2012 Looking Ahead

HAPPY NEW YEAR! Before we get into the crystal ball gazing it’s that time of year to do your portfolio checkup. I am updating all year-end total return numbers on all your accounts so you know what performed and what didn’t in 2011. Last year we expanded our investment allocation and I don’t see a reason to stop in 2012. Here is what I need you to do: Call me (or you can E) so I can print and send you your portfolio analysis. Once you have a copy we can talk (by phone is fine) and review your allocations (2) Examine your individual holdings (3) See what, if any, changes are to be made.

More than at any other time we all need to be proactive in our approach to saving and investing.

Now…for the crystal ball part…

No one knows what’s in store for 2012 but lots of guesses abound and some of those guesses were penned long before the minor stock rally that took place at the end of December.

On Christmas Eve WSJ writer Jack Hough said that there was signs of hope in the market and it was time for those investors who had been sitting things out to get back in. He went on to say that while it may be tempting to wait until after the Presidential election shares may move up in anticipation of the result.

The other side of my research was not as cheery. Almost all major Wall Street economists are full of gloom for 2012. One even predicted that the U.S. would fall into a recession, a victim of the mess in Europe.

No matter what anyone says or thinks we don’t know any more about what’s going to happen in 2012 than you do. We don’t know when the authors of the ‘guesses’ did their writing- was it when the markets were tanking or when things were perking up- believe me – it makes a difference.

What worries me is that the Republicans will continue their do-nothing assault on the President  right to the election- keeping the country hostage and growth negligible. Certainly none of us saw politics as an impediment to growth back in January 2011. Today we are all losing patience with our elected officials.

Doug Kass, interviewed on CNBC on December 27th, said he expected politicians to get their act together and make pro-growth fiscal policies. This will cause the S&P 500 to soar. Kass, a principal at Seabreeze Partners, is known for his bearish views.

Michael Kahn, technical analyst at Barrons.com, reports the S&P trend-line shows a similarity to previous years where initially the markets tanked and then came roaring back. He thinks that’ll happen in 2012. He believes in the middle of next year great opportunities will arise. We shouldn’t give up, he wrote.

All that aside here’s what I think for 2012- remember this is just what I think:

• As weakness continues in Europe  more money globally will start flowing to American stock markets.
• Real estate may have seen the bottom in 2011. Look around- I see new houses for sale and the sounds of hammers and saws. Home builder stocks may be worth more than just a look in 2012.
• Inflation not here in 2012. Certainly not what we can expect when interest rates start their climb.
• Some economists see a weaker dollar but weaker than what? Certainly stronger if the  Euro collapses. Commodities higher on weaker dollar. Look for lumber, copper along with beef (Texas 2011 drought follow- through) and corn will move higher. It’s an election year and overall commodities may be relatively tame.
• In 2011 gold and silver were supposed to be currency replacements but the dollar was still the place investors wanted to be when the euro weakened. Both metals will take another run at their 2011 highs- $1900 and $50. respectively in 2012. No bubble for these metals, yet. 
• Palladium whispered to be the play for 2012. Russia is the main supplier of palladium ore and news that it plans to cut production may see price rise. Palladium ETF – PALL  Used in autos and also phones & tablets.
• Interest rates slightly higher in 2012- nothing worth writing about (this may be the surprise wrong opinion for 2012).
• Jobs perk up.
• Oil- $120.  Middle East problems and emerging market use increases.
• China rocks- remember 3 billion people.
• On-line Poker Law passes. States need the money. Over $1 billion in revenue just for New York and another for California.
• The American consumer is back.
• Same old market volatility for 2012
• Investors may look at beaten up sectors in 2011 as clue to where returns will be in 2012. Also see beaten up Dow stocks and cherry pick.
• Markets End Higher in 2012.

Questions call Paul @ 877 783 7080 or write him at pstanley@westminsterfinancial.com. Share this blog with someone who cares about their money.

That Was The Week That Was-4th Week December

Shopping for Yield? According to November Barrons.com Greek sovereign debt yields 100% (or did back then) but risk is also 100%. There are other ways to boost yield. Daimler, the auto & manufacturing giant, has a yield of 6% plus the stock is trading at a significant discount from where it was last spring. Of course, like all other stocks what trades at a discount could trade lower. Still if you’re looking for yield there are stocks that provide significant dividends while you wait for a potential recovery. Depending on your risk comfort level there are a slew of products to satisfy an increase in return but all- I mean ALL- have a risk rating.

Bank of America closed under $5.00 a share Monday! It was an ugly day that got uglier as the day wore on. Markets closed off 100 points on the Dow. Countrywide losses still hold an anchor to Bank of America shares. Morningstar likes the stock but for the long term. This is the share price the ratings agency recommends to buy at and values the company at $10.00. It’ll take years, according to Morningstar for the firm to dig itself out of the hole.

AT&T busted by the Justice Department enforcement cops. AT&T gave up its bid for T-Mobile as the U.S forced the company to build its own network and not get it on the cheap by buying T-Mobile. Justice cops have been doing their job breaking up bids between Nasdaq OMX Group and NYSE EuroNext and H&R Block and TaxAct. AT&T closed under $29.00 a share.

Q: How do you prop up an ailing bank without more tax-payer funded bailout?

A: Use creative methods of moving already owned property on the balance sheet and selling it to investors.

European banks are using creating methods for raising cash without having to call it a bailout. Overseas the mere mention of the word bailout is toxic and so a substitute is in the works. Among those finding innovative ways to raise cash are the Italians. 

SAAB- (sob)- no more. The company filed for bankruptcy.

Markets exploded on Tuesday! Dow up 337 points, Nasdaq plus 81 and along with gold finally moving up $17.00 an ounce and oil nestling a tad under $100 everything looked quite cheery as the year winding down and traders closed their books for the year. Jimmy Cramer warned not to make too much of this latest rally and said he wouldn’t be a buyer right here.

“’ Who loves ya, baby?"  Telecoms still get love from Barrons ‘Getting Technical’ Michael Kahn. Both AT&T (a loser to the Justice ‘We Hate Business’ Police Department) still has plenty going for it along with Verizon. Both paying 5%.

How stinky-poo bad Euro Banks? The European Central Bank handed out over $600 billion to 523 banks! Loan interest 1% with 3-year payback. NPR said this should confirm that this is not a sovereign debt problem but- surprise- a bank problem. Who knew the Euro banks were in such bad shape? Certainly no one said anything about their liquidity issues before the loan window was opened.

Confused about oil? Remember- Dollar Down = Commodities Up. Dollar Up = Commodities Down. 

Ford –Started as a Buy by Sterne Agee.

Speaking of Autos…. according to Meena Krishnamsetty at MarketWatch.com the health of the economy is gauged by how many people will buy a car. And who owns the car stocks include hedge funds. At the end of the 3rd quarter  43 hedge funds owned Ford but their ownership was down from $2. 12 billion to $1.13 billion. GM was owned by 75 hedge funds with volume of shares slipping in the same time period some $800 million by hedge funds.

Doomed Exchange Traded Funds…Greedy organizers tried to slice and dice the industry a bit too thin thinking investors would buy just about anything.  Now the ETF industry says there are about 242 funds on a deathwatch. Not enough trading or assets to go on. 49 ETFs closed in 2010. Experts calling these Zombie Funds – they’re dead just don’t know it.

Gold closed $1609 an ounce as markets extended their winning streak to three days on Thursday. Whispers that the Fed may keep interest rates close to ZERO until mid-2014. The Fed minutes will be available for translation in January.

Capital One, the credit card & banking giant, continues to pursue customers even though they’ve had their debt discharged through bankruptcy. An audit found 15,500 such instances but the company disputes the finding. More than 800 of those erroneously hounded have filed lawsuits against the company.  About 1.4 million Americans filed for bankruptcy in 2011. Shenanigans aside Morningstar likes the stock to buy at $42.00 and value at $70.00. Shares closed at $42.64 Thursday.

Holiday Shopping List for 2012? Sterne, Agee & Leach have a few industrial ideas to share in Investor’s Soapbox published in Barrons.com. The analysts like the following stocks because of their pricing power, improving margins, successful transformations and restructurings, large deployable cash balances and sustained backlog expansion: ABB, Cummins, General Electric, Siemens, Tyco International and Wabco Holdings.

Have a wonderful Holiday & New Year!

Questions call Paul @ 877 783 7080 or write him at pstanley@westminsterfinancial.com. Share this blog with someone who cares about their money.

That Was The Week That Was- 3rd Week in December

As 2011 wraps up one thing is very clear – keeping your savings locked into fixed money market, certificate of deposit or savings account for the long term is a guaranteed loss of use of money. ( It’s like buying a U.S. postage stamp in 1970  and keeping it in your drawer. You have a stamp that cost a dime still worth a dime but you can only buy 25% of something today than you could back then.)

U.S. interest rates are not expected to climb anytime soon. The Federal Reserve reiterated last Tuesday that interest rates would remain low through the middle of 2013.

For investors seeking growth & income consider  a mix of blue chips paying dividends, utilities or simply the Dow Jones Industrial Average.  This is called getting paid while you wait. For investors where income is more important than principal preservation next week’s blog will illustrate how using a mix of Master Limited Partnerships, High Yield Bonds and Closed End Funds can bump yields to more than satisfying levels.

Barrons put out their top 10 stock holdings for 2012. The list contained some of the usual suspects like Exxon Mobil, Wal-Mart and Cisco along with a few surprises such as General Motors and PepsiCo.  (Hmmm, no Cocoa Cola or Ford?) They also recommended Barrick Gold and United Continental. Both stocks well beaten up in 2011 as was General Motors. Overall the Barrons list was down in 2011 through December 10th by 6.9%. Barrons is doing what seasoned investors do and that is pick up those extreme losers and integrate them into a portfolio.

Markets fell for the week-down about 3%. With the holiday season on us don’t expect much from the next two weeks as Wall Street empties. Oil fell 5.5% from the beginning of the week to the end. Food prices slightly higher. The last few trading days couldn’t overcome the sting of losses suffered at the beginning of the week.

A Rule Some Investor Breaks: When cleaning out the portfolio the amateur investor usually sell their winners and replace them with what they hope will be other winners while keeping their losers, thinking that they’ll turn around in their lifetime. The rule is sell your losers and hold your winners. It’s easier, more efficient and gets immediate and possibly long term tax benefits.

Bloomberg’s BusinessWeek Calls The New Triple Hedged Exchange Traded Funds ETFs on Steroids! I first warned readers a month or so back when the new triple hedged funds were introduced. While some investors think this could be a quick way to make money it works the other way just as quick. I warned that the Gold ETF triple would cause greater volatility and since the introduction of the ETF gold has fallen off its highs.  That isn’t the only reason. Lots of money fled to the dollar when the Euro crisis raged. If you’re buying from another broker check if their employing a triple hedge ETF.

Chrysler Marketing is the Bomb! Paris born Olivier Francois sees Detroit as Exotic and selling it and the cars the company makes here as just that.  Chrysler sales hit a 10 year low in 2009 as it exited bankruptcy. Cars the company makes are selling at a greater percentage than the competition because the company didn’t sell that many cars the year before. I haven’t driven a Chrysler product in decades and asked a woman who was driving a new Chrysler 200 what she thought of her car and she gushed raves for fifteen minutes. Wonder if in 2012 there will be a Chrysler IPO? The company –Fiat- nixed the idea (good thinking!!) for 2011.

Warren Buffett Bought IBM. The Oracle scooped up shares of IBM at their highs of, and we’re estimating, in the neighborhood of $185 a share. Now Morningstar reports shares in IBM fair value right at $182.00 and investors should buy at $145.60. On the other hand Apple, trading under $400 a share, has a Morningstar Fair Value of $530 and suggested Buy at $318.00. To the best of our knowledge The Oracle does not own shares in Apple. So investors wonder who was right? And, since Buffett is one of the world’s best value investors (buying stocks at their cheapest) was he insanely wrong on IBM?

Gold fell Monday- as printing presses across sovereign nations ground to a halt. Michael Kahn’s column ‘Getting Technical’ reported the trend for Gold was still favorable but if the price falls below $1600 an ounce, all bets, he wrote, are off. Gold closed Monday last $1665. Tuesday gold fell again to close $1643 an ounce. And, later in the week Gold did fall below $1600. The trend is down for the metal simply because there are too many sellers and little buyers, according to Gold aficionado Matt McAbby of Oakshire Financial.

 Criticism of The Euro-Deal Caused Stocks to Fall Monday . Worries that there is no mechanism or entity that could step in with force when the next blowup hits the headlines. (The critics are demanding the ECB European Central Bank forget the 1920s and step up as did the United States Federal Reserve to back Sovereign and bank debt.) James Surowiecki in the New Yorker of December 3rd, The Financial Page, with his column entitled An Avoidable Crisis, wrote, ‘The E.C.B. is concerned that becoming a lender of last resort could threaten its much prized price stability, but there’s no point in price stability if the euro vanishes as a result. If the E.C.B. isn’t careful, someday we’ll talk about how a great job it did of protecting the euro right out of existence.’

Tuesday The Fed Took No Action & Markets Gave Up Triple Digit Gain. New Voters for 2o12 May help The Ben Bernanke’s Agenda:

Oil Price at Highs – Last Blog I asked, why? The answer du jour from talking heads was that the Iranian Problem hovered over oil prices. Domestically we are using less oil, Europe certainly has slowed down and so the question is what is motivating the price of oil. According to WSJ the U.S. is no longer in the driver’s seat as far as oil prices, says James Hamilton an economics professor at the University of California, San Diego.  Growth is coming from emerging markets. No matter what the reason every $10 increase in the cost of a barrel of oil will shave a few tenths of a percentage off the growth of the gross domestic product. Oil, along with other commodities, fell across the board this week.

Schmart Too Late- Old Too Soon….Boomers are the growing target of financial thieves. Retiree Keith Grimes sank every penny he ever made into an investment that ‘promised’ him a return of 14%-24% a year, and was marketed especially to seniors. At the end it was nothing more than a Ponzi scheme. Stealing from one person to pay another. Today Mr. Grimes lives in a borrowed trailer in Florida and runs an industrial fiberglass business after losing most of his savings. Boomers are the number one target either through Free Lunch or Dinner seminars for these pitches, or through cold call phone solicitations. The amount of enforcement actions against these financial predators is but a drop in the bucket to the total amount of thefts occurring in the real world. However the amount of actions is expected to hit a record in 2011. In Macomb county a 44 year old man with no security license was able to con over a million dollars from seniors by simply saying he worked for Goldman Sachs and promised a 48% annual return. The seniors wrote a check payable to the conman and he simply deposited it in his personal checking account. No one even thought to call Goldman or double check on their account statements. A local lawyer smelled something fishy when it was brought to his attention and called the Macomb police to investigate.

Is It Just Me or Is Everyone Fed Up With The See-Saw Market?  Fund Manager James Dailey said that he thinks the DJIA could break 14000 in 2012. The lows of October, he said, will hold and the markets could move up with a ‘Santa Claus’ rally in the coming weeks.

 Gold lost more ground Wednesday as the dollar strengthened and the Euro weakened. The Street’s Jimmy Cramer said not to give up on Gold even as it fell to close under $1600. He pointed out that every time the metal retracted it also rallied strongly. Chiming in was Teeka Tiwari of the Tycoon Report who suggested investor buy on the dips and picked $1550, $1500 and $1480 per ounce as the three entry prices. His rationale if the metal rallied off one of those prices an investor still had some skin in the game, Still others called the price fade on Gold a sign of deflation which Jimbo Cramer poo-pooed.

The European Problem won’t have an answer for investors until 2012. The fix will take decades. The Euro, according to Pimco’s Gross, will have parity with the dollar which spells trouble, to our way of thinking, on exports and multi-national corporations. The Swiss are gearing up to fight any strengthening of their dollar the Swiss franc.

Book Lovers will remember George Whitman who owned and created iconic bookstore ‘Shakespeare and Company’ in Paris passed away at 98 this week. Whiteman was born in East Orange, New Jersey and brought up in Massachusetts and opened his Left Bank shop some fifty years ago. The store was a Mecca for writers and students. His daughter will take over managing the store.

Blue Chips moved modestly 45 points on Thursday. Jobless claims were the least since May, 2008. The Dow had a triple digit gain until International Monetary chief Christine Lagarde called the global economic crisis quite gloomy and urged international help in resolving Europe’s debt crisis.  I guess having the ECB step in is out of the question. Howard Ward, portfolio manager at Gamco Growth fund said, ‘It’s important for people to understand that we will certainly be impacted by the slowdown in Europe. But that doesn’t mean that we’re going to have a recession as well.’ Gold closed still a tad under $1600 an ounce.

Silver closed under$29.00 and this from a high of $50.00 an ounce earlier in the year. Myra P. Saefong wrote that the metal’s a bargain under $30.00 but investors best watch volatility. James Carrillo, senior portfolio manager for Swiss American Trading Company said he would be a buyer of both gold and silver at these levels. Stating that gold was massively supported at $1500 and silver at $28.00. Investors are cautioned of heightened volatility and silver futures dropped 7% last week and gold 5%. However if silver falls below $25.00 it could fall to $20.00 an ounce.

Reverse Convertible Securities are being sold to seniors because they don’t know what the hell they are; and even if told couldn’t tell the difference between straight fixed savings and a swindle. Wells Fargo was fined $2 million for unsuitable sales by the SEC for one broker and his pals selling clients these products. The investment is a yield based product where the principal is tied to an underlying stock. If the stock goes down prior to maturity the difference from where the stock price was when the investor bought it and where it is at maturity is deducted from the return of principal. If the stock goes up the bank reaps the difference between the price bought and the mature price. It’s almost the perfect ‘Head’s I Win-Tails You Lose’ product.

Motley Fool has Ford Motor on its top five best performers for 2012 list.

Two Thoughts from Different Folk: Barrons panel of financial experts believe the markets will bounce 12% in 2012 but with most of the gain in the second half. Retired Value Line research director Sam Eisenstadt forecasts a 10% return in the markets for 2012 but with the majority being in the first six months.  If we could only combine the two….what a year!

Zynga – the highly anticipated IPO fell on its face Friday. The shares were priced at $10.00 and opened at $11.00 and promptly fell below their IPO price within 10 minutes of trading. The stock closed at $9.50 a share. It could have fallen further if it hadn’t had the support of its Wall Street underwriters. This was a big disappointment for Morgan Stanley, the lead underwriter. Cramer and his friends on CNBC based the stock prior to the open on Friday saying The Street didn’t like the stock or its connection with Facebook.

Finally FDIC Closed two banks in Arizona and Florida. The total bank closings in 2011 is 92. Bah -Happy Holiday?

Questions call Paul @ 877 783 7080 or write him at pstanley@westminsterfinancial.com. Share this blog with someone who cares about their money.

Why Are The Markets So Volatile?

 

 

 

 

Lots of clients and friends don’t read my entire blog every week because its….too long, too much of the stuff their not interested in and sometimes news is too depressing.

This year the stock market has not settled onto fundamentals even though the vast majority of reporting companies have increased profits and many their market share. The question is, if so many major firms are minting money why is that not being reflected in their share price? Basically it boils down to emotion over fundamentals. Here are a few other reasons…

1. Flash traders are buying and selling and sometimes a sell or buy gets to the Street before one or the other clears. Volume of shares being traded is in the billions and these traders don’t care about fundamentals. They buy on rumor sell on news…sometimes the other way around.

2.  Fear Factor. Everyone is scared of something and not going to stick around if that next something scares them. Money is whisked off the table and either profits or losses are booked. Money Managers are not hanging around like they did in 2008.

3. First it was U.S.A., worrying about a recession double dip and now it’s worry about Europe. The truth is Europe doesn’t want a depression any more than we do.  It’s all about what we don’t know and the uncertainty of what’s going on over there. Every time Chancellor Merkel opens her mouth global markets fall. She’s the German Ben Bernanke. Even with the current EuroZone deal the problems are not going to disappear.

4.  In Washington, DC we have no leaders. We have two political parties in-fighting for their benefit and no one else. There is no LBJ, Reagan or Clinton to make Congress do what has to be done. There’s a lot of that in Europe, which is another part of their problem.

5.  The Federal Reserve cannot do anything else. Period. Done.

6. Corporations not hiring simply because they are fed up with all the regulation and nonsense coming from Washington and don’t know what to expect next. They’ll keep their cash and profits and wait this administration out.

7.  Short sellers working the volatility and when markets reverse they have to buy to cover their bets. Just more up and down making all of us sea sick.

8. The housing market is a mess. No one has paid a lick of attention to it except bailing out banks.

9.  Banks not worried about consumer but putting cash into coffers and waiting this administration out.

There it is. Nothing fancy just good old fashioned distrust, lack of leadership and no magic that’ll get Washington to work like it should. Hope this helps you understand it isn’t your investment giving you heartburn- it’s a lot of other stuff.

Questions call Paul @ 877 783 7080 or write him at pstanley@westminsterfinancial.com. Share this blog with someone who cares about their money.

That Was The Week That Was- 2nd Week December

If There Isn’t a Morningstar for Dummies There Should Be: As you know Morningstar is augmenting its star rating system by adding Gold, Silver, Bronze metal ratings illustrating what they think a fund thinks it will do in the future. In 2011 they have 300 funds researched and graded. By 2012 they’ll have done 1,000 out of the approx 7,500 funds. I just examined one of their entries and more than slightly confused. It’s the Clipper Fund, rated 1 star because it has a terrible performance over the past 5 years averaging a negative 4% per year. Morningstar rates the fund high in people, expenses, service and lousy in its results making money for investors. It also gives the fund a Gold star going forward, although fund management has shown it hasn’t been successful with investor money in the past. So you can see my confusion. You have a fund that in five years its corporate methodology, expenses and governance is super keen but making money doesn’t seem to be what the fund is awfully good at. I don’t see how that’ll change in the future. And, that’s basically the main reason I buy any fund is its ability to make money for its customers. Even the Morningstar analysis of the fund states.               ‘Despite a post-financial-crisis rally, the funds record under its current management team is still lackluster.’ Maybe Morningstar needs more time to get its act together on future’s rating of fund performance or I am missing something.

Last Week Ended With The Dow + 1.4% . The Euro problem was seemingly put to a temporary rest by agreeing to extreme sanctions and no financial bailout for those countries that did not adhere to strict economic prudence. The meeting last week by Euro Zone leaders ( see the happy leaders above Merkel & French President Sarkozy) was the first step in so-called fiscal integration. There still could be months of what the WSJ calls ‘wrangling’ before anything of substance is done. And, still, when everything is said and done the Big Gun, the ECB (European Central Bank), has not indicated that it would undertake massive purchases of euro-zone debt to prop up the region’s bond markets as the United States did with their Federal Reserve. So while the markets welcomed any kind of a deal it didn’t seem to be the deal that cemented the end to the problems in Europe. On Monday early of this week markets in Asia were up and European stocks fell.

But, from all weekend indicators  that I have been reading, our domestic markets appear to be soothed as we move into the Holidays. Everyone from The Street, to Barron’s guru Randall Forsyth agree that what happened on Friday seems to ‘pacify’ investors. This may be the beginning of a pleasant holiday after all.

 Maverick’s Pa once said, ‘If a man needs to make out a will he just ain’t paying attention to properly spending his money.’ A recent WSJ article reported on how some bill collectors are going after surviving family members for the debts of their relative. Usually when someone dies their debt dies with them. It is true those that are owed money may go after whatever assets the debtor owned at his or her death, but rarely have they gone after relatives of the deceased – until now. Debt collectors are playing the ‘moral card’ when chasing down money from family members. In fact their tactics are just as brutal, according to the Journal, as if the debtor was attempting to sidestep paying off the debt themselves instead of being dead. Some collection firms even send condolence cards that double as collection letters. One woman received over 200 threatening phone calls regarding her deceased mother’s credit card accounts. The rules are simple, and always check with your attorney, but unless you are a co-signer with the deceased, or joint owner on an account, you have no legal obligation to pay a penny for any money owed by your relatives or spouse.

Guess Who Could Be The Next Oil Producing Powerhouse? According to last week’s WSJ the United States is at the forefront of shale sourced oil and gas exploration and drilling. By 2020 experts say that the United States will be the top oil and gas producer, surpassing Russia and Saudi Arabia. This is reshaping the oil industry as the major oil companies are fed up with fiefdom politics and terror tactics in the third world. Australia is also part of this energy revolution along with Canada, West Africa, deep waters in Brazil and Mexico. Many of the majors are simply finished with countries like Venezuela that took their property after the firms spent billions in building the country’s oil infrastructure. This revolution would keep profits at home, cut costs of energy, eliminate political uncertainty and blackmail.

HSBC Bank in UK fined for inappropriate advice to elderly. A five year minimum investment was recommended to aged retirees to fund their long-term care insurance plans. HSBC planners sold asset backed bonds to be used to pay premiums on the Long Term Care  insurance. A review by a third party found that 87% of those recommended the product were unsuitable for it.

Online Holiday Shopping in USA breaks $7 billion for the week. India has its own on-line shopping spree going for it. According to Time Magazine 80 million internet users in India will collectively spend $10 billion online shopping in 2o11. This from a country that had virtually no on-line sites in the year 2000 when the dot com market collapsed and U.S. investors cut the cord between Indian and the United States internet entrepreneurs.

Monday Markets Happy-Happy- a triple digit upside until Standard &Poor’s opened its yap and said they planned on downgrading the ratings of 15 Euro Nations- ‘cept Cyprus and Greece which are already on high risk of default and been downgraded pretty much to dirt ratings. The S&P ratings ‘credit-watch negative’ signals a downgrade within 90 days and has a 50-50 chance of being confirmed. Stocks closed mixed after the news and at lower than half their day’s high. CNBC said markets already factored in a downgrade. As you can imagine no one in the investment business takes anything the rating people say with any authority. Cramer, live on CNBC in the ayem, said he would respect the wisdom of Steve Leisman before he would a ratings firm.

Philly Cream Cheese, Jell-O, Oscar, Kraft Cheese to the right and …Cadbury, Nabisco, Oreo and Tang to the left as Kraft Foods splits itself into two. Planters moves from snacks to grocery while Trident sticks with Cadbury and Tang…got it? Grocery, it seems is the slower grower, and snacks is where the action is. Kraft Foods is trying to get more oomph out of the company and the split will be a tax-free spin-off of one company into two. Morningstar still places a price of $39.00 on shares no matter how it is parceled.  Shares have gone nowhere in ages…

What Not to Buy For Xmas….according to Kiplinger Magazine: It’ll be cheaper in January….Televisions, Linens (I get pillows 2 for 1 as soon as the calendar cranks a 1), Snow Blowers, Cameras (Sony has a new one I got my i on), Outerwear, Skis, Furniture, Cars, Cruises (although deals are being made throughout 2011), Bicycles and (ahem) Gym membership. And PNC Bank has a price tag on all 364 gifts in the 12 days of Christmas of $101,120. Getting them Lords to be a leaping can’t be cheap…

Get Met… according to Barron’s Take. The country’s biggest insurer Metropolitan Life has languished in 2011 and now Barron’s thinks the company is ready to rumble higher. While Met gets 40% of its business internationally it is one of the largest providers of annuities and institutional savings products. Jeffrey Schuman, analyst at Keefe, Bruyette & Woods, thinks the stock could go to $50. in the next 12 months.

Window Dressing2: Fund Managers dump those stocks that have been abnormally punished throughout the year and expect shareholders to believe that the fund they managed didn’t own them in the first place. According to Mark Hulbert these very stocks will get beaten up even more and experience a “January” bounce. George Putnam of the Turnaround Letter said those stocks, historically, produced a 15% bounce in January’s past. In that same period the Dow Jones was up  just 2.7%. Here’s a list of this years massive losers: US Steel, NetFlix, Monster Worldwide, Janus Capital, First Solar, Bank of America, AIG, Computer Sciences.

Ye Ole Post Office is losing money and their solution is to cut service and raise prices. Is there anyone besides me that thinks there is something wrong with this business plan?

Starbucks =Mobile Transactions via Smart Phone: The first company that got it right. 29 million transactions since January. Customers love it, according to CNBC, because they trust and like the company behind the product. Starbucks is the first brick and mortar brand to embrace the phone transaction app and make it work efficiently. Expect this to heat up with other firms in 2012.

Water as an Investment: Most water as a product is owned by governments and there are few investments available that are water focused. Powershares Water Resources is the biggest of four ETFs that invest in the water industry. They hold shares in publically traded companies that deliver services related to water. There are no pure water plays and yet the global need for clean potable water is growing. The coming shale oil-gas exploration revolution positively gulps water like crazy.

Verizon Planning Streaming Web Video but with limited programming. The news was enough to kick NetFlix down 2% on Tuesday reported Barrons.com. The report wasn’t really a report but came from reliable anonymous sources…. said Barrons.com

Apple Plans to re-accelerate its retail growth…Share in the company have languished since Steve Jobs death. The company opened 30 new stores with 21 overseas. Barclay’s Ben Reitzes has an overweight on shares and a $555 price target. Shares closed Tuesday a tad under $400. a share.

IPO after Market? According to Barrons interview with Renaissance Capital’s Kathleen Shelton Smith the IPO after market has been extremely volatile. Many investors are waiting for Facebook as the next Google. While you, me and the candle stick maker may not be able to get in line for IPO shares at a price that institutional investors get them at there are ways to own IPO’s either before they get to market or after. The after market can be owned through The Global IPO Plus Aftermarket Fund (IPOSX), which owns those new companies that the managers think will be eventually owned by institutional investors. Currently there are 50 stocks in the fund including LinkedIn, Pandora Media and Verisk Analytics. Year to date the fund is down 20%.

Last Week’s Blog IPO Fund Buyer GSV Capital that invests in IPOs along with the big boys has just gotten coverage and Ladenburg Thalman gave the stock a buy rating. Shares up from last week and closed Wednesday at $15.65 a share. GSVC. If you want action on IPOs you may want to research the stock.

Next Week a Flood of New Deals will hit the Street as Eleven IPOs are expected to launch. This is expected to be the busiest week for new businesses since November, 2007. The biggest name to go public will be Zynga. There will be six IPOs next Thursday, a crowded field as firms vie to go public before the year-end. If you need more information on what firms will be going public besides Zynga and Jive Software, call or write.

 

A Fair and Equal Playing Field in the stock market…except the SEC thinks that some players should be treated fairer than others. In baseball an umpire gives the benefit of the doubt on a close strike pitch to either the pitcher or batter, depending on who has the greater reputation. In investments the SEC seems to side with mega-fund managers with a long history of compliance. What has happened is that Warren Buffett asked and got to conceal some of his big buys from other players and the SEC allowed it because he is Warren Buffett!  So far  in 2011 50 managers managed to hide their buys from the public and competition. Those given special treatment explain the reason they did what they did is that it is their proprietary trading knowledge and they want to shield what they buy from the public – for a while.

Exxon has never been managed by idiots. The company has oodles of cash, great scientists, experienced management and if overnight cow manure becomes the next world energy source they’d be sure to have a fence around a mountain of meadow muffins. Exxon has admitted to researching for the last decade a forward world energy outlook. Exxon now declares that by 2025 natural gas will be the number 2 in fuel use dropping coal to number three. Coal will still be a major player in emerging markets but not not in the industrialized world where energy demands will grow by 30% by the year 2040.

Small Business Gets Screwed….A new law was supposed to reduce costs for merchants that accept debit cards but instead the processing costs are higher. Before the Dodd-Frank Act (them two guys again), credit-card companies (banks) have merchants discounts on debit card fees. The Dodd-Frank Act placed a cap on the fees and bankers did what bankers do and eliminated the discounts on debit cards. Now small biz is forced to hike prices to customers to pay for the higher bank debit card fees. You’ll even see this at vending machines that accept credit/debit cards such  as RedBox, soon to be charging $1.20 up from $1.00. Do you think that Dodd and Frank signal their intentions and allow loopholes in their law to purposely screw consumers and business? Every time I get a ‘Good News’ letter I start reading the fine print.  And, don’t be surprised to see one or both Dodd ( Retired and on the Friends of Angelo Christmas Card List) and Frank (that’s Barney who’s retiring) working in the banking industry.

Ford Reinstates A 5 cent Dividend. This may be what investors have been waiting for- while the stock fell after the announcement on Thursday the markets were off almost 200 points, which, as you know takes everything either up or down depending on the mood.  More important to the company, and shareholders, is the reinstatement of Investment Grade Rating. This would allow those financial institutions to buy shares in the company currently constrained because of the junk status. The dividend may be the final piece to get the Investment bump up and see shares mature to a price more reflectively of the company’s earning power. GM is also sitting on a huge cash cache but said they were more concerned making up pension shortfalls than paying a dividend.

Consumers Are Shopping – Surprising the Naysayers- Consumers finally coming to grips with home values reduced and savings ravaged by the recession are back to spending and less saving. Greg Daco, an economist at IHS Global Insight, ‘reckoned was the easing of inflationary pressures and access to credit became somewhat easier.’ The fact is that people need new stuff to replace the stuff that’s worn out.

China’s Inflation Lessens: The lowest inflation reading since September 2010 surprise 16 economists in the Dow Jones Newswires survey. HSBAC economist Ma Xiaoping said, ‘The government should accelerate loosening efforts and make stimulating economic growth a more prominent priority.’ Which is the news for those who were burying the Chinese economy.

 Finally- Don’t Forget to Call and Have Your Portfolio Analyzed for Risk & Allocation as we go into 2012.

Questions call Paul @ 877 783 7080 or write him at pstanley@westminsterfinancial.com. Share this blog with someone who cares about their money.