic

ETF, Uncategorized

How "Progress" Created a $174 Billion Epidemic

October 19th, 2010

How

Two things happened you should know about: food got cheap and work got easy.

Sounds simple when put like that, but it was enough to change the world. Consider a personal example…

On my family's farm in Kansas, my grandfather's wheat crop was considered good if it made 10 bushels to the acre. It was planted largely by hand and harvested the same way. Bringing in the crop took two weeks of back-breaking, sunrise-to-sunset labor.

Today, because of agricultural advances, that same bottom ground, which is still in our family, can grow 70 bushels an acre. Bringing in the wheat crop still takes nearly two weeks, but it's more tedious than back-breaking. And now my family plants more than 10 times Grandpa's original quarter and still harvests it with half as many people. That's helped the price of consumption plummet.

And because of the advances, I didn't have to hang around the farm to get a job. I don't till the land or run cattle. I make a living in an office, behind a desk. Most days I don't do anything more physically strenuous than chew. I am productive, but I am nevertheless effectively sedentary. I'm in nowhere near the shape that Grandpa Ted was when he was my age, nor am I in as good a shape as my family members who stayed on the farm. Like I said, work got easy. They call it “progress.”

My story isn't uncommon. In the early 20th century, the USDA says, nearly half the country worked in agricultural production. Today, it's less than 1%.

As the Chief Strategist behind Game-Changing Stocks, I'm always on the lookout for what I call “game-changing” situations. These are instances where a major shift is taking place. I've found these shifts are usually accompanied by spectacular opportunities to profit.

You just read about two game-changing shifts — technology has brought us both cheap food and easy work.

And that's leading to another shift… and an opportunity to profit. Cheap food and easy work are the new reality. And unfortunately, that means diabetes.

Fourteen million Americans have been diagnosed with the disease. Another six million have it and don't know it, and — astonishingly — another 41 million have pre-diabetes — overtaxed metabolisms combined with poor eating habits and a lack of exercise. Diabetes in this country, and around the world, is a ticking time bomb.

Even now, the cost of the disease is already astronomical. The American Diabetes Association (ADA) says the national cost of the disease in the U.S. alone exceeded $174 billion in 2007. (Health stats take forever to collect, so those three-year-old stats are the best we have.) The ADA's estimate includes $116 billion in medical costs like drugs and doctor's visits and hospitalizations, and $58 billion from sick time. I've been a Type I diabetic (juvenile onset, thought to be genetic) for 30 years. I can attest to just how easily this disease can keep you from a day's work.

I wouldn't wish diabetes on anyone; I can tell you firsthand, it's a lousy burden to carry. But from an investment standpoint, this medical condition is just about perfect — it has a huge and growing patient base. Those patients can live a relatively normal and long life, every day of which will require them to consume diabetic supplies, and there is no cure on the immediate horizon.

Usually when I find game-changing opportunities, it's in a nascent field. The discovery usually comes with plenty of small companies sitting on the edge of a breakthrough — think of how Netflix (Nasdaq: NFLX) changed the game when it came to something as simple as renting a movie.

But in the case of diabetes, many of the firms are larger. Bristol-Myers Squibb (NYSE: BMY) and Johnson & Johnson (NYSE: JNJ) are working on potential blockbuster drugs called SGLT-2 inhibitors. And Medtronic (NYSE: MDT) makes the gold standard in insulin pumps and should see a nice bump in business as the diabetes epidemic grows.

Action to Take –> These aren't the tiny up-and-comers that I've made a living off of discovering, but when it comes to investing, you can't argue with profits.

If you're interested in game-changing stocks, I think you'll love my latest report — The Hottest Investment Opportunities for 2011. From tiny nuclear power plants that can be buried in your lawn, to revolutionary pain killers made from cobra venom, I'm convinced these game-changing ideas could take off in the coming year. To get briefed on these opportunities, and several others that I think could return many times your money, please read this memo.


–Andy Obermueller

Andy spent a decade as a financial journalist writing for some of the largest newspapers in the nation. His acumen helped guide the financial news read by over a million people each day. Read more…

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

This article originally appeared on StreetAuthority
Author: Andy Obermueller
How “Progress” Created a $174 Billion Epidemic

Read more here:
How "Progress" Created a $174 Billion Epidemic

ETF, Uncategorized

5 Fatal Mistakes Value Investors Make

October 19th, 2010

5 Fatal Mistakes Value Investors Make

Value stocks have long been regarded as safer investments than growth stocks. They tend to sport lower valuations and are often dogged by low expectations. So any stumbles can be taken in stride. But investors need to do their homework before pouncing on a value stock too quickly. A little digging may reveal more insights that take the shine off of any value play.

Here are some key items to watch out for.

1. When losses sink book value. Investors tend to take a shine to stocks that are trading at less than book value (which means that the company's market value is less than shareholder's equity — found on the bottom of the balance sheet). Trouble is, if that company is losing money, or taking major write-offs, then shareholder's equity is likely to erode. To be safe, look for “below book” stocks that are actually profitable, so shareholder's equity (book value) will keep rising. (For further reading on “below book” stocks, check out this article)

2. Cash flow that never becomes cash. Analysts will often tout certain stocks that appear cheap on the basis of their cash flow. Indeed cash flow can be a very good metric, as it proves that a company can generate ample excess returns from operations. And while a company is growing at fast clip, it makes sense for management to re-invest that cash flow back into the business.

Yet some companies seem perpetually stuck in that mode, always pushing the money into the business in order to keep up with competition. So that cash flow never translates into rising cash levels. For example, solar panel maker SunPower (Nasdaq: SPWRA) consistently generates positive operating cash flow, but heavy investments mean that free cash flow is always negative. That has forced the company to repeatedly sell more shares to stay afloat, diluting the stake of existing shareholders.

3. An uncertain dividend yield. Dividend stocks are often seen as value stocks. Their high yields provide an attractive source of income even if their shares have limited capital appreciation potential. But many investors mistakenly buy stocks with unusually high dividend yields. And extremely high yields — in excess of 10%, for example — can be a sign that the dividend will need to be cut. At the depths of the economic crisis, media firm Gannett (NYSE: GCI) offered a $1.42 annual dividend, even as its stock moved below $7, implying a dividend yield in excess of 20%. Management soon had to cut the dividend by 90%, and dividend chasers that didn't see it coming were burned. So it's important to see how operations are faring. If business has just turned south, a seemingly attractive dividend may be at risk.

4. The low P/E trap. Stocks with low price-to-earnings (P/E) ratios often represent the best value. But only if earnings are flat are rising. Yet some investors buy low P/E stocks without noticing that earnings are in the midst of a long-term decline. Internet access provider Earthlink (Nasdaq: ELNK) might have looked awfully tempting last year, when its shares traded for around $7 and earnings per share (EPS) looked set to come in above $2.50. That translated to a P/E ratio below three. But remember, as a new investor, you're paying for future earnings. And in Earthlink's case, profits are sinking fast as it loses customers. Sales are likely to fall -18% this year and another -15% next year. EPS is likely to be less than $1 this year, and could fall to $0.50 by 2012. Shares now trade for a richer 17 times that 2012 profit forecast, and that's no bargain.

5. Overvalued assets on the balance sheet. This is a twist on the first item noted in this article, that book value should be taken with a grain of salt. Many companies carry assets on their books that don't necessarily relate to actual real world values. Some investors like to cite department store retailer Dillard's (NYSE: DDS) as a compelling value play, as the company is valued at $1.8 billion, but the value of its real estate holdings is $2.7 billion — +50% higher. Yet it's unreasonable to assume that the company would find any buyers paying full value for its real estate while the world is awash in unused retail space. If the economy sharply improves, and many empty retail stores are re-occupied, then Dillard's would likely get more appreciation for its real estate. But not right now.

Action to Take –> “Stocks are cheap for a reason” is a tried-and-true investing axiom. So when you come across a value stock, look for reasons against the stock, not for it. If you can't find any major problems among the financial statements or with investor assumptions about the future, then the Value stock is likely to prove rewarding.


– 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
5 Fatal Mistakes Value Investors Make

Read more here:
5 Fatal Mistakes Value Investors Make

Uncategorized

5 Fatal Mistakes Value Investors Make

October 19th, 2010

5 Fatal Mistakes Value Investors Make

Value stocks have long been regarded as safer investments than growth stocks. They tend to sport lower valuations and are often dogged by low expectations. So any stumbles can be taken in stride. But investors need to do their homework before pouncing on a value stock too quickly. A little digging may reveal more insights that take the shine off of any value play.

Here are some key items to watch out for.

1. When losses sink book value. Investors tend to take a shine to stocks that are trading at less than book value (which means that the company's market value is less than shareholder's equity — found on the bottom of the balance sheet). Trouble is, if that company is losing money, or taking major write-offs, then shareholder's equity is likely to erode. To be safe, look for “below book” stocks that are actually profitable, so shareholder's equity (book value) will keep rising. (For further reading on “below book” stocks, check out this article)

2. Cash flow that never becomes cash. Analysts will often tout certain stocks that appear cheap on the basis of their cash flow. Indeed cash flow can be a very good metric, as it proves that a company can generate ample excess returns from operations. And while a company is growing at fast clip, it makes sense for management to re-invest that cash flow back into the business.

Yet some companies seem perpetually stuck in that mode, always pushing the money into the business in order to keep up with competition. So that cash flow never translates into rising cash levels. For example, solar panel maker SunPower (Nasdaq: SPWRA) consistently generates positive operating cash flow, but heavy investments mean that free cash flow is always negative. That has forced the company to repeatedly sell more shares to stay afloat, diluting the stake of existing shareholders.

3. An uncertain dividend yield. Dividend stocks are often seen as value stocks. Their high yields provide an attractive source of income even if their shares have limited capital appreciation potential. But many investors mistakenly buy stocks with unusually high dividend yields. And extremely high yields — in excess of 10%, for example — can be a sign that the dividend will need to be cut. At the depths of the economic crisis, media firm Gannett (NYSE: GCI) offered a $1.42 annual dividend, even as its stock moved below $7, implying a dividend yield in excess of 20%. Management soon had to cut the dividend by 90%, and dividend chasers that didn't see it coming were burned. So it's important to see how operations are faring. If business has just turned south, a seemingly attractive dividend may be at risk.

4. The low P/E trap. Stocks with low price-to-earnings (P/E) ratios often represent the best value. But only if earnings are flat are rising. Yet some investors buy low P/E stocks without noticing that earnings are in the midst of a long-term decline. Internet access provider Earthlink (Nasdaq: ELNK) might have looked awfully tempting last year, when its shares traded for around $7 and earnings per share (EPS) looked set to come in above $2.50. That translated to a P/E ratio below three. But remember, as a new investor, you're paying for future earnings. And in Earthlink's case, profits are sinking fast as it loses customers. Sales are likely to fall -18% this year and another -15% next year. EPS is likely to be less than $1 this year, and could fall to $0.50 by 2012. Shares now trade for a richer 17 times that 2012 profit forecast, and that's no bargain.

5. Overvalued assets on the balance sheet. This is a twist on the first item noted in this article, that book value should be taken with a grain of salt. Many companies carry assets on their books that don't necessarily relate to actual real world values. Some investors like to cite department store retailer Dillard's (NYSE: DDS) as a compelling value play, as the company is valued at $1.8 billion, but the value of its real estate holdings is $2.7 billion — +50% higher. Yet it's unreasonable to assume that the company would find any buyers paying full value for its real estate while the world is awash in unused retail space. If the economy sharply improves, and many empty retail stores are re-occupied, then Dillard's would likely get more appreciation for its real estate. But not right now.

Action to Take –> “Stocks are cheap for a reason” is a tried-and-true investing axiom. So when you come across a value stock, look for reasons against the stock, not for it. If you can't find any major problems among the financial statements or with investor assumptions about the future, then the Value stock is likely to prove rewarding.


– 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
5 Fatal Mistakes Value Investors Make

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5 Fatal Mistakes Value Investors Make

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The Perfect Technical Trade for This Market

October 19th, 2010

The Perfect Technical Trade for This Market

I continue to be very uneasy about the market and believe it could begin trending lower at any time, so my natural inclination is buy inverse exchange-traded funds (ETFs). These are baskets of stocks that move higher when the market moves lower.

I gave you a great inverse ETF a couple of weeks ago, ProShares UltraShort S&P 500 (NYSE: SDS). I recommended this ETF because my systems were telling me then, and they continue to tell me now, that this market could move lower in the near term — perhaps a lot lower. But, what did the market do last week? It moved high enough to stop us out of the SDS trade.

But remember: I am a rules-based investor. I have rules for getting into a position and rules for getting out. The rules for getting in are still flashing “Short!” But just because I have a rule that tells me when to short the market, it doesn't mean that I ignore my rules for getting out of a trade.

There is an old saying that the market can remain irrational longer than you can remain solvent. One of these days, the market's trend will reverse and I am afraid that it will not be a happy ending.

But, that may not happen today, or this week or this month (probably). The market is saying, “Eat, drink and be merry, for tomorrow will undoubtedly never come.” No one knows when the day of accounting will come. My forecasting systems indicate it could start this December — maybe sooner.

Indeed, if the market does actually begin to roll over this coming week, I will personally, be looking to pick up some SDS shares. In the meantime, I like the way my top-rated stock — this week's Trade-of-the-Week pick — is performing in a market that seems to defy gravity.

[To receive free trading recommendations before the market opens each week from either Dr. Melvin Pasternak or Mike Turner, go here to sign up, risk-free.]

Let's look at my pick for this week, Gilead Sciences Inc. (Nasdaq: GILD).

ETF, Uncategorized

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