retirement interruptus

That Was The Week That Was –3rd Week January

2012-01-23T05:52:00.001-08:00

Everyone loves a bargain. Even the rich like getting something for less than its advertised. The investment business basic premise is to buy low and sell high- most average folk do it the other way ‘round. Still getting an investment cheap is no guarantee it won’t get cheaper. Mortgage Insurers are dirt cheap! PMI, MGIC and Radian Group have all suffered. PMI & Old Republic have been ordered by state regulators into a ‘run-off’, which means they can’t sell service to new homeowners and can only pay claims and collect premiums. The stocks, according to Jonathan Lang at Barrons, are trading in the pennies and with more foreclosures on the horizon may trade lower, or vanish all together. The lesson is to buy a quality stock at a great price not a bad stock at bargain price.

Important week as 117 S&P Companies Report Earnings. Based on analysts projections the Street should see positive earnings from Apple, Motorola Mobility, Legg Mason & Textron.

The Barrons’ Roundtable sees trouble (with a capital T) in Europe but buying opportunities in United States and Emerging Markets! Pessimism equate with opportunity, so sayeth Roundtable member Fred Hickey on the 14th of January. They go on to say that people will kill themselves to get a bargain on a new television but run from a stock bargain- or sell the stock instead of buying more- when the price falls. Here’s a few other things from their meeting:

There’s a growing divergence between US companies and the US economy.
Plus or minus 10% for the domestic markets this year.
Most of the cash in US companies sitting overseas and would be again taxable if repatriated.
Europeans countries in financial trouble own a lot of assets but it’ll take time to sell. They could sell land holdings and even tax the church, which would solve all the problems in the world.
Euroland is dysfunctional. It’s the northern parent versus the spoiled children of the south.
Every European country will be in recession in 2o012- certainly by 2013.
When money yields nothing, banks won’t lend.
One has to invest in the least dirty shirt and the US is the one.
Most companies don’t know what to do with all their money.
Corporate profits will not collapse but may decrease by 20%.
China is more important than Germany and France combined.
Brazil has oil. Is the breadbasket of the world. Exports commodities to China. Plus they’re pretty smart people.
Gold has to be bought some time this year- probably in the second half and under $1600.
It’s not that gold will so much go up it’s that paper money will go down. Fifteen to 25% of all assets in gold.

Definition of Asset Allocation: Asset classes have different levels of risk and return and so each will behave differently over time. Don’t expect them to go up and down at the same time.

Six Things Going to Cost More

2012

THANKS TO CNN MONEY

AIR FARE
MEAT & FISH
COFFEE
GAS
MAIL
CLOTHES

Investors prepare by investing in commodity index or specific stocks of companies reflecting inflationary sectors.

Morningstar’s Fund Manager of The Year! Global Manager Lost 4.13%

In Search of Yield – its not at the bank….Some companies can see their stock price pop if they increase dividend. According to Sunday’s Barrons Apple, Google, Berkshire Hathaway, Waste Management, Oracle, Cisco and Disney could all see shares go up. There are many funds and ETFs paying 3-4% but the stock leaders for dividends are the following:

Technically….speaking…Michael Kahn at Barrons.com writes that the party for banks may be over. In the last month the bank stocks outperformed the S&P 500 by 10% but a bearish technical reversal is soon upon the same.

Markets Up Monday- Gold & Energy Higher.

New Stupid Depression Indicators: Each economic downturn preceded by building a taller skyscraper than was in existence before. India in recession and just completed two skyscrapers and 14 more under construction. Our Empire State Building built in… 1931.

The woman who created the Consumer Protection Agency, and should have had the job leading it, is instead running for the U.S. Senate. Elizabeth Warren vows to be voice of the middle class. Has a campaign war chest that makes her a formidable opponent.

Gold on everyone’s shopping list!? You don’t need to get scared or even think the world’s going to end to come to the conclusion that gold should be in everyone’s portfolio. When to buy is the key and Tom Lydon shares his view later in the blog. Most agree about gold that it’s the only bit of pseudo-currency that’ll keep pace with inflation. Matthew Lynn’s London Eye Column, which he writes for Dow Jones, on January 18th, ‘ Markets are getting used to the fact that Sovereign Debt is no longer a safe haven. The Big Five- US., France, China, Japan and Italy are all running huge deficits and little signs of bringing them under control. One of two things will happen- either they will all default or they will inflate away their debt using compliant central banks.’ He predicts that by 2020 Government Borrowing will slowly come to an end. Money will be flowing into new safe assets: Emerging market debt, gold, corporate bonds and blue chip equities. Emerging Markets as a core holding is getting more and more mileage from analysts and planners.

Big Investors Bullish For 2012 Sectors

SOURCE CIRA-US EQUITY STARTEGY.

Performance Year-to-Date

RETURN FROM DECEMBER 31 2011 TO JANUARY 18 2012. THINGS CAN AND WILL OR MAY CHANGE.

China’s Urban Pop. Larger Than Rural…691 million out of 1.3 billion, rural workers moving to cities from farms to seek fortune. The important news is that the young prince and princess (as their elder’s call them) are quickly becoming super consumers. Credit Suisse reported that China’s middle class is rapidly being replaced by the affluent young. Middle class in China is defined as earning 7500 yuan or $1,188 per month which is equal to our workers earning $2,000 a month. We are seeing a more Americanized Chinese consumer spending the way we do- which is great for American Business.

Inflation Concerns? Buy Commodities!

Thursday stocks closed at a 6-month High. Copper soared to a 4 month high. Gold was off a smidge as was oil.

But Michael Kahn at Barrons Technical says don’t chase this rally. His take is that a better opportunity is later in the year and that a tumble is due for this market. Not saying when but suggests that this market looks eerily similar to April 2, 2011 just before markets moved to 2011 highs in May.

Bank of America Thursday made a profit of 15 cents that propelled shares higher. The bank announced a profit of $1.4 billion for 2011 against a loss of $2.2 billion in 2010. On the whisper front some expected the bank to announce 19 cents and were disappointed. Still some advocate buying on a trade.

Regular Folk were not the only one’s to pull money from equities in 2011. Hedge Fund investors ( the so-called sophisticated rich) collectively pulled out more money in 2011 than they put in since the second quarter of 2009. This from Steve Eder at WSJ.

Anyone watching Cisco? Amazon slowly moving up. IBM close to what The Oracle paid for it. Friday Big Blue moved up on better than expected earnings. Tech Sector held back by Google as Nadaq-100 attempting to break out from 2011

Marc Faber- Professional Doomster-said, ‘ Stock markets have already discounted some very bad news and there is no reason to think that stocks will sink, despite gloom prospects for the global economy. Major support he says goes back to the S&P 1010 all the way to August 2010.’ S&P 500 closed last Thursday at 1315.

Most Dangerous Banks in The World – Too Big To Fail – Assets to Home Country GDP

From China’s one bank to the United State’s Eight Banks- The world has 25 institutions simply too big to fail. Italy has one bank, France has four, Germany has two. Information gathered by Blogger PolyCapitalist at Seeking Alpha.

Every Major U.S. Bank Donated Most To The Campaign of Mitt Romney For President- From Business Insider. And he still lost to Newt….

Buy Canada! by Eric St-Cyr (sounds Canadian, eh?:

Commodities- Canada has huge deposits of metals, minerals and agricultural products.
Energy – only developed nation that is a net exporter of energy.
Total Debt to GDP-lowest of the 10 largest developed nations.
AAA Rating
Political stability
The Trade – iShares ETF - EWC

Buy Gold? ETF Trends reports: Bullish activity on gold and some bulls state gold will reach $2,000 ounce in 2012. But, warns ETF Trend writer Tom Lydon, ‘Gold exchange traded funds need to get safely above the 200-day moving average.’ GLD closed Friday $162.00.

Existing Home Sales Up 5% in December

Mortgage rates, improved jobs picture and rising rents caused slight bump. Don’t get excited but still a look at homebuilders may be in order.

Auto Makers expect to Hire in 2012. Employment in the industry rose 4% in 2011 to 590,000.

Markets up- Gain puts Dow at its highest since July 2011

Nasdaq-100 ETF Breakout hampered by loss at Google. The Naz is aiming for new highs but stumbled as Google missed numbers and fell 8% in after hour trading last Thursday. Mixed messages coming from analysts about buying Google on the dip. Some advocate against pointing out that the recent purchase of Motorola Mobility and some 30,000 new employees to absorb plus a poor third quarter from Motorola a hindrance.

Finally, FDIC closed 3 Banks Friday. Small banks in Florida, Georgia and Pennsylvania were shuttered.

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 January

2012-01-17T08:20:00.001-08:00

Record GM sales in China in 2011! Bloomberg reports last Monday that car sales for domestic autos were up across the board with GM +8.3% and Ford increased 7%. This in the worlds largest auto market! Even Toyota, hurt badly by the tsunami in 2011 was up 4%. Luxury models added to the sales records. World’s largest market….

Stocks ended last week slightly up. The Dow up 0.5%, S&P up 0.9% and the Nasdaq moved up 1.4%.

Tips For Your Flex-Spending Account.

Review receipts including over the counter health care.
Call for documents –if you need to do so.
Restock your home (and cottage) 1st aid kit.
Buy extra glasses, hearing aids, batteries.
Stock up allergy meds.
See dentist.
Get flu shot.
Alt medicine may qualify- check and see.
Don’t forget mileage.

time to double- check your HSA investment allocation!

2011 S&P 500 Performance:

Year-end reports coming out to all clients and if you have questions why you are where you are after August 2011 here’s the chart you can see why.

Investors Fled Long-Term Equity Mutual Funds in Record Numbers: Morningstar reported that in 2011 almost $100 billion left equity mutual funds for bank checking and savings accounts. It was the largest outflow of money since 2008. In December, 2011 Equity Funds had the second consecutive month in a row of net redemptions.

Investors poured almost $900 billion into checking and savings accounts, according to TrimTabs for 11 months of 2011. The numbers according to TrimTab Executive Vice President David Santschi was because of fear of a weak economy and government manipulation.

Bullish sentiment remains! According to American Association of Individual Investors bullish sentiment measured in at 49.1% as compared to long-term sentiment of 39%.

Rolls & Bentley Sales Jumped in 2011. Asia-Pacific sales surged 47% and North American sales up 17%.

Royal Bank of Scotland Cuts Metals Forecast:

Copper cut 15%
Aluminum cut 12%
Gold forecast average $1750 troy ounce
Silver $33 oz
Platinum $1700 oz
Palladium $800oz

Hostess Brands Maker of Twinkies Filing for Bankruptcy- Again: High food and labor costs along with huge debt and unfunded pension liabilities have contributed to the American Bakery of Treats icon underwater for decades. Hostess also bakes Wonder Bread. The company had been in bankruptcy in 2004 but has struggled ever since emerging in 2009.

Morningstar fairly gushes over…Disney! The ratings firm calls it undervalued, a wide moat stock and has a dominant position and pricing power. (How about that?) And it all boils down to the long-term contract that ESPN has with Monday Night Football. Competitors are all playing catch-up, according to Morningstar’s analyst Michael Corty. He calls the stock dirt cheap where it is at a bit over $38.00 and believes shares are conservatively worth $45.00.

Oil prices could pop 80% if Iran blocks Hormuz Strait. Michael Wittner reported to clients that Iran could keep straits closed for at least 2 weeks. Brent could trade $125-$150. David Greenberg added on CNBC that no way would he be shorting oil in 2012. Toyota’s Lenz added gasoline could be above $4.00 in 2012.

Morningstar Likes International Game Technology for Online Poker Gaming. IGT is best positioned to take advantage eventual online gaming providing infrastructure and also a new casino floor management system. IGT is major producer of slot machines. Shares closed Monday down to $16.92 with buy recommended by Morningstar at $12.60 and Fair Value $21.00. Not without risks this.

Big Volume on Gaming Stocks Wednesday- For the same reason that Morningstar likes IGT traders have determined that the U.S. could bring in up to $6 billion annually with online poker and have booted up shares in Las Vegas Sands, Wynn Resorts, MGM, Melco Crown & Boyd Gaming.

Cramer on CNBC said, sectors he likes for 2012 include China, Tech and Banking. They were the three biggest losers in 2011.

USA News Reports that Flat results in 2011 could mean positive for stocks in 2012. S&P 500 index moved up an average of 13% and 8 out of 10 times whenever the index was flat the year before, based on historical results measured from 1930 to the present.

CNBC reported the S&P 500 closed above its technical high price of last October. This can only mean- - that the markets have impetuous to move higher. The Powershares QQ, which tracks the tech heavy NASDAQ-100 is about 1% from breaking out to a new high. The S&P 500 index closed Tuesday at 1292.

Jeff White at Marketwatch provides the magic number for you technical aficionados. The number 1294 is a support level and the number on everyone’s (maybe) list. See the chart above. If the this level of support is broken on the high side investors can look for a test of the 1345-1350 level- which were reached twice last year – in Feb and July.

OJ futures spike on fears of a fungicide found in Brazilian concentrate. Futures up 26% on news.

Ford sees strong profit for 2011. Asia – Pacific will report a loss due to the tsunami but overall Ford sees good strength in 4th quarter. Weather also hurt Toyota, Honda and other manufacturers in the region.

Netflix downgraded – Bank of America Merrill Lynch analysts said investors may have been too over enthusiastic over shares and recent streaming service data. Shares fell 5% on news. Still shares up over 3% ytd.

Wow! Vizio Connects! The American based television manufacturer, known for inexpensive flat screens, bangs a home run in its first attempt at the Laptop and Desktop market. Watch for their products coming due this summer.Company also come out with a dandy tablet. All this from the LV electronics show. Vizio is a privately owned company and no shares are available to the public. Products sold at Costco among other retailers.

Michael Kahn- technical writer from Barrons: Cycle analysis is foreign to most investors but folks at Bank of America Merrill Lynch suggest a serious decline in the markets for the first six months and then BOOM- a huge buying opportunity as the markets take off. Kahn says to save your money for the coming opportunity and the best way to remember this is the old ‘sell in May and go away’ adage. Bank of America analysts call this a decennial cycle – meaning the 9th year of the cycle. It’s a drop and then a Big Pop.

If Bombs start falling on Iran expect the markets to fall back significantly with oil, the dollar and gold to trade higher. This from Teeka Tiwari of The Tycoon Report. He also says to be careful of gold if the dollar strengthens. I’ll have those ETFs for when it happens.

Food Prices Higher in China as Inflation Ebbs to 4%.

Fertilizer stocks in the news: Jeff White at Dow Jones likes the following in the sector: Mosaic (MOS), Intrepid Potash (IPI) and Potash (POT). If you like the food or Ag sector this may be where you look first.

TopStockAnalysts suggest SILVER is ready to run. Shares were trading 50% above their 200 day moving average before the correction of 2011 and now about 30% below the 200 day. According to Jeff Clark the metal could get cheap but he’d be dipping a toe in the market right about here. SLV ETF closed Wednesday $29.50.

2013 Ford Fusion is…Hot!

Goldman Sachs Group bids for multibillion dollar bundle of bad mortgages from the NY Fed. The bank bid on about $20 billion with an average fair value of 47 cents. WSJ Friday suggested the bank would have been a buyer for about $3 billion. The NY Fed went on to quietly ask others bid on the same bonds and then publicly say they would be a seller only if they could get a ‘fair value.’ Goldman, hoping to get the bonds with little publicity, had no comment. Experts contend that the NY Fed would probably be better off selling the bonds to other dealers who could move the bonds at their discretion. The bonds originally came from AIG.

Good News for Apple – a supplier caught in the Asian floods now says their problems of distribution for the iPhone have been solved. Any production problems have also been solved. The death of Apple stock has been greatly exaggerated. iPhone is a huge money maker for the firm.

Another Bond Battle Emerges- A rally in Italian and Spanish Bonds is quietly being ignored by mainstream media in the US. Rates have tumbled on the short-end in Italy & Spain, as confidence or the extra-liquidity being pumped into the system by the European Central Bank. This is great news…The Spanish 2 year is 2.808% or the lowest seen since 2010. Italy’s 2 year has fallen below 4% not experienced since November.

Markets moved up Thursday. Gold stumbled.

From ‘Business Insider’ Five Million Retailers are suing Visa and Mastercard and major banks for billions. Retailers want about $40 billion a year from 2004 to present. According to the suit retailers state that the going public of Mastercard and Visa was a disingenuous effort to avoid looking like a monopoly. Retailers seek compensation for alleged overcharges.The basic message is that banks and credit cards have screwed them with overcharges.

Even with the Troubles- Visa & MasterCard are still strong picks, along with merchant processors Total System Services and Heartland Payment Systems. This from Sterne, Agee & Leech.

Fidelity Fund Manager Shake-up- again. Seems every other year Fidelity fires, re-hires or switches managers from fund to fund. 2012 is no exception. Fidelity Overseas Manager given boot, Jeff Feingold stripped of all responsibility except Magellan. And Joel Tillinghast returns from Sabbatical to re-run Low Priced Stock Fund. While Fidelity is a huge fund factory with more funds than needed this is always an interesting dance.

JP Morgan Chase misses! Profit loss in 4th quarter falls 23%. The stock is down 17% the last 12 months. The investment banking arm showed a loss of 52% in profits and revenue fell 30%.

CNBC Friday Morn…Analysts said ‘Watch the Euro.’ Friday morning euro stood at 1.27 and expected to fall further. No one talked about the better than expected European bond auction. Euro should act as health barometer to let investors know when to start buying.

Finally – Friday the 13th did the deed and U.S. stocks closed down across the board. Standard & Poor’s put the cherry on the sundae and closed the week downgrading the credit ratings of 8 European countries.

ACCORDING TO ZACKS.COM OUR DOMESTIC MARKET SELL-OFF FRIDAY WAS UNDERWHELMING SINCE BOND TRADERS HAD LONG ANTICIPATED THIS DOWNGRADE. THIS WAS NOT, IN ZACKS VIEW, A WORLD SHAKING EVENT.

Need more information about a stock, bond, fund or have a Question on anything contained in this blog- call Paul @ 877 783 7080 or email him at the address below.

QUESTIONS, CALL PAUL @ 877 783 7080 OR WRITE HIM @ PSTANLEY@WESTMINSTERFINANCIAL.COM. SHARE THIS BLOG WITH SOMEONE WHO CARES ABOUT THEIR MONEY.

That Was The Week That Was-1st Week January

2012-01-09T07:59:00.001-08:00

Investors greeted the new year expecting the worst but were pleasantly surprised as stocks jumped to an early lead Tuesday and gave up some ground but overall a healthy beginning to the New Year +179 on the Dow. Oil and Gold also up as investors perked up their first day back from vacation. Still skeptics abound even as some company analysts upgraded stocks mid-day to add fuel to a very good day indeed.

Odds 2012 Finishes Higher when 1st Day is positive 64%!

Gold was up $38. the largest pop in price since November – shares of the ETF GLD traded at $156. Many questions if gold had bottomed over the holidays and was getting ready to run. Jon Najarian on CNBC said he’d be a buyer of etf GLD at $149.00

Rare Earth- Molycorp UP 4.3% after being declared dead last week by traders and analysts. The company announced that it had secured long term contracts with customers before the company starts its California plant. China is a major buyer and holder of rare earth materials which are used in a number of electronic applications.

Chris Rowe at the Tycoon Report writes on Tuesday that stocks are poised to continue higher for the intermediate term. He gives the technical applications using both the 20 and 40 week moving averages. Some cautious technicians use the 300 day average but most locked into using 200 & 50 day moving average. (the simplest form of technical analysis).

SEC sues Life Partners a firm that buys and sells life insurance for investors and from ailing seniors. The Securities and Exchange allege the principals withheld information that showed that the holding period for investors was far longer than they proposed. The SEC calls it, ‘…baseless life expectancy estimates.’ According to the WSJ revenues have dried up and the company has been showing losses estimated to be in excess of $300,000. Some insurance agents augment income by selling for this or similar companies. Always talk to your advisors both legal and accounting before you write checks or sign documents.

3% yield -lots of stocks in the DJIA paying at least that annual dividend to investors, according to Jeff Reeves at Investor Place. A very crowded field of stocks including: Kraft, Chevron, JP Morgan and Microsoft. Add the following: Proctor & Gamble, Intel, Johnson & Johnson, DuPont and General Electric. There are more on the list that’ll pay solid dividends with a possible potential upside.

Dow Up Wednesday after a slight pause in the morning as the markets ended mixed. Gold still moving up and Oil closed over $102.00.

Autos may once again shine, even though one analyst (I know of) said stay away from Ford. Others seem to like the autos, even General Motors. WSJ reported how auto financiers were getting less edgy with customers who were late with mortgages or behind in payments. Industry may be having a good year as customers are looking to replace aging cars. Ford sales were up 10% in December, GM up 4.6% and Chrysler was up 37%!

Say, ‘Bankruptcy!’ Kodak, poor management, lousy vision, in rough shape as the company prepares for Chapter 11. The company does make dandy personal cameras and business/personal printers that are comparable with HP and others, but shares closed under 54 cents Wednesday. The company has so far failed in its turnaround by selling patents and licensing deals.

Big Banks see the Federal Reserve Not raising rates until 2014 and will be doing some sort of stimulus in 2012. This could mean, according to the Federal Reserve Bank of New York survey the Fed buys mortgage securities, much as it did in QE2. The Fed is now waking up to tight money for mortgages and understands- finally- according to WSJ- that banks have to loosen up.

Jim Rogers was heard on CNBC Tuesday saying that if Gold goes to $1200 he would be a big buyer. (It’s easy to say when gold is far from that number and no one knows if $1200 is a price that gold hits on its way down to a much lower number! But Jim Rogers wasn’t born yesterday and one of the smartest commodity people in the world). Not this Jim.

This Jim.

The Good Old Days Are Back! ‘member Sadie Hawkins? Sock Hops? Thirty cent a gallon gas? The dot com collapse? Analysts played a big role in touting stocks just before the dot com bubble burst- even appearing on CNBC to sell new issues until everything tanked in 2000. Afterwards rules were set in 2003 so that analysts couldn’t tout stocks again. Seems memories are short lived and Analysts are baaack at it and those investment banks that employ analysts that are favorable to certain companies get the business! Analysts still can tout stocks and in particular Mary Meeker’s student Mark Mahaney, now working for Citi, and, according to Thursday’s WSJ, doing a right-fine job of getting biz for the bank. Meeker, from Morgan Stanley, was about a good an analyst as you could find and Mahaney was a junior under her tutelage. Not always right Mahaney runs a regular meeting with money managers and venture capitalists dubbed, ‘the rally in the valley’. IPOs brought Citi almost $25 million in fees last year, including the IPO Zillow. Expect more of this from Citi and others as the economy get healthier and more money gets to be invested in Initial Public Offerings.

WHAT SECTOR WILL PERFORM 2012?

BEST INCOME GROWTH 2012 SECTORS

Play the lowest P/E with best income growth- match-up.

Monsanto jumps on corn seed shortage. On news from WSJ on Thursday. Remember corn is used in everything….I mean everything….

Markets closed mixed Thursday- opening waaay down and clawing its way to a positive the Dow slipped in at the close. Oil closed up and Joe Terranova in his blog, and of CNBC wrote, ‘Watch the 10-year Treasury and when it rises above 2% increase risk exposure.’

Speculation that the Government would dump $1 trillion into Mortgage-Refi sent bank stocks soaring on Thursday – especially Bank of America +8%. The fact is that Bloomberg and blogger James Pethokoukis are wrong and the government is not going to offer a mortgage refi program. Stocks should come down to earth. They did on Friday…

Weight Watchers STOCK soars on news it cut deals with American Express and NYSE. AmX will pay 100% of the fee for employees to go on WTW and NYSE will pay half. WTW up 8% on news.

Leftover in the ‘What to Do 2012 News’ bin… Jonathan Burton at MarketWatch writes, ‘…another challenging year… ’(1) Riskiest play is long-term Treasury as bulls last gasp. Still trade will make money but not as much as 2011. (2) Stick with 2011 winners. (whatever they were). Oh, yes, U.S. stocks over European. (3) Consider small cap stocks. and if buying European ‘cause you just have to…(4) Buy only the best of Europe and the most distressed.

Better than expected Jobs report ended the week with Friday down but overall the Dow was up 1.2% for the first week in 2012. Ahead of earnings next week Alcoa was the lead loser. Utilities were off 3% the first week. As one of the leading sectors of 2011 it fell unexpectedly as investors sold off for riskier sectors. Michael Kahn, technical analyst at Barrons, wrote that the S&P Bull still looked good as a ‘golden cross’ indicator formed by the 50 day moving average crosses over the 200 day moving average show a longer term momentum – except- some very serious chart resistance for the S&P 500 as it reaches 1350. It closed around 1280.

Euro worries put a kibosh on a potentially bigger week.

Investors still a-bailing…mom and pop investors sold off equities the first week in January. U.S. funds lost $1.1 billion in equity, according to Lipper FMI, not counting ETFs. According to Jon Najarian investors had a mental level on when to get their money out of the markets. This could mean lots of folk will be chasing the market higher if the S&P hits 1300.

Stealth Stocks? Am I the only one watching Apple and Netflix? Someone’s been a-buying….

Finally – NYTimes Columnist Floyd Norris has discovered a 70 year cycle in the S&P500 that followed a 15 year pattern of ups and downs. Using this as a template Norris concludes we have another 4 bad market years before conditions change.

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- Resolution January

2012-01-03T08:06:00.001-08:00

Too Old to make Resolutions that at an age nature will eventually cure I thought I’d share some wisdom from Al Lewis, Commentator at MarketWatch, a part of Dow Jones.

Not this Al Lewis.

This Al Lewis.

Al writes that if Uncle Sam was seriously interested in self-improvement he would resolve the following: Stop deficit spending before $15 trillion becomes $20 trillion.
Fix Social Security & Medicare before the Baby Boomers all retire over the next 5 years.
Address shortfalls in public and private pensions before the Boomers start pulling their money out.
End Mortgage Foreclosure.
Stop the unemployment crisis and sending jobs overseas.
Admit the economy will never come back to normal.
Prosecute financial criminals.
Figure out what derivatives are.
Stop corruption in Washington.
Quit pretending there will never be inflation while printing unprecedented amounts of money.
Do Something. Those are a few of Al’s thoughts as I edited them to fit the space.

Year-end 2011:

DJIA +5.5
S&P 500 0
Stoxx 600 –1.34
Euro –3.32
10 Year-Treasury –1.44

Bank of America- Market Cap Lost $80 Billion in 2011. Analysts say problems persist and Barrons remind us that the bank’s growth strategy is not very clear.

Food Prices Rising! The price of pork, beef and other foods up 68% in the last five years. Prices fell in November but don’t get used to it says Dorothy Hinchcliff who reports the U.S. isn’t the only place with higher food costs. Include India where veggies were up 22%, Ag play here with potash manufacturers clearly in the sights of traders for 2012.

Soros sees bear market for Gold. George Soros two years back cut his holdings calling gold a bubble. And he’s Baaaack! But, other than Soros the median analyst community suggest the metal could rally as much as 39% in 2012. Remember George got out of the business of investing for other people some time back. More on Gold ETF trade a little further on…

Amazon the amazing on-line retailer that customers, including me, are absolutely hooked on, has had its stock price pummeled in the final quarter, even though the business is up 15%. Goldman Sachs analyst Heather Bellini reiterated her neutral rating on the company. But Gene Munster, managing director at Piper Jaffray, sets Amazon’s price at $256. Steve Grasso said on CNBC that the new Amazon Kindle Fire will be an iPad killer. I bought three as gifts and my only complaint is that you can only charge it using an outlet and not by computer or other means. Both analysts were bullish on Apple and Amazon for 2012.

Smart Money Magazine Where to Invest in 2o12? Look to Emerging Markets as living standards rise in those countries and people want to eat better (hint- fertilizers ). Also cherry pick Europe-especially Germany where several companies shine: Siemans, SAP. Also, Internet advertisers as Google and Baidu. I am always hesitant about magazine recommendations.

Waddisay? China’s Purchasing Manager’s Index rose to 50.3 in December illustrating that market concerns over a slowdown in the world’s second largest economy has been overblown. The index moved up from 49.0 in November as China’s economy will not be seeing a big slide. A reading above 50 shows expansion while under 50 an economic contraction.

The Great Recession That Keeps Hanging On….State Street Global Advisors George Hoguet favors emerging markets over developed countries. In a Barrons interview he said the world is only half way through the recession. He went on to say it’ll take the UK banks until 2016 to get back to 2008 production. That’s a full lost eight years. It will be very difficult for the United States to decouple from a European recession. He concluded that his firm is overweight emerging markets. He said that in five or ten years emerging markets should be the core in everybody’s portfolios. The euro, he thinks, will weaken some more in 2012. The countries he finds most attractive include Brazil, Turkey and Indonesia. He also like South Korea and does not see an acceleration of tensions with the North. India, however, he is seriously underweighted because of inflation.

Dynamic Duo buying stocks that offer both growth and yield. Henry H. McVey of KKR’s Global and Macro Asset Allocation has compiled a list of those that are promising. Many are the same stocks that are seen on other screens by other managers. The usual suspects include:

Lockheed Martin
Philip Morris
Conoco Safeway
Time Warner
Wal-Mart

There are about 20 other stocks Henry likes and I’ll keep tab on them as the year goes on. There are several mutual funds I like that fit this category.

Gold ETF may be a trade but not a long-term buy: Thomas H. Kee, Jr, technical analyst, writes that he doesn’t trust gold because there is no direct catalysts to influence price. (I’ve always thought of gold as an inflation trade.) But Mr, Kee says the technical's show that the gold etf GLD may be a buy at $141 and may head back to $161.

Autos Are Liked in Detroit Susan Tompor writes that local crystal ball gazers like Ford to $15.00 and GM to $34.00. Morningstar likes the autos but they like them a lot more with Ford $23.00 and GM $48.00.

Finally – It’s Election Year! Mark Hulbert writes that expectations are always greater in an election year and January seems to be the catalyst to get things going- a lot for the forthcoming year. But this January, Hulbert reports, is the 4th month of the 4th year charting from a Presidential Election Cycle from 1896 to the present. In that case this January historically produces a small loss. And, in a side bar – Portfolio Manager Michael Cuggino says that in 2012 investors will boost prices of gold, copper and other commodities.

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

2012 Looking Ahead

2011-12-30T08:06:00.001-08:00

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

2011-12-23T07:33:00.001-08:00

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

2011-12-19T06:20:00.001-08:00

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?

2011-12-13T02:03:00.001-08:00

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

2011-12-12T06:46:00.001-08:00

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.

That Was The Week That Was-1st Week December

2011-12-05T06:06:00.001-08:00

Dogs of the Dow -Value Investing Lesson 2: Investing in the Dogs of the Dow has been around ever since Dairy Queen put a curly-cue its first cone. Dog investing is Value investing at its simplest and easiest. There are two problems with this strategy: One holding substantial amount of money in only ten stocks is not for the faint of heart, (the system calls for investing in only 10 of the 30 Dow stocks), and if you only have a few dollars to invest the Dog method is not for you. A lot of the old-timers used Dog investing as a method to provide dividend income. Here’s how it works, and if you want me to help set up a Dog portfolio please call or e: At the end of the year research all the Dow stock histories and sort them to determine those stocks that paid the highest dividend and had the worst performance for the preceding year. Out of that list choose the worst ten performers and those are your Dogs. Invest equal amount of money in each stock and over the next year you do not sell, modify or change anything in the portfolio. At the end of next year you do the same calculation and invest in the new 10 Dogs. Every year you will own the 10 best dividend performers of those with the worst annual stock performance. Since there are only 30 stocks in the DJIA you may have a stock or two that carries over from the year before. The dividend yield helps in the total return and is currently twice as high as the 10-year Treasury. The dividend may be paid in cash or reinvested in additional shares. The total returns, including dividends, have not been shabby considering Dog investing has lost considerable cache the last decade or so. Over the past five and ten year the Dogs of the Dow management style has outperformed the S&P 500 index rather handily.

Last week best week for the markets in three years, even though Friday finished basically flat. News of Central Banks providing liquidity to beleaguered Europe was just the ticket. Small caps up 10% and S&P +7.4%. Beaten up bank stocks were strong with Bank of America posting a 8% gain and Morgan Stanley up 17%. Even the jobless numbers ( although this will get some revisions) was at lowest level since 2009 and fell to 8.6% from 9%. So how do you play the markets where central banks are the backstop? JP Morgan analyst Thomas J. Lee wrote that this rally has legs and suggested buying cyclical stocks. He went on to say, ‘It’s still hard to argue that the market is screaming “Buy!” Every time Angela Merkel sneezes, the markets wince. That kind of volatility isn’t for everyone.” Tom’s list of cyclical stocks is listed further down into today’s blog. Here’s the news as the week unfolded…

‘Tis the Season…when window dressing reaches Wall Street. What exactly is ‘window dressing?’ It’s when mutual funds load up on those stocks that produced well for others the previous eleven months (and not for them) and now managers want you to believe they were on it all the while. Smart Money magazine pointed out American Funds Growth fund sold their stake in Oracle and Microsoft and added to their positions in Amazon and Apple. The fund said it was part of their long-term investment commitment. Pssst, got a bridge to Canada for sale- cheap…

Bullishness on Chinese Company’ stocks is amazingly strong even though the Chinese market has skidded. Analysts are so sold on Chinese companies that for every sell on a Chinese stock they have 19.2 buy recommendations. Compare this to U.S. companies where the ratio is 10.5 to 1 and for the rest of Asia 7.3. The WSJ reported that it is the analysts belief that the Chinese cannot fail attitude. The only other bull-like country for analysts is South Korea. One Asian analyst, James Antos, said of his counterparties who never can say a bad thing on Chinese banks, ‘In Europe you have some guys who have been covering banks for 20-years. It wouldn’t be a bad idea to have at least lived through one Chinese banking bear market…’

A 1-2 Punch Monday as markets cracked 300 points mid-day and still the Dow closed +291 and Nasdaq +86! All based on Europeans saying they had a plan and Black Friday being a huge success. Cyber Monday was also huge- up 24% from the year before with over a billion dollars in sales on-line. (If it isn’t on-line or at QVC I don’t buy it.) CNBC at the closing bell thought the beginning of the rally was sustainable…. It’s just a plan….nothing inked…! Expect more volatility before this is over.

Fitch Affirms AAA for U.S.A. but revised outlook to ‘Negative’ because of declining confidence in sustainability of government finances. Ex-Super-Committee peoples listening? Fitch was directing its ire to Congress.’

Barney Frank- egotistical- bright-smarsy-liberal: Color him Gone! The Massachusetts Congressman is packing his bag and either heading home or into the open arms of a Lobby Firm. Frank was one of the main architects of the mortgage meltdown. His political ties and unwillingness to put a leash on the mortgage monsters Fannie Mae and Freddie Mac ( they were huge contributors to his political campaigns) gave banks and investment houses the ammunition to put the nation into the second worst Depression of its 200 plus years. His idealized notion that people with no money, little income and no history of paying their bills should be able to own a home with little or no money of their own invested was a Utopian nightmare . Frank headed the chairmanship of the Financial Services Committee and was supposed to oversee the remaking of the financial industry. But, as the WSJ wrote in its editorial Tuesday 29th. that was like asking Charlie Sheen to teach anger management classes.

Morningstar Installs New Rating System….For years investors looked to buy only those Morningstar rated four and five star mutual funds. With over 7500 mutual funds available to American investors Morningstar announced a new forward looking rating system- how funds would perform in the future versus how well they did in the past. Their belief is that fund managers offer a better opportunity going forward than analysts or talking heads. The problem is that initially Morningstar only has analyzed 300 mutual funds and hope to offer analysis on 1,000 funds by the end of 2012. That still leaves the vast majority uncharted. The ratings will be based on Gold, Silver and Bronze. This rating will be based on how well a fund will do in a certain group versus its competition. The problem is only 300 –1,000 funds will initially be rated-a small sample that could influence planners and investors to bloat assets of those named Gold rated funds. And yes, I have subscribed to Morningstar since its inception and will be sharing this information with clients. The methodology Morningstar will use is based on (1) People running the fund (2) How the fund selects its holdings (3) The parent company stewardship (4) Risk adjusted performance (5) Expenses in relationship to others in its category. Funds will still be rated 1-5….

Lots of Stuff Happening Tuesday: Iranian students storm British embassy (deja vu only different) , American Airlines files for bankruptcy- stock worthless, Steve Liesman at CNBC says to wait for the December Global Leaders meeting on the 9th before anything of substance takes shape over Europe, Markets were mixed at the half-way mark, Tech was leading the losers, Tiffany’s had great global numbers but weak European sales figures and the blue box stock was punished along with other high end retailers Ralph Lauren, Coach and Sax (Just last week the high-end retail giants got rave recommendations- so watch the bounce as European news breaks.). Tiffany has a growing presence in China and in Russia. Barrons reaffirms its love for Tiffany in its Wednesday ‘Barrons Take’ blog. Finally, technician Michael Ashbury warns of specific resistance: S&P 500- 1215-1230; Nasdaq-2590-2600 and Dow resistance around 11,500. whew! pooped…

Tick-Tock…Uber-Analyst Meredith Whitney, earlier in the year, warned of states going belly-up…and issued dire predictions on owning tax-free muni’s. The clock is running on the supposed melt-down that hasn’t happened.

U.S.A. net Exporter of gasoline, diesel and other oil based fuels. From 2005, where we imported as more than 900 million barrels of fuel to 2011 where we are a net exporter, the United States provides emerging markets and others with refined oil products. According to WSJ this trend is not likely to change over the following decade.

Missing $1 billion MF Global customer money just shrank as solid detective work discovered $500,000,000 parked in an account at a defunct broker-dealer, according to Huffington Post. Just another $600 million missing…pshaw…a mere piffle.

Face-Book Gearing for IPO… this coming spring the company anticipates issuing shares and is pricing the company in the neighborhood of $100 billion. Before you start digging behind the coach cushions for spare change you may want to wait a bit until the IPO luster fades before buying. At $100 billion the company would be valued $15 billion more than (sob) Amazon and $85 billion less than Google. Facebook in 2011 will have an estimated $4.3 billion in world-wide revenue and possibly (according to WSJ) $7 billion in 2012. Still the company has some massive numbers: In October Facebook has some 790 million visitors who spend an average of 6 hours on site. Compare that to LinkedIn (a recent IPO) that had 92 million visitors in October and spent 15 minutes. The Globe and Mail interviewed Chris Nagy at TD Ameritrade who suggested waiting before buying shares in Facebook and allowing the hype to cool. Don’t forget all those swells that got in at the beginning and own substantial amounts of private shares in Facebook. They’ll be selling, you betchum.

Toyota Announced that their allegiance to Emperor and Country may be at an end. The company is being hit with softening U.S. sales and an extremely strong yen. The strong yen makes exports more expensive. The company is toying with the idea of moving some of its small car production to Baja California and Mexico. Moving auto production out of Japan is being discussed but nothing is firm at the moment. The stock TM closed at its yearly low of $64.30 Tuesday.

Wednesday Markets surged almost 500 points on the Dow! The Central Banks ( Letting you know in case you were out of town or the TV was broken.) of U.S., Canada, England, Japan, Swiss and (let’s not forget) European Central Bank, all got together and launched a joint action to provide cheap, emergency loans to banks in Europe and elsewhere if and when needed. This is exactly what the markets wanted to hear. This is not the first time a coordinated action by all Central Banks was initiated. Similar action was taken in 2008. It was the news that governments were taking the European problem seriously and not acting like politicians that motivated investors. Before everyone gets excited the volume was light considering the huge upside on world and domestic markets. This action does not solve anything. Deep problems still exist.

$’s or Swaps-what the Central Banks did was announce that they had a plan to get dollars or any currency to local banks. The banks really didn’t do anything on Wednesday but made the world aware that the global financial central banks were aware of European issues and confirmed that with their announcement that the banks would do what they needed to do if and when a severe monetary crisis erupted. It was more of a I’m-here-if-you-need-me gesture…(even investors need a little reassurance once in awhile).

Hedge Funds Call it Quits! According to CNBC many hedge funds in 2011 are calling it done, cooked, finished, stewed and put on the shelf until 2012. Michael Murphy, CEO of hedge fund Rosecliff Capital summed it up, ‘ The uncertainty coming from the Eurozone has created an environment where almost all asset classes have traded in tandem and fundamental analysis has been almost irrelevant.’ Mikey, I’ve been singing the same song for months.

Autos- Crushed Numbers- Again! GM =+7%, Ford = +13%, Chrysler= +45% and Toyota=+7% and still institutional and fund investors ignore them as auto share prices are at this year’s lows. Consumers again flocking to SUVs and Trucks as Ford sales confirm were up 29% and 23% respectively. okay, a modest pop Friday ….

Tom Lloyd, Sr in MarketWatch blog reports on six Dow stocks oversold and may be trending higher. Actually Mr. Tom said they’d be trending higher- here are his picks: American Express, Chevron, Johnson & Johnson, Coca-Cola, Microsoft and Proctor & Gamble.

Morningstar List of Mutual Fund Losers (Believe me when I say that these are all managed by educated experienced people who devote their lives to managing money!) Birmiwal Oasis –(negative) 55% for the year. (it had a 63% loss in 2008- you wonder if any assets remain), The USX China Fund (negative) 54% (how you can be negative in China when the average China fund is up 5% is head scratching), Apex Mid-Cap Growth (negative) 35% ( the fund charges an obscene 7% expense ratio- and calls itself a no-load fund), Finally ( yes, dear reader there are more but enough is enough), Legg Mason Capital Management Opportunity (negative) 29% Bill Miller, one time uber-manager and heading for the pasture after this year called Kodak a $100 stock and today it’s hanging on to $1.25. His top holdings have been horrible in 2011: Boyd Gaming, Synovus Financial, MGIC Investment and Clearwire (being kept on life support by Sprint!).

The Center for Science in the Public Interest warning of a health hazard that causes a violent reaction after consuming a popular meat substitute. Over the past decade CSPI has received 500 U.S. complaints and 1200 from Europe and Australia. The product is sold under the name Quorn. It is actually Mycoprotein, a fungus fermented and mixed with vegetable flavoring and ingredients like onion and egg white. It is then shaped into nuggets or cutlets and frozen. It is sold as a chicken substitute and has a high fiber content that may be responsible for consumer complaints. Some people love it. The product is sold at Whole Foods and Kroger. Others will never eat it again. Ginny Lineham dined on Quorn ‘Turk’y Style Roast’ this Thanksgiving. Within three hours she broke out in a cold swear, vomited and passed out in the bathroom, hitting her head. Critics say packaging does not state, ‘This is a vat-grown fungus that could cause severe allergic reactions.’ Fans of the product say it is chewy like chicken with a distinct mushroomy flavor. Probably yummy with lots of ketchup, huh? Bon appetite!

Cyclical Stock Lesson: A cyclical stock is one that rises rapidly when economic growth is good and falls when growth slows. Tom Lee of JP Morgan suggested the following cyclical stocks to buy this cycle: Bank of America, MasterCard, Wynn Resorts, Las Vegas Sands, Apple and Macy’s.

The I.P.O. market has gotten scarce with the continuing market volatility. Lost in the hubbub of a Facebook IPO this spring is game maker Zynga that derives a good portion of their income from being associated with Facebook The company has decided to offer 14% of its stock in the offering and expects its initial investors to lose money! The Zynga IPO will be priced $8.50 to $10.00. Paper losses are expected for mutual funds run by Morgan Stanley. Fidelity and T.Rowe Price. These companies bought preferred shares in the neighborhood of $14.00 a share, according to news released by Zynga. The IPO share price is expected to be $8.50 to $10.00 a share. The IPO market has lost some of its froth as shares of previous companies have tanked after being issued. Groupon lost 28% after issue and LinkedIn are down 38% from post-IPO peak. The difference between Zynga and the others is that Zynga is profitable. The company has 200 million players on line at Facebook.

One-Stop Shopping for IPOs Zynga, Facebook & Twitter: Yes, dear investor, there is a stock that invests in start-ups and has cash invested in Zynga, Facebook and Twitter- getting the real pre-IPO price before the IPO. GSV Capital buys in the secondary market (as do some mutual funds and hedge funds) and into the incubation period of these so-called hot issues. Evaluating share price is nearly impossible and no analyst is covering the stock. Currently, according to Barrons.com, GSV has 16% in Twitter, 14% in Facebook and 5.5% in Zynga. Shares in GSVC closed at $14.44 Friday last.

Finally, FDIC closes two banks in Georgia. The total banks closed year to date: 90.

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 November

2011-11-28T05:37:00.001-08:00

News Monday that Euro-zone leaders are negotiating a groundbreaking pact, according to the WSJ, to further cement the currency bloc from fracturing. The deal, which would involve some arm twisting ( but more for show than go), would also allow the European Central Bank (ECB) to intervene more aggressively. It is expected that something will be announced by the first week in December. The shortened trading week was all about problems in Europe and how the bi-partisan Super Committee failed to reach any compromise on tackling our deficit. And now for the week as it unfolded…

Today’s Value Investing Lesson: Warren Buffett and Benjamin Graham are two of the world’s best value investors. Value investing is nothing more than buying a stock on the cheap and, if possible, one that is trading at a price that is less than the liquidation value of the underlying company. Historically value investing produces greater total returns than investing for growth. So what stock or industry, I wondered, could I buy that is trading at or less than its book value? It doesn’t take a Warren Buffett or Peter Lynch to zero in on the beaten up sector of financials-especially banks. Our friends at 247WallStreet.com ran a screen on bank stocks that showed Bank of America in July 2011 had a book value of $12.65 and last week the stock was selling for less than $5.50! Wow! It seems to be a screaming buy. But, and here’s the big but…the book value of BAC has been slowing dripping downward since the beginning of the year. It was worth more in book value in January than it is in November. While no one can say that someone is messing with numbers the fact is that Bank of America is not making money, has a huge losing portfolio of mortgages and has issues on where to make money going forward. This tells us that book value may continue to soften. How can that be? More loans than expected can sour. Opportunities to make money may go south (much like the debit card fees of a few months back) or regulations could tighten further. In addition investors are unsure how much Euro debt the bank is exposed to. What all this tells us is that stock prices in some banks may stay depressed or even go lower for the extended future while the book value continues to deteriorate. And unless we want our money locked up, possibly doing nothing for a very long time, we should look elsewhere for other value plays. And, that’s the reason why some value- like stocks are being ignored in this crazy market. A few hedge fund managers have caste aside the value crowd concerns and leaped into financials. Greenblatt, Pabrai and Watsa are three that bought and own huge amounts of the banking industry and I’ll have more later in the blog. John Paulson’s hedge fund is down 50% this year because of his huge bets on banks and financials.

Black Friday Sales Strongest Since 2007! Never underestimate the American shopper. Give them sales and they will come. Sales were up 6.6% from a year ago and on-line sales grew 24.3%. This may be the year when pre-holiday promotion slowly fizzles as less product is available the closer we get to the actual holiday. Grab the deals while you can!

Election Year Investing: Here’s the deal- if you’re the President and want to get re-elected you need to make people happy- especially investor people, and do it as close to the election as possible. Marshall Nickles, EdD of Pepperdine University did a study that showed past President’s stock market results were actually the lowest 1.87 years into their term. This coincided with mid-term and not presidential elections. The stock market did rather well, for the most part, in presidential election years. The author of the study concluded that investors would be best served if they invested about 27 months into a President’s administration and sell directly after. Wars, recessions and bear markets tend to start or occur in the first half of the term and bull markets, in the latter. Since 1928 the S&P 500 index was down only three times in Presidential election years.

Super- dud-Committee – Billed as the go-to-folks failed!

The markets sensed this from the get-go Monday last and fell 300 points, or so, before climbing back and ending the day at a loss of 250 points on the Dow. Gold wasn’t the fav du jour as investors ran to cash, especially the dollar. Gold ended up at the lowest in 4 weeks at $1678.60! ( didn’t i write about this earlier in the Fall?) The weakest of the Blue Chips were Disney, HP and Bank of America. Volume, which is the key- sometimes- was pathetic. At the half way mark of the trading day only a quarter of the shares traded in an average day saw action which is telling in its own way.

Above the folks that couldn’t (wouldn’t) get er done!

Michael Kahn – Technical Analyst at Barrons.com writes that the market’s big drop Monday can be blamed directly on the folks above who failed to do their job. (I just got to say that if they were hired to play ball, engineer cars or sweep out classrooms, and did the same kind of work they’ve shown handling the nation’s welfare, they’d have been out of work in a heartbeat!) Kahn write that technically stocks are heading over the edge, probably to revisit last summer’s numbers. The technical's, he writes, are not impressive. He caveats that indeed volume was thin and the European problem still holds sway on a day to day basis.

The now defunct MF Global is not missing $600 million of investor money. It is estimated that it is missing $1.2 billion of investor money.The trustee reports much of the moola is stashed overseas and he has to review some 38,000 customer accounts.

And the good news is or was…. Irwin Kellner at MarketWatch reported that the economic outlook may indeed be brightening. Earlier in the summer consumer spending was off. It is the engine of our economy and accounts for about 70% of our nation’s get up and go. That cutback in spending has caused commodity prices to fall, retailers to reduce prices on products and services without hurting profits, and bring the ye ole consumer back. In other words, Monsieur Kellner now sees the glass half-full rather than half-empty and the only thing that could put the kibosh on the growing domestic recovery – OMG! -failure of the Super Committee.

The Cramer on NBC’s Today show said the market drop Monday wasn’t about the super committee’s failure but about Europe. ‘Europe’s problems are five times that of the United States,’ said he. He also said he wouldn’t be putting new money to work at these levels…at least for now. So what’s the mouth going to talk about at 6PM & 11PM?

From The Department of ‘Someone’s Got To Be The Grown Up’ – In Europe and in the United States self-preservation among politicians has to take hold and initiate common sense changes and policies to get economies back on track. It seems to me that language that initiates fear with little basis is puerile at best- destructive at the worst. PIMCO CEO Mohamed A. El-Erian was quoted by Bloomberg that U.S. Economic Conditions are Terrifying. There didn’t seem to be anything new that El-Erian said in the article that seemed more frightening, let alone terrifying. Maybe you had to be there…

JP Morgan sees it differently: On Friday it came out with its fixed income outlook and said that the crisis in Europe would likely get worse before better and the spillover to the United States would ultimately be contained. They recommended High Yield and Emerging Market Debt for 2012.

Susan Pullman at WSJ, reported on how discussions with Fed Chief The Ben Bernanke turn into investment riches. The Federal Reserve Chief holds conversations with large institutional hedge fund managers in gauging which way policies by the Fed will be accepted or aid the economic health of the country. Those conversations, which are reported to be confidential and coded, often expose possible Fed action which money managers immediately pass on to their clients. One such instances was the possibility of the Federal Reserve buying longer maturity bonds. This evolved into what we know as ‘The Twist’ in which the Federal Reserve set about buying the long bond. Institutional money managers were able to take advantage of the buying of longer maturities before any news leaked to us lesser mortals. It’s all about buying on rumor, or what you deduce is the rumor, and selling on the actual news.

Oil trading a bit under $100 a barrel on concerns of…shucks, I don’t know why oil is trading as high as it is. In fact oil should be much lower with an economic slowdown in Asia, United States and Europe. News that oil shipper Frontline may run out of money surprised traders and the stock fell 41% Tuesday and the Overseas Shipbuilding Group ETF (OSG) fell 17% on news that there were too many ships and not enough business to cart oil from hither to yon. Some traders say that oil is more of a fear trade is because of a possible disruption as tensions mount with Iran.

Time Magazine reported on the 50 best and worst inventions of 2011. There were many top drawer inventions such as Twitter based hedge funds, capturing Twits and converting them into investment portfolios; but my favorite was the Perfect Razor made from iridium and each razor blade 5,000 times thinner than a human hair.The cost $100,000 but comes with lifetime sharpening service.The worst came from Japan which manufactured artificial meat from sewage. Pass the mustard

Ford versus General Motors…the old rivalry is back. Both stocks are down 39% in 2011 and Hilary Kramer at InvestorPlace.com put in her two bits which of the two companies she likes the best and the winner – Ford. The Hilary said the stock should double and a dividend announcement in 2012 wouldn’t hurt its chances to get there. From your lips, my dear …

Dunno if I’m thrilled with the idea of higher taxes while lots of folks out of work and personal savings rate is down. Consumer spending has chalked up its fifth consecutive month in a row of positive increases. This at a cost to personal savings as consumers are back at the malls. Talking heads criticize consumers saying they haven’t established a sufficient buffer of savings before spending. and if we don’t spend we’re un-American and not contributing to the growth of the country….sometimes you just can’t win and please everyone.

Back to More Value Investing: Charles Sizemore at MarketWatch blog likes master investors Mohnish Pabrai (author Dhandho Investor), Joel Greenblatt (Little Book That Beats The Market) and Prem Watsa ( Canadian but don’t let that be held against him); all strong institutional investors. Charles point is that two of the above three have huge positions in financial; especially the banks. They are also huge Bulls and the point being made is that many of us should take comfort in knowing that we are on the same side of the trade with some of the brightest value investors in the business. Mohnish Watsa

Germany auction of 10-year bonds went ‘kaput’! The German government was only able to sell about 60% of the Wednesday auction of 10-year bunds with an average yield of 1.98%. Either this was a message by investors for the Germans to show leadership, forget the hyper-inflation of yore and order the Central Bank to start the printing money; or there is a real concern regarding the future health of Germany. In any case this is a severe wake-up. Anyone will tell you that the bond market is the barometer that usually leads recoveries or recessions. Our markets fell 0ver 200 points on the Dow. There isn’t a sector in the market that is immune as everything goes down at once and comes back at once. Asset allocation just doesn’t work in 2011 – gold stuck around $1700. Euro down 1% against the dollar. Germany doesn’t want to see the Euro disappear. The German Mark was a strong currency and this caused pain for German exports. The Euro allowed the selling of German goods to other countries using a weaker currency and making Germany extremely competitive globally. In the sophisticated world of economics this is Germany now being in-between the rock and the hard place. ( I’m not kidding, the phrase was actually first used to describe the U.S. banker’s panic of 1907.)

Europe has similar if not more difficult problems than we do….German Chancellor Merkel reiterated Thursday her stance on not pursuing Euro Zone bonds or changing the charter of European Central Bank. Her acquiescence would make Germany the default co-signer on all European debt - something she and Germany do not want. It’s politics in Europe –same as in the U.S. While no one knows exactly what’s going on in Europe any more than we do in our own capitol; it’s individuals versus common good on both sides of the Atlantic and until that changes we’re in for a rough patch.

Time out for AT&T as the company steps back to re-address their merger with T-Mobile. AT&T will pay T-Mobile $4 billion with $3 billion in promised break-up fees and the other billion for spectrum. Shares fell to $27.60. The companies removed the merger deal application and instead will press their case of a merger before a judge next year. And does this mean that Sprint & Clearwire are the winners? Whispers that the two beaten up shares are possibly poised for a comeback. Bob Citrone, hedge fund manager, added Sprint to his portfolio this past quarter. Sprint traded around $2.50 and Clearwire at $1.5o. on Wednesday, Credit Suisse also likes both long-term. The AT&T and T-Mobile merger may be as dead as yesterday’s Thanksgiving turkey. This may spell some problems for AT&T going forward.

Netflix is down again on news that it wants $400 million in capital and will get it by selling more stock and issuing debt. Netflix, as you remember, dear reader, was the golden goose that just kept on moving higher and higher (like Green Mountain only different industries), until misplaced direction in fees caused the whole thing to collapse. Shares moved down again to close at $68 Thanksgiving eve. A new fair value estimate by Tony Wible at Janney Capital on the stock is $49-$51 a share. Shares topped $300 only a few weeks earlier. Jimmy Cramer got it right the other day saying shares were toxic.

Markets approaching 7 week lows….

Luxury Real Estate in the Big Apple is so hot that real estate agents have resorted to cold-calling existing owners of condos and townhouses to prospect for sellers! Sandy Weill, he of Citigroup fame, has put his 6,700 square foot condo on the market for $88 million. What’s prompting this mania? Seems foreign buyers see value in the states and are swarming in, cash in hand to snap up what they see as bargains. Let’s hope for some trickle down. Bruce Willis is also selling his Idaho rancho for $15 million.

High Yield bonds used to be called Junk Bonds ( In the day of Mike Milliken who used them extensively to build businesses in the 70s and 80s and then went to jail in the 90s. Not before making hundreds of millions for himself and others) The firm he worked for, Drexel Burnham, did such deals as the RJR Nabisco and Ted Turner MGM/UA takeover using junk bonds. High yield bonds are those instruments issued from companies that have less than investment grade risk and therefore pay more to borrow money than those that do. These bonds have little to do with money markets as night has to day. However, a Schwab investment company manager, according to Financial Advisor News, thought it prudent to tell clients that the Schwab YieldPlus fund was as comparable to a money market- except the fund fell almost $2 billion by investing in private issuer mortgage backed securities. The exec was fired and Schwab ended up paying $119 million to resolve the SEC lawsuit and $235 million to settle investor lawsuits. Know what you invest in or find out from someone that does.

Time Magazine reports from the desk of Fareed Zakaria,that China has enjoyed decades of peace, stability and free trade and seems content to act narrowly and exclusively in its own interest, unconcerned about helping the global good. Was this a sly hint to the superpower to get involved in the global economies or simply pre-election bashing?

Quality over Quantity? InvestorPlace.com suggested investor explore the following Fav Five stocks: Ralph Lauren (A trip up north doesn’t quite feel the same unless I stop on the way and shop at his clearance store); Nordstrom (For some reason they are known for their shoes but I don’t get it); Tiffany & Company (Anything in the iconic blue box works for me – the rich always end up at Tiffany while I’m at Amazon); Coach (They just came out with a less expensive lady’s handbag that is…expensive!) and for good measure- Dollar Tree (Even the Grosse Pointers and Bloomfieldites sneak in to load up on their chotchkies. In the 60s you’d find their grandfolk at the downtown Birmingham SS Kresge store.)

Owning a House just got Cheaper Than Renting: The WSJ 3rd quarter survey in 28 markets found housing declined in all but five markets. Meanwhile rent rates have increased while mortgage rates have fallen to about 4%. The result that buying is cheaper than renting in 12 markets. In Atlanta a mortgage with 20% down is at $539 (average home) while rent hovers in the $840 a month range (Markets eventually will do what politicians refuse to do.)

Give Thanksgiving! New York Finance professor Baruch Lev admits to being thankful for, ‘a divided government and do nothing Congress. With a unified Congress, we would have stringent climate change laws, higher taxes on millionaires and billionaires, and public-employee pension fund bailouts. We would be closing in on Greece without Germany bailing us out.’

Finally-Investors are losing patience with the EuroZone politicians. ‘Leadership understands,’ according to Italian Prime Minister Monti, ‘…that a collapse of Italy would eventually lead to the end of the euro….resulting in unforeseeable consequences.’ The strains on the Euro zone are adding additional pressure on German and French leaders which have so far failed to quell investor concerns, according to Friday’s WSJ.

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 November

2011-11-21T08:21:00.001-08:00

Inflation and a contagion fear from Europe are the two worrisome problems du jour and the outlook is either the EU is cooked like a Christmas goose or they can work their way out of the mess. Some experts point to the fact that EU’s problems will infect the U.S. but may take a few years to really impact us and then stick around for a very long time. Bill Gross of PIMCO said on Friday that the European problem is the U.S.’ biggest problem. What the problem is and how the United States could be infected will be discussed in this blog. Wednesday, prior to the markets open, inflation numbers came in less than expected, thus giving the Federal Reserve more leeway to stimulate the economy. Still, inflation at some point will rears its head and investors best be prepared.

The Euro-zone’s debt problems stem from overspending by certain countries. Those countries not only borrowed too much but with an economic slowdown have little resources to pay those loans back. The primary concern is with the PIIGS or Portugal, Italy, Ireland, Greece and Spain. The problem emerged late in 2009 and has been of deep concern since 2010. The fact that all these countries are using a common currency complicates the issue. The fear is that if even one country defaults that a domino like reaction will cascade throughout Europe. When that happens other banks and countries will suddenly stop lending and doing business with everyone in Europe and everything will standstill while the economies fall into a depression.

Monday News suggested a solution to the crisis as the Europeans would meet the week after next to discuss selling Euro-Zone bonds that would replace existing individual sovereign bonds. Germany, it was reported in the WSJ, hates the idea believing it’ll get stuck paying back for their spendthrift neighbors. Here’s the chart from Eurostat a German company that provides statistics to European countries.

The Reasons Why Europe Is Important to US: Standard and Poor’s reported 30% of our overseas business is done with European nations. Europeans are also big buyers of our debt, real estate and stocks. Just go to Florida and see all the apartments and real estate our foreign friends own. Our bigger banks have large holdings of European bonds, and while there is no fear our banks will go bust when the overseas bubble bursts our banks will certainly lose substantial money. As an investor even our defensive stocks are global and subject to what happens in Europe: Cocoa Cola, Philip Morris, Kraft Foods, Newmont Mining, McDonalds and EMC Corp. No question that the U.S. business will slow down if and when Europe falls into a recession. Thanks to Jim Woods at Investor Place for much of the above he shares with us. Ford and especially General Motors have reported slow downs in European sales.

It’s ALL about protecting the banks! Buyers of Sovereign Debt protect their investment by buying what is called Credit Default Swaps, an insurance offered by hedge funds, insurance companies, banks and brokers, in case bonds default. The total net exposure worldwide is estimated to be about 30 times the United State GDP. In other words there is not enough money to cover all the debt that is ‘supposedly’ ensured. AIG, before 2008, didn’t even bother with the charade of setting aside reserves for claims when they sold Credit Default Swaps to investors of mortgage bonds–they simply pocketed 100% of the premiums and when the mortgage market went bust they got bailed out by us.

Problem is that the insurance on sovereign debt may hinder any negotiation of sovereign debt haircuts, according to WSJ Monday last. Credit Default Swaps are insurance to protect in case of default. If that’s the case, the question is, why should an investor readily agree to a discount, or a haircut, on the bonds they own? Knowing this leaves the EU with little room to negotiate with holders of large chunks of sovereign debt from distressed nations. European Banks, according to BusinessWeek Bloomberg, painted a much different, if not a Catch-22 story. European regulators are demanding more banking reserves and as European banks sell sovereign debt to raise the cash and lower risk this process causes bond rates to rise. Institutions across the region are slashing their lending to PIIGS nations exacerbating the problem even further. This selling is causing rates to rise. It is the rising interest rates which, when compounded, become unsustainable and cause default.

The European Central Bank was chartered to be the lender of last resort- to banks. It has a mandate not to loan to governments – a rule implemented because what happened when Germany experienced hyper-inflation in the 1920s and a trillion marks equaled one dollar. Back then the central bank printed money the way Charmin now prints toilet paper. The United States Federal Reserve has no such compunction against printing oodles of cash to bail out banks, financial institutions and even foreign countries. But the ECB is taking the high road and making noise that it would rather stick with principal and see a global catastrophe rather than print and hand over one Euro. The ECB officials ensconced in their comfy new Frankfort offices point to their charter which expressly forbids such nonsense of lending to save nations. The Federal Reserve, on the other hand. has printed $600 billion in Treasury securities, reducing the value of our dollar and exposing us to future inflation. The Bank of England, according to Randall W. Forsyth in Barrons.com, has largely followed our script. That leaves the ECB which experts contend will, in the end, do the same. The result, throughout the world, will be a cheaper currency for each and every one of us along with inflation. We will contend with it in the marketplace but it will be after the crisis of liquidity. One fire at a time.

Eric St-Cyr was offered his early Holiday present and asked what one investment he would like to own in last week’s MarketWatch.com blog. The Eric suggested that in stressful times the one thing all people had to do was eat and so he opted to buy the Agricultural Exchange Traded Fund. He reasoned that this was a great inflation hedge across all foodstuffs. His choice was PowerShares DB Agricultural Fund (DBA). The fund represents sugar, various wheat, cattle, cocoa, coffee, hogs and cotton.

Farmers buy back land they sold to developers just a few years earlier. (This reminds me of when the Japanese bought almost every American iconic piece of real estate back in the 80s such as Rockerfeller Center and Pebble Beach Golf Course for boku* yen and eventually American investors bought it all back for a song.) In the WSJ, November 14th, the news that the Arizona dairy family Vanderweys bought a 760 acre farm in foreclosure from Liberty Developers for $8 million that was bought by Liberty in 2004 for $40 million. The demand for farmland is being fueled by price hikes on everything from corn to cotton. One mega-farmer summed it up by, ‘Why should a farmer sell land now when everyone is making so much money?’ Investment in raw land through ETFs and mutual funds for the average investor is difficult since land alone doesn’t create income/cash flow. Funds concentrate on those areas of real estate that provide income or capital gains. The PowerShares AG ETF possibly makes a sensible substitution here.

*Boku in Japanese means a lot. In the 60s I met an American middle-weight fighter and he went by the fight moniker Boku.

The uber-rich are down on stocks. Barrons reported yet another survey where the Uber’s were Gloomy Gus’ on stocks-53% being downright pessimistic while 13% upbeat. Still the big boy hedge fund investors have been trading equities and some, like Warren Buffett, stocking up on stocks. The Buffett bought his first ever tech stock – IBM. He bought a 5.5% interest in Big Blue at the stock’s highest value in a long time. Share closed around $190 and Buffett’s price wasn’t far from that. IBM trading at 11-13 times forward earnings. The Buffett also bought shares in Visa and CVS. He also added to his holdings in Wells Fargo. Some wags are saying the Oracle of Omaha has finally lost it with his IBM purchase. The Buffett and others think that IBM can only go higher.

Monday markets off 73 points on the Dow and $14 off on gold.

Speaking of The Warren Buffett… his stock, Berkshire Hathaway, owns some of the finest domestic companies and most bought on the cheap. Buffett adds to his current holdings when his favorites find favorable value. Recently he put more money to work in equities than he has done in 15 years and analysts think that Berkshire Hathaway is undervalued by about half. Today shares in both the A and B of Berkshire Hathaway are trading at book value. Something they haven’t done since 1992. Here’s a smattering of what he holds: Cocoa Cola, American Express, Bank of NY Mellon, Costco, DirecTV, Dollar General, Exxon, Intel, IBM, Kraft, CVS Caremark, GlaxoSmithKline and GE. And, lets not forget his insurance companies, including GEICO. Steve Sjuggerud, editor of True Wealth, recommended shares in Berkshire as a buy saying, ‘Whenever you can put your money with the greatest investor in the world at close to liquidation value, you should…’

The Most Owned Stocks by Congress…it’s perfectly legal for a member of Congress to sit on a Committee and act on insider information they learn in that committee, which would put the rest of us in jail, as reported on 60 Minutes a week ago Sunday. Nancy Pelosi looked like a deer caught in headlights when asked the question at a news conference if it was proper for her to act on insider info. And, fixing the reporter with a gaze that could melt cobalt, she shot back, ‘What’s your point?’ (Even Willy Sutton didn’t have that much chutzpah) So here are the stocks most widely owned by our beloved leaders…er representatives in the District as reported last week in Barrons.com and Bloomberg: Exxon, AT&T, Wells Fargo, Intel, Pfizer, Cisco, Microsoft, Bank of America, Proctor & Gamble and GE. Doesn’t this remind ya’ll of Hilary, back in 1978, buying 10 cattle futures for $12,000 (she only had $1,000 in her checking account at the time!) and parlaying that into $100,000, with absolutely zero experience trading futures?

Fund & Institutional Money Managers Rotate Holdings and many are doing so now according to Tuesday’s CNBC. Financials are obviously not the place to be and many investors are finding their way to cash heavy tech. In this climate it’s impossible for the average investor to make moves that emulate the heavy hitters but by allocating across a wide range of sectors they can take advantage of where the markets are moving. Bank of America sliding down to $6.00, again, even though book value is higher.

Looking to be Bold? Rare earth mining is in play. After bouncing off their lows experts contend that the future looks bright but bumpy. Major players include Molycorp and Rare Earth Element, Ltd. Experts contend that this is a volatile sector and investors have to consider their personal time frame and risk. Molycorp, for example, is 58% off its highs.

Michigan Retirees now will have to pay 4.35% Michigan Tax on Retirement Plan withdrawals effective January 1, 2012. There are exemptions for those who are or reaching age 67 in 2012; plus, a tax on a portion of income for those retirees who will be between the ages of 60-66. As always check your situation with your tax advisor.

Market fought back all day Wednesday from a deficit until Fitch, the ratings firm, opened its yap and said that U.S. banks could have some troubles if the European situation worsened (like that was a big surprise). And in the last trading hour the markets sank, lead by the banks, another 156 points on the Dow to close down 191 points. Interestingly gold was down $12 and oil up to close at $102.90. (This is both good and bad news. Good if you own oil/energy and bad if you’re a consumer as the trickle down will hit the pumps soon enough). Remember oil holding around $85 not that long ago. Bank of America fell under $6.00 a share. Let’s not forget home heating oil will start perking up as is the season. And major banks are toxic as investors are selling.

Ben Weiss Builds a AAA portfolio: Here’s a question, how many companies have a AAA rating? Anyone? It’s 8. No longer Berkshire Hathaway, GE or Toyota- all gone from those high ratings. Twenty years past there were 80 companies and now, sob, only 8. The following eight have $105 billion of cash in their coffers and appear to be safe in the medium term from a downgrade. Here are the eight that anyone can own and build an income producing portfolio: Exxon, Microsoft, Johnson & Johnson, Imperial Oil, Automatic Data Processing, MTR Corp. ST Engineering and SMRT Corp.

Green Mountain stock – GMCR fell hugely when allegations of fraud were broadcast to investors. The company stock traded over $115 when whispers felled stock prices in the coffee giant. The company produces those containers that one inserts into a brew-maker and makes a single serving of coffee, hot chocolate or tea in less than a minute. This method of coffee delivery seems to be the delight of many. Now Mitchell Pinheiro, of Janney Montgomery Scott, say that no matter the problems the company has the stock is worth $125 a share over the next 12 months. Shares closed up $52.30. The Cramer said ‘nyet!’ on owning Green Mountain.

Another Sell-off Thursday markets fell 230 points before regaining its composure and only losing 135 on the Dow. Gold was down to $1720 before closing at $1731. Oil fell to close a smidge under $100. We’ve been on this train before.

Angie’s List IPO came out Thursday and I don’t get it. This is like a on-line everyday Welcome Wagon for everyone from plumber to lawyer in 175 local markets. It’s supposed to be providing only those most highly rated firms as voted by consumers in the local area. Right! I used the service once and the highly referred plumber showed up driving a beater, old dirty street clothes, unshaven and reminded me of someone who’s picture would be hanging at the local post office. Still Angie cranked out $62.6 million in the first nine months of 2011. The stock closed up 20% from its IPO price of $13.00.

If inflation is on the horizon…and we know it is, wouldn’t that make owning stocks a best thing, just about the smartest thing ever to own? I was thinking way back when I was a kid for a buck I could buy a Big Mac, fries and Coke. Hasn’t inflation increased the cost of goods and also the price of shares?

The Business of some Wall Street Traders is Always Finding a Short-Cut: In last week’s WSJ the story emerged about Pipeline Partners, a firm that matches large blocks of stock/bond buyers with sellers. Pipeline caters mainly to institutional investors that do not want every Tom, Dick and Harry on the Street to know what they are buying and selling in huge amounts. Pipeline has told clients that they matched orders without an intermediary. In other words the trades were secret. But, according to the SEC, Pipeline allowed a firm called Milstream access to the order information and Milstream acted on that information, placing trades before the customer orders were placed. Milstream, oddly enough, is a selling subsidiary of Pipeline. Pipeline was fined $1.2 million and cut loose two of its top executives without admitting or denying guilt. What a country!

Happy & Safe Thanksgiving to all!

Finally- FDIC closed 2 banks Friday bringing the total in 2011 to 90. Markets also closed mixed with stocks off 3% for the week.

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

That Was The Week That Was – 2nd Week November

2011-11-14T09:40:00.001-08:00

Some traders are acting as if Greece and Italy are going to go out of business right before our eyes. The gloomsters are trying to sell us the idea that one morning we’ll wake up and there’ll be just a blank outline on the map where Italy and Greece once stood. That’s not going to happen but what may happen is certainly serious enough for all investors to have concerns. The Dow fell pert near 400 points on Wednesday as banks unloaded bonds and other holdings to get liquid in case cash was suddenly needed. Seems everyone is confused about exactly how the EU is going to fix what needs fixing; and with lack of global leadership and backbone this mess seems to go and and on. I asked one of my wholesalers at Fidelity Advisor Funds how long we can expect to be on this roller coaster and his answer was that according to Fidelity Advisor analysts we can expect more of the same up and down markets for three months, or maybe six.

The Week ended Up a fraction of a point! Down 100 points, up 100 points, down almost 400 and then up…investors were gobbling Xanax by the fistful by the time markets closed Wednesday as fear mongers were peddling their goods. Politicians seemed to understand the gravity of the world-wide repercussions of their inaction and in Greece they swore in a new caretaker Prime Minister while Italian lawmakers overwhelmingly approved a package of growth-boosting measures that, according to Friday’s WSJ, will pave the way for the resignation of current PM Berlusconi, which happened Saturday, and the appointment of an interim government. Italy looks forward to a $2.6 trillion budget cut. It involves raising the retirement age and selling of state owned real estate. Greece, meanwhile, appointed their own technocrat to lead them out of a 130 billion pound bailout. The EU also needs political stability and strong leadership going forward to stem any contagion due to investor fear. Both Europe and the US markets applauded the first baby steps in both Italy and Greece. Now for how the markets and others did last week….

Note: Concerned about where you are? Portfolio review and analysis available. On the home page of my web site www.primaryplanner.com you can click and complete the request. Make sure I get a cell or day-time phone. This analysis is good for retirement and personal plans. There is no charge.

Risk Reduces the longer you hold an investment. But, you already knew that. It’s the short-term fluctuations that investors fear will turn into long-term market collapses that keep more meaningful money from entering the stock market. ‘Investors are still using the rear-view mirror as an investment track,’ Dan Genter, CEO and CIO, of Genter Capital Management said in a Bloomberg interview. Investors have withdrawn some $341 billion from equity investments since 2008 and another $61 billion in 2011. The average investor ignores the real probabilities of the market and focuses on the possibilities. Over any rolling 20-year period the MSCI World Index, considered the broadest measure of stock performance, almost never goes down and only drops 7% over any 10-year rolling periods.

Never Seen Markets This Mad, said Jimmy (The Mouth) Cramer both on air and on his blog last Wednesday. The Dow fell almost 400 points and Cramer scratched his noggin in frustration as he viewed inconsistencies in the sell-off and investor fear. His wondering includes: If Europe is so weak why does oil continue to climb (it was just about the only sector that did on Wednesday). If Greece is falling and Italy next why does it seem that the Euro has stabilized. Some American companies doing business in Europe haven’t seen much weakness at all.

Is it just me or are traders just bouncing from crisis to crisis?

Best Opinion Blog WSJ On the EU Debt and U.S. Crisis from David Wessel. He writes it’s been 2 years since Greek problems surfaces and five for U.S. housing bubble burst and yet, he wonders, why haven’t the players done anything about either one? The answer is deciding who gets stuck with the tab. ‘In every crisis you have to allocate losses between debtors, creditors and taxpayers,’ said Anna Gelpern, an American University law professor and former Treasury official. ‘By definition,’ she added, ‘it’s a political problem. If it’s not politically salable, it can’t happen.’ Edward Kane, a Boston College economist summed it up, ‘Parties that have contractual losses try to shift those losses to counterparties, especially taxpayers, These crisis tend to drag on as long as there’s a chance of sticking taxpayers with the losses.’ And that, my friends, is exactly why we sit watching day-traders manipulate markets and politicians doing absolutely nothing while trying to find a way to stick us with the tab.

FYI-The Italian Problem is not because the outgoing administration and PM did a bad job it’s because Italy has had almost no growth for the past ten years, according to Bloomberg BusinessWeek.com. Italy has a surplus- today- but with interest rates being hiked in order for the country to borrow the problem is that eventually it will not be able to repay what it owes or refinance bonds coming due. On Wednesday LCH Clearnet, a London based clearing house, was raising the deposit it demands for processing the trades of Italian securities. The deposit protects LCH in case a deal fails and it gets stuck holding Italian bonds. It’s these kind of changes that kill a country’s ability to do business.

Pension Trusts Strapped, according to Monday’s WSJ. The UAW Trust is underfunded by nearly $20 billion and the union is seeking to divert 10% of active workers’ profit sharing checks into the VEBA ( Voluntary Employee Beneficiary Association). With lousy investment results plus increasing health care costs the plans are hemorrhaging money. In addition to more funding the Trusts are expected to cut back benefits.

UPS Projects a Good Holiday. It forecasts 120 million deliveries up from 113 million last year. The company said it will boost seasonal part-time hiring 10% to 55,000.

Buffett buys! Warren bought $29 billion worth of stocks in the 3rd quarter, the most he’s bought in 15 years. According to Bloomberg he expanded his holdings in consumer and financial sectors. The S&P 500 index fell 14% in that quarter, which compelled Buffett to go on his buying spree.

MF Global is likely to be among the 10 biggest bankruptcies ever. It’s estimated the company will file with $41 billion of liabilities placing it #8 on the all star list. The biggest was Lehman Brothers with $691 billion. Enron was #6 with $65.5 billion. General Motors #4 with $91 billion. and their still looking for $600 million of other people’s money that MF Global somehow misplaced. The firm’s paperwork was so sloppy that auditors can’t make head or tail of what’s what.

Selling Your Pension: Investors are buying pension income from folks who need lump sum money to pay bills, catch up on mortgages and the like. Much like the TV ads touting structured settlements some financial advisors are putting together investors with needy retirees. The deal is that a retiree gets needed lump-sum while the investor gets a monthly check that is calculated to include payment of interest and principal. Advisors get paid from proceeds while investors are able to ramp up yields as high as 6%. The problem is that there is no guarantee that the retiree continues to sign over pension income once they’ve received their lump sum.

Yelp IPO –Next? Founded in 2004 Yelp is a internet site that combines social networking and local commerce and may seek an Initial Public Offering in 2012. The company may be valued as much as $2 billion. Seeing the folks at Groupon walk away with $12 billion may have been enough of an incentive to stoke the greed factor.

Yum Brands owns and operate such storied franchises as KFC, A&W, Pizza Hut and Taco Bell, and is also a player in China and getting more of a finger(licken good) -hold on to 1.3 billion citizens. You have to love this story, dear reader. Yum, which owned about 20% of a local food chain called Little Sheep, Ltd., asked and was approved to buy the whole shebang. Chinese regulators gave their approval and Yum is the proud owner of one of China’s largest hot pot restaurant chains. This is the first time that a foreign country business has been able to buy and control a Chinese business. Like I keep writing- 1.3 billion customers. Can you say, ‘With everything.’, in Mandarin?

Chinese Inflation cools in October. Not only did the numbers for China come in better than expected but real estate prices fell while sales increased 18% from a year earlier, according to Chris Oliver at MarketWatch. Still inflation is a concern but authorities in China say that they are gearing for a soft landing and not the devastating scenario painted by some financial experts. The CPI rose 5.5%, slowing its growth for the third month in a row.

From the Department of It’s About Time: U.S. District Judge Jed S. Rakoff challenged the S.E.C. on why the agency allowed Citigroup to settle a case while not admitting to wrongdoing? The S.E.C. answered that companies are willing to enter settlements more quickly and pay their fines if they don’t have to admit to the underlying allegations and then face that admission in separate private litigation. And in a nutshell is the one reason we’ll never see wrongdoing established against a large public company or officer as long as it’s settled and paid quickly and they can get ‘not admitting wrong doing’ language in the agreement.

Thursday Markets up. Gold down to$1767 and oil up $98.21.

Rare Earth once the darling sector of the investment world now being treated as if were a nasty relative showing up unannounced and staying for the holidays. Molycorp (MCP), the rare earth mining company, posted numbers three cents less than analysts expected and the stock crushed after-hours by eight percent. The company stated they were ahead of schedule on their recent mining project due September, 2012. Rate earth materials used in everything from cell phones to autos. China’s been buying the stuff and stockpiling.

A Forever Stock? Tom Benany, of TopStockAnalysts, wrote of his one stock to buy before its price runs away. His recommendation is Coca-Cola. He likes it because its P/E ratio is 12.5 and its price-to-sales ratio P/S is 3.4 a ratio higher than the industry average of 2. Earnings are expected to advance at 10% per year going forward. Plus Coca-Cola plans on investing by 2020 $20 billion in emerging markets, namely Africa, Mexico, Russia and China. Analysts, Tom reports, see the stock rising between $105 and $130 a share by the end of 2016. I keep thinking of 1.3 billion Chinese drinking a soft -drink…a day…!

Why analysts more pre-occupied with Price to Earnings than Profit number? Seems you can have huge earnings and little profit. If earnings are flat profit can increase through judicious reduction of expenses. Just one of those things that keep me up at night…

Cheapest Stocks in the Dow: The folks at Fool.com did the math using forward 5 year P/E to come up with four stocks with less than 11 P/E. In order of cheapness they are: Hewlett-Packard, The Travelers Companies, JP Morgan Chase and ExxonMobil. While there are those that look to buy Dogs of the Dow remember cheap stocks can get cheaper.

Let’s revisit yields from across the world: The 10- year in Germany at 1.871%, in the U.S. 2.09%, France 3.36% and Italy 6.514%.

Talmer Bank and Trust- folks over there keep me informed on what’s what and Friday an e-mail informed me that they believe a Euro recession becomes more likely.

Most of us measure personal wealth and self-worth that includes our homes. The New Yorker reported-We feel richer with equity in our home and spend more when we do. Consumers have certainly been doing their share of supporting the economy and not been bashful about buying high ticket items. Now its up to government and business to prime the pump and get the business of business moving again.

Boeing 737 books $18 billion order from UAE, Airline of Dubai. The country has options on another 20 planes making a possible backlog of $26 billion. BA shares closed Friday $66.92 with Morningstar reporting fair value of $73.00 prior to the booking of this most recent sale. Prior bookings were in excess of $300 billion before the UAE deal was inked.

Friday huge! Dow up 260 points. Gold up $30 closing at $1787 but oil sneaks up shy of $100 to close at $99.22.

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-1st Week November

2011-11-07T07:08:00.001-08:00

It was billed as a momentum week, with stocks continuing their healing process from the summer meltdown, but unforeseen events pulled the rug out. It began last Monday when the Greek PM announced he wanted the Greek citizens to vote on accepting the austerity measures as part of the EU bail out. He tossed an enormous wrench into the European debt crisis because 60% of the Greek citizens are against any additional government cutbacks that are conditional for any European aid. That same day a significant commodity trading firm, MF Global, with a huge bet on European sovereign debt went belly-up. The entire week was devoted to uncertainty- again. Here’s the news as it unfolded with other stuff I found interesting along the way… The week ended with stocks slightly down- We can expect more disruption from Greece this company week as the opposition party demands that the citizens get to vote on further austerity measures…(the Greeks want the bailout money, belong to the EU but no more cutbacks or paying the price..) Like that’s going to happen…

Italy Next? The third largest country in the EU has significant debt problems. Many worry that if Italy rolls over there is no saving from a global depression. The European Central Bank is buying Italian bonds in an attempt to drive yields down and Prime Minister Berlusconi brushed aside worries of an Italian default. Quoted in the Financial Times Saturday morning Berlusconi said the Italian economy was good, tourism was high, hotels and resorts fully booked. He refused EU assistance of some 50 billion Euros but did accept highly intrusive IMF financial monitoring.

Day Traders say it’s been a tough year. Investing is not as easy as Fox News and others make it seem. Fidelity used to advertise that anyone could self-manage their investments successfully. Today they advertise to use a professional to guide an investor to retirement success…times change. However, Thomas Kee, Jr. has a tip for those frustrated with 2011. Simplify your investment method by buying one stock per week. Start each week with a buy and at the end of the week, no matter the result sell and own cash through the weekend. He has other rules as well; such as ignoring penny stocks and those trading over $100. He calls this strategy, ‘The Stock of the Week’.

Sprint & Clearwire are close to signing a long-term deal for Sprint to use the Clearwire network. The new agreement is a boon to both companies as Sprint will get lower costs and Clearwire was clearly on the ropes without Sprint. Shares of both popped Friday last on the news.

China shuffles Financial Regulators. Bloomberg reported both outgoing regulators have left the Chinese financial and banking system in better shape today than they got it. Now at the age of retirement both are leaving as China readies itself with surpassing the United States as the world’s largest economy. This is expected by 2018.

Barron’s Take: Coca-Cola has a buy rating and $77 per share price by Citi analyst Wendy Nicholson. Part of her analysis includes knowing that the U.S., a massive guzzler of Coke, will have the third largest population in the world behind China and India by 2020. Coke believes, according to Barron’s Take, that they have the right stuff and media strategy to keep them #1. KO closed at $69 end of October.

Barry Diller, Coca Cola Director since 2002 bought another huge amount of shares in the company on November 1st and 2nd to the tune of $6.7 million. This latest 100,000 acquisition was in addition to his February purchase of 235,000 shares of Coke in February of this year.

Lowes Has Issues: Closing 20 non-profitable stores, will open 10-15 new in 2012 and laying off 1950 workers.

Age of Shale has arrived. This plus Canadian Sands may make North America energy vibrant again. The shale frenzy has pushed the value of total U.S. gas and oil deals to pert near $300 billion over the past 2 years. Middle of October Kinder Morgan bought rival El Paso for $21 billion. The company said that the shale glut will not be short-lived and billions will be needed in infrastructure.

No Economic Domestic Fast Track until someone comes up with a plan for housing.

Brett Arends took a big gulp of Kool-Aid and suggested to readers that they invest in the Greek stock market! His reasons include: The market in Greece is cheap; Equities are the real assets and don’t belong to the government; There is blood on the street, which is a buy indicator for stocks; and no matter what happens regarding the debt the companies in the Greek stock market are not going away….There are arguments against as well…

U.S. taxpayers are helping fund the Greek Bailout! President Obama buried the $54 billion largesse in a war funding measure to avoid an up and down vote for using funds to bail out a foreign country. This from Jim McTague in Saturday’s Barrons D.C. Current.

Eight Companies That Have Consistently Raised Dividends for 25 Years or More: This from TopStockAnalysts. Do not invest before doing homework but here’s their list…

Pitney Bowes
Cincinnati Financial
Leggett & Platt
Johnson & Johnson
Abbott Labs
Automatic Data Processing
McGraw-Hill
PPG Industries

Buying a stranger’s life insurance policy as an investment just got tougher. The Delaware Supreme Court ruled that insurers can challenge the legitimacy of ownership and beneficiary even past the standard 2 year incontestable period. This business has been reeling for the last 3 years and Delaware may have put a nail in the coffin to speculators and hedge funds. The Life Settlement business now has to regroup. The problem stemmed when frauds were committed on the purchase of several elephant sized policies and the insurance companies sued the life settlement organizers.

Schmart too late? Someone’s always doing surveys and this one comes from Texas Tech University school of financial planning. Across the board the study found that Americans are, for the most part, financially illiterate. But, what’s worse is the survey showed that as people grew older they became more confident in their ability to handle finances when in actuality they were becoming less capable starting at age 60. By the time we’re 85 we’re pretty much dunderheads. Now, what the hell was I thinking about?

Preparing For Hyper-Inflation? On pins and needles investors worry about inflation, high interest rates and the price of goods and services to sky-rocket. So when will that happen? Experts agree that not until the economy gets a firmer grip will we see prices rise and once started it’ll be a long-long ride. How will inflation impact you, me and the candlestick maker? Housing, cars, food and energy all will cost more. Income will also rise but not as fast as goods and services. Investors may well start examining inflation sensitive sectors such as real estate, commodities and energy.

Yikes! Domestic markets fell 276 points on the Dow last Monday as Greek government hitched its britches and refused to accept more economic abuse for receiving its needed largess until agreed by voters. Greek government surprised Europeans and U.S. regulators with their late Monday call. The Greeks seem to feel their people will back a European designed austerity plan but with the recent rioting that remains a dim issue. And in the U.S.A. a company called MF Global filed for bankruptcy because they couldn’t account for about a $700 million dollars of customer money plus their extraordinary exposure to foreign sovereign debt. On Tuesday MF Global admitted to using customer money to regulators. MF Global can trace its roots to sugar traders back in the 1700s but rising rates on Italian, Spanish, Portuguese, Irish and Belgian government bonds did them in. The company held $6.3 billion of sovereign debt with $1.2 billion in firm’s equity. That was enough for them to go scrambling for a deep pocket suitor over the previous weekend but when the time came to examine the books before the final agreement auditors found close to a billion bucks was unaccounted for. The deal ended like a limp handshake after a bad first date and the firm had no choice but to file for bankruptcy. The lesson is two-fold: One- investors are now allowing firms to fail- even the big ones like MF Global and those investment firms with big exposure to sovereign debt will be avoided until things cool down in Europe. …Friday afternoon searchers found about $600 million at JP Morgan….but regulators say there is still about the same amount of customer money missing….

Thousands of Investors are burned by the MF Global bankruptcy. There will still be over a billion dollars to split up with the lead investors considered to be Fidelity Investments parent FMR Corp, Guardian Life, TIAA-CREEF and Rydex Security Global Investors; they account for about 25% of all outstanding shares as reported by MarketWatch.com

Barrons & Morningstar reported which mutual funds held significant shares in bankrupt MF Global. None of the funds are on my preferred fund list and clients should not be concerned. However for those interested here are a few funds that hold significant shares in MF Global: American Beacon Evercore Small Cap Equity Fund, Alpine Dynamic Financial Fund, Eaton Van Small Cap, Templeton Global Smaller Companies Fund, Templeton Foreign Smaller Companies Fund, Fidelity Select Brokerage & Investment Management and Select Financial Services.

Brett Arends wrote in his blog that what we don’t know about MF Global is: The guy, Jon Corzine, who ran MF Global said a week before the company bellied up, ‘ We are pleased with our strong resources and outstanding execution and will provide investors competitive returns in the quarters to come.’ Then seven days later the lights went out. And, according to Arends, the blow-up of MF Global took even the honchos by surprise. The CEO bought $450,000 shares as recently as August. Corzine resigned Thursday, said he was taking not a sou of his $12 million entitled severance and would assist regulators as much as possible.

Amazon & Apple: Dimitra Defotis wrote in WSJ Technology column that investors should ‘wise’ up to the extraordinary power of Amazon. No longer just a ‘bookseller’ the company is growing influence in cloud computing for corporations to GPS navigation for cars. Lets not forget its new Kindle Fire. Any opportunity to accumulate shares from here, said Keith Goddard a money manager in Tulsa, OK., who now regrets selling his shares around last week’s price. Apple has a huge war chest and plans $8 billion in capital investments in 2012, nearly double that of 2011. That includes almost a billion dollars in retail stores!

MGM and Boyd getting their ducks in a row, reports WSJ, for the day when the government approves on-line poker. This may be what the government wants and is looking for-companies that can ensure fair treatment of players and also share with them in the spoils. The companies announced they would be sharing platforms and investing in Bwin.party, which is licensed in Gibraltar, France and Italy and does business under its PokerParty brand.

Citigroup COO sold 1/4 of his stock holdings. Lon Juricic, president of StreetInsider.com said about the sale, ‘He (meaning Citigroup COO John P Havens) doesn’t see any upside soon is what his sale tells me. It seems like bad timing with the situation in Europe and all the financial stocks, so why not hold off till things calm down?’ Getting ahead of some Christmas shopping…?

Bill Gates sold $10,000,000 of Microsoft stock at the end of October.

Markets took another Hit on Tuesday. We’ve seen this show before. It’s manic-depressive with extreme highs and deep lows. Looking for help gold was steady, after falling in early hours 2% and oil held its own at the close. Brian Amidei, managing director and partner at private wealth management firm High-Tower Advisors said, ‘I read as much research as I possibly can. I am relying on some very smart people in international affairs. We get a lot of things on our plate, and to be an expert on all of them is very hard.’ Eagle Asset manager Dennis Cowart said it best, ‘ When U.S. markets were beholden to Slovakia’s parliament, a few short weeks ago, most of us couldn’t find the country on a map – yet it’s wagging the tail (or maybe he meant dog) – it’s a ridiculous situation.’

The Street says they like the following stocks to pop in the 4th quarter: CenturyLink, Apple (who doesn’t!?), Sclumberger, Kaiser Aluminum and Ford.

Avi Salzman at Barrons.com gives the inside poop on why auto stocks get no respect: Here’s the deal every time auto’s announce sales it does them no good as traders pound their share price. They did it again on Tuesday as autos were on pace to sell over 13 million units. Why? Salzman says autos unfortunately have been reporting on down days. Plus, the markets respond negatively no matter how good the news. Seems the Street wants the days when autos padded their results with fleet and rentals. Those days are gone and eventually the Street will have to realize its a different reporting world.

Fed will keep rates exceptionally low through the middle of 2013. Owners of short term bond funds may extend maturities to increase yield with a significant measure of knowing no rate increases are on the horizon. This means more money with little extended risk. The Ben Bernanke also expressed modest optimism in the economy but stressed slow growth, at best. Concerns about European fiscal and banking issues have contributed to strains in global financial markets and have adverse effects on confidence and growth. The dollar fell and stocks rose even as the melodrama overseas continued to play out. The Dow up over 170 points, off its highs for Wednesday last.

China a Player! You can bet your bippy if approached to assist in the EU bailout China will wring some exacting conditions for investing in the EU. The ‘in-your-face’ attitude by the Greeks may be the final straw as Europe looks for deep pockets to get them through this new and unseen complication. According to Robert Powell at MarketWatch as China moves more to the center it will provide outside investors greater transparency with where the Chinese opportunities are. ‘You cannot not pay attention to them,’ said Philip Abbenhaus the director of Asian Equity Research Institute. ‘In the long run it may well be that the United States will end up servicing the needs of both Indian and Chinese growing middle class. The United States will end up simply feeding and entertaining the Third World citizens.’

Thursday Greek PM announced no referendum by Greek voters was needed as the Dow surged 200 points on the anticipated news. Yes, dear reader, traders seemed to take this latest bit of Greek theater with their morning bagel and cream cheese and motored bravely on before any announcement. Gold stuck flat at 1765 and oil climbed to $94.21. It was rumored that Merkel and Sarkozy threatened Papandreou with ouster from the European Union and not one shekel of aid-ever! Putting them to the test both French and German leaders showed their mettle in dealing with a potential global financial meltdown. Greek lawmakers voted to form a coalition government Saturday morning and gave George P his vote of confidence, which according to the WSJ, was significant.

IPO Groupon closed up 31% in its Friday debut. But, hush, dear reader, you didn’t miss a thing as Morningstar reports the stock isn’t worth the $26.11 it closed at last Friday or even the $20.00 it opened at. The reporting and analytical company went on CNBC and also wrote that Groupon was worth $8.00 a share. What was amazing to investment professionals was that Groupon was able to bring its shares to the public during a down market and with a company that had yet to earn a single drachma in profit. We like many others are waiting Facebook IPO.

Berkshire Hathaway –Warren Buffett’s company posted operating earnings up 37% from same period 2010. Shares closed Friday at $115,806. The stock is down 7% from a year ago. If El Warren can’t show positive results in a tumultuous year with all his behind the scenes special deals you know its been a tough year.

Finally- From The Department of Stuff I Wasn’t Aware of While Looking up Other Stuff I Didn’t Know: The Swiss are turning gold ingots into consumer products. PAMP, one of the top refiners in Switzerland, has started manufacturing whimsical designer gold bars for specific markets. There are ‘Hello, Kitty’, small stamped ingots for Koreans and India has the many armed goddess and for the U.S.A. we get a small ingot stamped with the happy likeness of Snoopy.

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 October

2011-10-31T11:30:00.001-07:00

Rational thinking entered Wall Street Monday as traders ignored Europe debt woes and concentrated on stock fundamentals as markets continued their upswing from the week before.

A Skeletal Solution is appropriate description given the season as investors put The European Problem in the ‘rearview’ mirror. The EU deal needs filling in, reported The Street.com., but figure another week of a continued rally for stocks.

Not so fast, writes Steven M. Sears for Barrons.com. The rally didn’t ‘feel’ right to the August Sears. The reason is that Main Street and Wall Street are not disconnected. Concerns that Middle-Americans are cutting back on essentials and the upper-affluent community finding themselves in exactly same pickle leads The Sears to conclude that both seem to be ‘teetering on the edge of insolvency’. This bit of social detecting leads The Sears to suggest that the time is to be anything but complacent. He suggests investors buy bearish puts on the iShare Russell 2000 to the beginning of 2012. He also suggests (probably looking out his Manhattan window) that social unrest is on the horizon and investors include in their shopping list both gold and guns. What a kidder, that Sears, a few days earlier (see the January Effect) he wrote that investors should be gearing up for a strong rally in January!

Fear mongers drove investors away from markets and Best October in 25-years! It is expensive missing even a day let alone the best month of the year. Talking heads and scribblers with not so hidden political agenda made sure that the average investor lost significant money in October. They did that by manipulating basic fears of a coming global calamity and scared investors from the markets for their own political ends.

Market Veteran Jeremy Grantham said it best last September when markets were reeling. ‘This is no market for young men.’ What he meant was it wasn’t a market for those that did not experience bear market blows and sustained downward pressure by those shorting good solid stocks. Grantham went on to explain, ‘Policymakers and politicians have acted like children at play.’ Now lets look at the week as it unfolded…

The Street.com reported on the 26th of October that American business is Boooooming! The U.S. may be reclaiming its job as the global growth engine. Ford, UPS, DuPont and 3M all reported better U.S. business while international slowed. GE, Master Lock and Boeing have all returned production to the US from China for the following reasons: quality, reliability and technology piracy. This doesn’t mean, The Street wrote, that the economy is finally fixed. It does mean that things are not as bad as some economists and investors think.

Netflix crashed and burned Monday after hours. The company announced it had lost roughly 810,000 subscribers with their summer pricing change. Jimmy (The Mouth) called it right two weeks back when he said the stock was broken. Netflix traded at $299.00 a share as recently as July before falling to $87.50 Monday. and spent Tuesday sinking even lower as momentum carried over from the close.

Gold up but so was oil, over $92. a barrel, on Monday. The week started with good news and lots of Mergers/Acquisitions as Oracle said it would acquire customer service software of RightNow Technologies. Health Spring jumped as Cigna announced buying the health care stock. Mattel entered the fray with a bundle of dough for Bob the Builder, Barney and Tommy the Train. Just in time for Christmas.

FedEx given the nod, by Lazard Capital, that the company can add 25% to share price given its China connection. This growth is expected to happen as the Christmas season gets into high gear.

The Maxim Group predicted the sound of music will translate into boootiful things for investors. They like Sirius XM Radio and Pandora; but they like Pandora over XM. Live Nation is confusing as Maxim sees concert ticket sales to fall and revenue to do the same. Still they have a buy rating on shares.

Sharing a Happy Birthday to Chevrolet! The iconic auto celebrates it’s 100 year birthday on November 3rd! My daughter shares the same date, but many-many-many-many years later. Happy Birthday, Jennifer!

3 Billionth person to be born October 31st!

Old poops hanging at an online social network site called Player’s Life. The site (and I haven’t visited) is dedicated to those low rolling retirees that like the high life of slots and gambling. The site created a year ago is dedicated to squeezing more dough out of senior gamblers when they do come to play the real slots. No surprise that the site is the creation of WMS Industries, the second largest manufacturer of slot machines. This could easily turn into a real gambling site if and when the U.S. approves on-line gambling. Stay tuned.

Consumer Confidence weakest since March, 2009. No surprise, Sherlock, or whoever writes the MarketWatch headlines for last Tuesday. You could have saved a bundle in fees by simply walking into the local Target or Kroger and ask folks how things were going. Consumer expectations fell almost as far as Lindsey Lohan’s chances of playing Snow White in the next Disney pic. On the good side- home prices increased for the 5th straight month. Stocks were down for the day, gold and oil were up.

Amazon spent more than it made…well, almost. Jeff Bezos is the kind of executive that reinvests profits into the business. This has worked well as the massive on-line retailer grows its business and reduces (eventually) its operating expense. Shares fell hard Tuesday as investors were looking for immediate results and not what could Amazon do for them down the road. While net income fell net sales were up over 30%. The company should continue to do well going forward as Morningstar labels the company a disruptive force in the traditional retailing channel. Cramer on CNBC morning Squawk praised the job Bezos has been doing. Plaudits continued as investors stressed that the long-term view was essential for the company to grow and if the United States adopted the same business attitude we’d be long out of this Depression. Yo, anyone for drafting Bezos for President?

Ford may…reinstate a dividend. The company will have to do more homework but the basic plan leaked to the press is that shareholders may once again taste some of the profits by owning shares in the auto company. Barrons made the case that investors punished the stock on Wednesday because they missed profit numbers but revenue grew. The company had reduced debt and Morningstar analyst David Whitson reiterated that he saw nothing that would reduce or question his $23 fair value on the stock. Moody’s upped the company’s financial rating.

On of the first stocks that I bought and traded ages back was Gentex Corporation. What made me buy it was their technology in rearview auto mirrors. The company started its business by making smoke detectors and morphed into this high tech rearview mirror giant that has its products in virtually all high-end makes and models. Today it manufacturers much more than smart mirrors. Bob O’Brien in the Barrons.com Weekday Trader revisited the company and made a compelling case for investors to rethink owning this profitable auto parts company. As the entire global auto manufacturing industry gains traction this may be a stock investors want to add to their portfolios.

Oil closed $93.30 and Gold broke $1700 to close at $1717 Tuesday. Coal is also making a move.

MetLife is trying to get out from under the thumb of government regulators. Seems the company wants to increase paying a dividend to shareholders and regulators nix the idea. The reason is that Met owns the 7th largest banking company and the government wants Met to do nothing until it goes through another round of financial stress tests. Now the insurer is trying to sell its banking arm to be free of oversight.

Dow Jones Industrial Average:

Chart above just goes to show where we were and where we are in 2011.

Anticipating a Euro Deal stocks rose across the board Wednesday. The Dow was up 162 points.

Celebrating the EU Deal was done, as promised. Guarantees in the neighborhood of $1.4 trillion plus banks shaving Greek debt by 50% and increase net capital by next year were agreed to- sort of. The haircut of Greek bonds applies only to private holders and not to public investors. The concerns turn to Italy as the game of musical country defaults continues. First the world economies need a breather and you can expect markets to move higher – for a bit.

Gambler? Steven Sears writes that now would be the time to play The January Effect. The JE is when small caps rise higher than any other sector at the beginning of the year. Professional investors know this and that’s why you may want to take advantage of it now instead of waiting. However, The Sears writes, this is a trade only and for investors with money to lose. The suggestion is to buy an at-the –money call option on the iShares Russell 2000 ETF (IWM). No one knows why small caps rise in the beginning of the year, or even if they will. They just have a history of doing so. Old Sears can’t make up his mind- on-off- whatever strikes his fancy. See his comments on owning guns and gold at the beginning of this blog.

Too expensive even for the government- and I’m talking about long term care insurance. Any thought that the U.S. would get into the long-term care business can now be put aside. The premiums keep escalating as more old poops queue for either institutional or home care. By 2020 some 15 million people will need some form of long-term care. Those that have some insurance to help pay for the increasing and staggering costs of long term care are less than 3%. Some folks can’t afford the insurance premiums, others won’t and still some cannot get it at any price.

Ron Insana- On CNBC Thursday afternoon said, ‘Expect this rally to continue and interest rates are committed to remain low.’

What a Day! The markets opened up over 2oo points Thursday and never looked back. Short sellers had to cover and buy shares, which added to the upside. It was all Bulls as a deal in Europe capped a stressful weekend. No news from the naysayers as they had to hide. This was a rally that some say may end up with the best October market month ever. What took all summer to drip down seems like most, if not all losses, may possibly be recouped in this one month. The Dow closed up 340 points, S&P 500 +43 and both oil and gold up for the day. Oil closing over $94 a barrel.

Negative comments on China Markets were squashed as Dr. Burton Malkiel said Chinese equities are extremely undervalued. Malkiel is the author of, ‘A Random Walk Down Wall Street.’

Recession? We ain’t got no stinking recession!

From The Department of: We Don’t Know What The Hell We’re Doing But We’re Getting Paid Lots of Money Doing It. Hewlett Packard now deciding to keep its PC business rather than selling it. Company officials announced Thursday what deep analysis was involved in this latest turn of thinking. Just a few short weeks earlier the company announced a new CEO and a selling of their PC bidness. Shares of HP rose on the news or it could have been a rising market lifting all boats. The fact is that PC’s and printers are big business to HP.

Baidu net profit nearly doubles. The Chinese internet giant that is the equivalent of our Google saw its shares increase to close $148.90.

No mas! From Big Banks awash in cash the bigs say they won’t impose debit card fees. The public and economic backlash severely created a public relations and stock problem for all of them. Being greedy just didn’t work this time for the bloodsuckers and they decided to throw in the towel – at least until the economy gets on firmer ground. You can bet this will be revisited.

QVC the home shopping channel is owned by Liberty Interactive and has an outstanding Ebitda of 20% beating out such brick and mortar giants as WalMart, Penny’s and even Amazon.com. The WSJ reported that shares of Liberty look cheap as 1/3 of all business the company does is in Europe and Japan. With Christmas coming shares may pop.

Casino stocks in Macau are raking in the dough. Morningstar loves Las Vegas Sands and predicts earnings per share at a 50%-plus compound rate for the next five years. They give the stock a fair value of $73 a share up from current $48.00.

Robert Arnott predicts investors will soon be facing what he calls the perfect storm. He defines these as the 3 D’s – deficits, debt and demographics and on top of that wealth eroding inflation. Now is the time, Arnott wrote in his newsletter, for investors to build protection for portfolios.

Still doubts remain on Europe. Next in line is Italy, paying over 6% to borrow money the country cannot long afford paying more than other countries. Critics charge Italy with not doing enough and failing to deliver on promises to reform its debt and spending. ‘It’s only talk –chiacchiere in Italian,’ said Alessio de Longis, portfolio manager at OppenheimerFunds.

Finally- in September Barrons asked professional investors…what they thought of the markets. This at a time when stocks were at their annual low. Surprisingly professionals responded by stating they planned on allocating more money to domestic and emerging markets while laying off developed overseas markets. Also 50% said that some sort of European conclusion would cause stocks to go higher. In a not so stunning prediction investors said they would be buyers of large cap stocks over mid and small caps. The best performing sectors were thought to be in the next 6-12 months energy and technology.

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 October

2011-10-24T05:33:00.001-07:00

Wake me up after the election….

Stocks closed on an upbeat Friday, slipping above the trading range they’ve been stuck in. Still concerns continue as investors worry that lenders are not showing the same confidence at investors, fears of the European debt contagion problems, and how much support we can expect from Washington.

Asset Allocation doesn’t work in 2011 any more than it did in 2008. Oh, it’s alright to own bonds and cash,which will not stray too far off the mean when equities fall apart, but don’t try building portfolios with emerging market, small, mid or large cap equity funds or stocks in 2011 and expect a reverse correlation. The actuality in 2011 is that when one goes down so does the other. It works in reverse, too. When one goes up they all do. Which is a shame because it’s not supposed to work that way.

Bonds will go boom. Eventually. Sooner or later yields have to go up and principal down. And when rate do start climbing-eventually- they will continue for years and years, according to Bill Gross, of Pimco.

Volatility is causing a lot of the Big Boys from playing in the sand box. The problem creates a wider than normal gaps in stock/bond price. One trader of a well known hedge fund tried to buy a stock and found that the price ran away from him as he was placing an order. Another saw his trade go sour even as he placed his order. According to Tuesday’s WSJ many investors, fund managers and hedgies, are staying on the sideline. With fewer investors, including banks, taking either side of a trade, air pockets develop where a 5% drop in price is common. Jeffrey Kronthal, co-founder of hedge fund KLS Diversified, said, ‘Any reasonable sized selling is driving individual bond prices down quite a bit.’ This chicken and egg syndrome is driving the big boys out of the market.

Euro Crisis drives markets lower as the Germans put the Greeks and European banks on the back burner Monday. Last week’s rally bespoke of our understanding of a new sense of urgency among European leaders. Monday illustrated that was not the case as markets swooned on a less than positive news that German Chancellor Merkel said discussions would most probably continue into 2012. Monday markets fell, including oil and gold. Out of 500 stocks in the S&P 450 were lower at the end of the day.

Another Day… and markets rose Tuesday! Bank of America was the largest beneficiary gearing up 10% as the banking giant reported 3rd quarter earnings that exceeded expectations. A triple digit Dow kinda day with gold and oil down slightly. Wholesale prices up- giving nudge-nudge to inflation. The positive mood and move was buoyed by news that Germany and France agreed to 2.7 trillion pound rescue package. The Dow climbed as high as 254 points on the news before settling under 200 for the day.

Blame Recovery on us. Old time spenders are now savers and hurting the recovery, according to Jon Hilsenrath and Ruth Simon, who seemed to have nothing better to do at the WSJ except throw stones at the non-spending, non- debt building middle class. The Federal Reserve and economists have a word for us paying down debt and its called deleveraging. From 1997 to 2007 household debt ballooned from 66% of economic output to 98%, and now is a paltry 89%.

One point three billion customers….every time I think of China I think 1.3 billion people. And Apple says that China is their second largest market and the Apple CEO says the sky is the limit for sales in China. Sales in China for Apple popped to $13 billion from $3 billion just one year ago. The fastest growing middle class in the world. Shares of Apple fell Tuesday as the company missed numbers and after hours shares fell under $400.

Domestic Autos taking it to the Germans and Japanese because of increased quality and…ta-da…the cheap dollar. Yes, dear reader, Americans are able to compete because the foreign manufacturers cannot sell their cars here at a price less than what we can. The difference is more so in the small car market which is down 20% for Asian car builders. The price gap is the widest, according to Bloomberg, since 1999.

Tip…from the Weekday Trader…who likes cheap shares of Alcatel-Lucent (ALU). Shares are trading where they were 2 years past and are ‘incredibly cheap’, according to Michael Genovese, communications equipment analyst at MKM Partners. According to WT shares should be in the vicinity of $5.00 a share, or 70% higher than where they are today. The five dollars is using a modest 9x’s earnings versus a more normal 13-17 times earnings. Shares closed at $2.85 and had a 52 week high of $6.63. Morningstar likes shares at fair value of $3.50 but haven’t reported on them since earlier this year.

Wednesday the markets back down….as confidence lost in European leadership, Apple didn’t make numbers (a temporary situation), and the government’s ‘beige book’ on economic activities showed investors did listen to the Fed and pared back risk as suggested. You could have stayed in bed for all the day did for you. The numbers about the economy tell us we’re in a holding pattern making big circles in the sky and accomplishing not to much. Gold was down also oil (a smidge) but like everything else just hanging around for someone to toss a softball across the plate.

Coffee prices set to rise. Unexpected rain storms in Central America, where 10% of our java comes from, is experiencing more than unusual rains. Prices have already popped 5.7%.

Some stocks shouldn’t have been bought after the crash of ‘87’.

and I haven’t mentioned General Motors….

Experts at 24/7 WallStreet predict that there are other tech stocks that should do better than Apple going forward. Apple has a consensus price of $500 a share. The outperform list includes: Corning, Juniper, Micron Tech., EMC Corporation and Baidu, Inc.

Barrons’ Cover proclaimed same such comments about tech Saturday, reporting that today’s tech doesn’t command much respect from investors. Barrons believes that companies in the wireless arena should do Great in the next 12 months and prospects for social networks bode well. Their top 10 includes: Ancestry.com; Apple; eBay;Electronic Arts; Fortinet; Fusion-io;Hewlett-Packard; Nuance Comm; Oracle; Tibco Software.

Slight gain Thursday…on a mixed market day for the Dow. Goldman Sachs Chairman Jim O’Neill thinks the US is doing a better job than people realize. ‘There seems to be this mood of inevitability…we’re back in a recession. I don’t really buy that.’

Joe Terranova on CNBC Fast Money…said Thursday to beware of paralysis from analysis. Stephen Massocca of Wedbush Morgan probably said it best, ‘It’s a ping-pong game- people have been burned by reacting to individual news stories only to have them refuted, withdrawn or contradicted.’

The Ben Bernanke told Senate Democrats that the European Crisis is Solvable. He also said that the Fed has done all it can to stimulate job growth and now it would have to be taken up by Congress.

Time to Buy stock in Home Builders? FBN Securities thinks that several stocks have been beaten up good and tender enough for some investors to add them to their portfolio. FBN states that they think that the ‘space’ is offering the most inefficiencies since the beginning of 2009. They offer the following as long term holdings: M/I Homes, Ryland Group, PulteGroup, Beazer Homes and D.R. Horton.

Gold trickling down. $1623. on Thursday. Remember trading just weeks earlier close to $1900.

The Federal Reserve may be ready to buy mortgage backed securities –maybe. We’ll have to wait until the Fed meeting beginning of November but some argue that the ‘plan’ would be met with ‘fierce’ opposition. The argument for buying mortgages stems from the fact that interest rates on mortgages have not fallen as much as have Treasuries and refinancing existing mortgages is a way to take advantage of lower rates and offsetting a host of bank fees. The Fed action of pushing down rates may actually stimulate more refinancing even with odious bank fees.

Leap Wireless fell like a stone starting the first of July 2011 from a high of over $16 a share the stock plummeted and closed Thursday a penny over six bucks. Hot Research analyst Brigantine Advisors writes that the stock can pop 50% if….subscriber growth improves. Seems Leap has an improved subscriber growth through the company’s Premier stores, which sell only Leap products but the stores are not owned by Leap. Brigantine Advisors sees store growth around 500 for 2011 and more in 2012. The upshot is that by year-end 2012 shares could trade as high as $9.00.

Ford Upgrade by S&P and Fitch and shares responded by 4% pop on Friday. Ford also had new contract ratified by union which didn’t hurt the move on shares. Just a few days back Ford traded under $10 a share and closed Friday over $12.00.

Be still my heart…markets roared on Friday! What’s better than the Lions going 5 and 1? Having all indices shoot up to close the week so we can forget about stocks and savings and enjoy college football, Fall foliage and a hot bowl of chili. It’s 3 weeks of gains and Friday closed out with Dow up 267 and the S&P 500 index was plus 23 along with gold up $30., and oil (watch this) closed at $87.53. We could end up even for the year at this rate, or match our April high. Trading was big. This was an across the board rally predicated on Europe doing something by next Wednesday. Volume on the NYSE was 1.1 billion. So far in the 4rd quarter 75% of all reporting companies have earnings in excess of estimates.

The Big European Plan? Greek debt will peak at 186% of GDP in 2013 and decline to 152% by the end of 2020, even with all the austerity measures. The German plan is to have banks who hold Greek debt to reduce what the country owes them by 50-60%. Currently European banks have agreed to a 21% haircut. That’s the plan and I am not making this up….

Hedgies cut their positions in gold and silver, slightly, according to Murray Coleman. But, the managers increased their positions in heating oil plus crude oil, soybeans, gasoline and sugar. This has been the biggest push into commodity futures since the end of August.

Finally- 4 more banks closed by FDIC on Friday bringing the total to 84 so far in 2011.

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 October

2011-10-17T10:02:00.001-07:00

Forget Global! Jonathon Burton suggests investors to concentrate on buying domestic stocks that sell their products in the U. S. of A. only and have little exposure to the global markets. Forget anything to do with China, he says, even as it slows its commerce engine to a measly 8% estimated growth in 2012 from 10% estimated this year. The U.S., according to Savita Subramanian, analyst at Bank of America’s Merrill Lynch, is a better place to invest than the rest of the world. Another negative, according to Savita, is the relatively strong dollar, which is a headwind for companies with large global sales.

As many of you know Equitas America, LLC has closed its doors. If you know of anyone who has lost their representative or not transferred assets to a broker/dealer have them call me.

It was a good week for the markets, with all indices up, including oil and gold. There are many issues still weighing on the economy both globally and politically and don’t expect a strong continuation of this recent rally. We are still holding the same allocation in bonds and our only concession has been to increase the maturities. Here’s the play-by-play of last week…

The Lipstick Index – sales of the ‘perk me up’ cosmetic are up 14% in 2011 while nail polish is up 54%. In the 2oo1 recession lipstick sales soared and today its nail polish, heir to the lipstick index which has shot through the roof. Roya Wolverson reported this and suggests someone has too much time on their hands…note spike on chart above. And don’t ask me what’s the significance.

Don’t Call It Junk – It’s High Yield! A few years back investors made a killing buying short term maturity junk bonds at significant discounts. Lately the junk bond market has taken a big hit and now there are bargains out there. The spread, or yield gap, between junk and U.S. Treasuries was almost 9% in September versus less than 5% at the end of April. You can buy junk bonds in an active managed mutual fund or individual bonds. With a default rate of around 2% we can expect more defaults to bring the averages around 4% for the year – which isn’t a bad bet for investors. Barrons.com reported that some of the junk holdings in funds include Ford Motor Credit, Ally Financial (aka GMAC), CIT Group and AIG. All yields are in excess of 7% as of the first week in October.

Who amongst us hasn’t bought something really awful? As a kid I got a Easter chick that rapidly grew into the world’s meanest rooster that terrorized my block until a neighbor finally stewed it for Sunday dinner. Big companies make stupid purchases, that at first thought make sense, but were never meant to be. The Street reported on some of the worst mistakes including: Daimler buying Chrysler, TimeWarner being acquired by AOL, AT&T shelling out good money for NCR and Quaker Foods buying Snapple to compliment their Gatorade drink. None of those buys worked and worse the companies all lost money off- loading brands that just didn’t fit. The lesson here is that everyone makes mistakes. Sell your losers. Keep your winners. It’s a rule.

Social Security recipients to get a 3 1/2% COLA raise in 2012. This will mark the first time in 2 years that retirees will get a bump in benefits.

Jimmy Cramer labeled NetFlix a ‘Broken Stock’, on Monday’s CNBC mornings show before the open. He said that he has never seen a stock recover from the kinds of mistakes NetFlix CEO Reed Hastings has made. At one time Netflix was a leading indicator and followed closely by day-traders. Morningstar calls the selloff ‘panic’ and pegs shares at $150 fair value. NFLX closed at 108.10 Tuesday last after a 52 week high over $300 a share.

John Paulson, billionaire, made the right bets when the mortgage market collapsed, and is managing the Advantage Hedge Funds. So far he has been so wrong on so many bets that the icing on the cake was when gold fell 16% in September and ended up showing a paltry 1% gain in his gold shares for 2011. Earlier this year Paulson managed, according to Greg Zuckerman at WSJ, about $38 billion. After losses and redemptions that number is closer to $30 billion. Investors have until October 31st to ask for their money to be returned.

Longacre Hedge Funds will close. Once holding over $3 billion and bleeding assets now find themselves at less than $400 million. It’s been that kind of year for hedgies.

Bounce! Monday markets up over 300 points on news of EU getting a handle on the banking crisis. Don’t get excited. It’s only one day and more volatility due before the election. Gold up and oil tickling $85 a barrel.

China Sovereign Wealth Fund props up four biggest China banks with stock purchase on Monday. Tuesday domestic market makers in the U.S. said the pop in Chinese banks was but a temporary situation.

Jimmy Rogers, the hedge fund/commodity guy, spoke to a commodities conference in Frankfurt this past September, telling attendees that he is a lousy commodity investor but his favorite is agriculture and he buys it through indices. The best known ETF is MOO. Food will be the next big thing. In a separate article Barrons.com said the same thing last Saturday, but offered agriculture stocks, instead of indexes, that are trading at 52 week lows including: Archer Daniels Midland, Deere, Monsanto. Other suggestions include DuPont and the fertilizers Potash, Mosaic and Agrium. While agriculture didn’t provide the needed protection from the equity sell-off in 2011 Rogers, and others, say it is a long-term investment and well worth making. Not to be confused with singer Jimmie Rogers.

Slovakia aka The Slovak Republic put the kibosh on U.S. markets Tuesday by voting Nyet on forking over additional aid to beleaguered Greece. Before you think I’m making this up or its a skit out of a three stooges movie consider that this country is born of a dissolution with Czechoslovakia, four million citizens, and joined the EU in 2009. Slovakia is a sophisticated highly advanced economy and boosts some of the best landscapes and hotels in Central Europe. The Slovak legislature voted down Tuesday last adding $4 million of their hard earned tax dollars into the greater European soup pot. Some pretty schmart Slovaks! Expect this to eventually pass as additional pressure and arm twisting is brought to bear. Which it did Wednesday late contributing to our domestic rally.

Markets fell slightly Tuesday- ahead of the start of earning season (Alcoa didn’t make numbers after the bell and was slightly punished). Barrons.com sees action in some oldies but goodies as the aging star stocks of years gone by stage a resurrection. Cisco, a five star stock of Morningstar’s, has broken technical resistance, as reported by technical analyst Michael Kahn, as has Wal-Mart and Amgen. Holding just those three in a portfolio would have been cause for celebration in the 90s and may be again.

Pepsi getting its you-know-what handed to them in their soda war with Coke may spin off their Frito-Lay division. This, says, Credit Suisse analyst Carlos Laboy, could potentially boost stock price to $85 from their current level of $61.

What’s Your Fund Investing In? Mutual funds are loaded with cash and lately taken the opportunity of pre-buying shares in non-public companies hoping to reap huge returns when their pick goes public. Opps – seems Groupon, the Chicago based on-line coupon company, may see shares cut back ruining the day for several popular mutual funds. None of the below funds should be substantially hurt as the amount invested, according to their reports, are or less than 1% of their asset value.

Investment News and whispers may not be to the best interest of mom and pop investors. Scary stories frighten the average investor and may be placed by those who desire certain stocks to fall in order to be able to buy them at a more attractive price. China stories abound and not all seems to be what it is purported to be. Investors are best served, before leaping in either direction, to checking all sources.

UBS, the beleaguered banking giant, raised guidance ( that’s a fancy word for what they expect to happen) for the next quarter stating, as reported on CNBC Wednesday last, that the global economic news is not as bad as suggested.

Wha…the hell’s going on?….Ford and GM stock prices popped last week and had solid trading numbers to indicate the shares would be climbing higher. Checking my crystal ball to see what I missed I found that traders were just now getting to calculate lower commodity costs, such as aluminum, into the manufacturing biz which results in mo’ profit…! Shares of both companies have been trading at extremely attractive p/e’s for the last six months….

Rally last Wednesday cut short. Still markets gained triple digits and Dow at break- even for the year. Gold up1.3% as oil fell a fraction to $85.57 a barrel. Earlier Cramer called the rally in stocks real citing numerous reasons including commodities down and news on strengthening the European banking sector. Janney Montgomery analysts recommended buying Pepsi before management figures out what’s wrong and how to fix it.

Inside Europe Barrons.com interviewed billionaire European Francoise de Visscher who said it was not in the best interests of Europe for a banking or Greek default. Germany is calling the shots over there, said de Visscher. They have the money but also live on 60% exports to Europe. He went on to say that after Greek and bank restructuring watch the EU start the longer term work of bringing Europe closer together through economic and ‘political’ integration. Russia will cozy up to East European countries with its gas and oil stockpiles as bait.

The Good Old Days when an investor could tune-in to CNBC and get a handful of stock picks from touts…er…analysts and make a bundle are gone. So where are those super analysts of yesteryear? Matthew Lynn asked storied investment manager Anthony Bolton wha’s wrong? Bolton came out of retirement to launch Fidelity’s China Special Situations Fund. Bolton is having a bit of rum luck and explains that the political side of investing has caused losses that even the smartest stock pickers can’t overcome or see coming. Today more investment decisions are made by governments than in any corporate boardroom. Which explains why many of today’s investors are allocating over many funds, ETFs and stocks.

Thursday it was the banks leading the Dow lower, being lead by JP Morgan Chase, while the Nasdaq rose, gold and oil both fell. It’s always something….

Sell Sprint said the experts at Morningstar. While admitting that the company could possibly bounce off their lows of $2.78 on Thursday the risk of them going even lower was about the same as their going higher. Best day ever as Sprint started selling iPhone Friday. so they reported.

Google keeps crushing numbers. Shares rose to close a tad under $600 Thursday last. Net income increased to $3.18 billion or $9.72 a share versus estimates of $7.64 a share for the same period. In the meantime Google Plus, the answer to Facebook, opened in September and already sports 40 million users.

Stocks trading in a narrow range. Michael Kahn charts the current rally and notes that rather than a breakout stocks will retreat. Volume, although high on the rally, has diminished. Investors can expect more of the same as we move through the year as the technical analysis would suggest a back and forth within a tight bear-bull range.

Ford workers on Friday morning at the Saline facility have voted against ratifying the UAW – Ford new agreement saying it doesn’t provide enough inflation protection and allows contract workers to remain for an extended period of time. This was the third factory to vote against the contract. A potential strike has been approved and only needs 72 hour notice before workers walk-out if the contract is not approved. Shares in Ford promptly fell off their highs on the news. late news Friday showed a reversal of the vote and by this time Monday results should be in.

Friday Closed higher giving the week and year to date a push into Bull territory. Analysts saying markets oversold, but we knew that. For the week the Dow gained 4.9%, Naz was up 7.6%- the biggest gain since March 2009- Apple, IBM and Amazon all jumped to record highs.

Google- Redux-after crushing estimates I checked Morningstar who likes the stock to a fair value of $720 and noted that Google’s growth story was faaaar from over.

First gone was golf ( Sold to the South Koreans) and now Fortune Brands is a stand alone pure play on liquor under the name BEAM. Cramer loves the stock saying it is recession proof and called it ‘The Google of Liquor’. It could be a great takeover for giant spirits factory Diageo. Shares trading near their lows at $47. 15 for the year.

China slows down as does the world. Seems the engine is starting to moderate its feed as its appetite for commodities has reduced. Global exports have fallen and purchases of copper and soybeans has fallen from 2010. But, say some, not so fast. China is a strategic buyer of key commodities and may be getting ready to gobble up needed resources as prices fall. Take for example copper which had fallen to $3.00 and seen a spike in price and demand.

Forgetaboutit…metals -lots more volatility a-coming… New Exchange Traded Notes launching Monday will increase the leverage to buy gold and silver. The new ETNs will offer up to 3 x’s leveraged plays and 3 x’s inverse bets on both silver and gold. Proshares will offer the double bet- straight and inverse while VelocityShares will offer the triple bet. Right-way triple bets will trade under UGLD and USLV while wrong way will be DGLD and DSLV.

Andrew Bary’s Commentary Barrons Cover recommends that investors buy….ta da..banks, of all things. He reasons that prices are fetching, attractive and pretty darn cheap. Matthew Lindenbaum, of Basswood Partners, said that a diversified portfolio comprised of Goldman, Morgan Stanley, State Street and Comerica could do quite well in three years or so considering where they’re priced today. Patience is the key.

Speaking of which - Four Banks closed Friday bringing the grand total in 2011 to 80 closings.

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 – 1st Week October

2011-10-10T10:05:00.001-07:00

As this week opens gold and silver are both up this Monday, the dollar is down and last week’s employment numbers shoveled a recession down the road ‘whew’ to the next month’s number. For last week 3 good days out of five but damage done in September…here’s the recap:

Worst 3rd Quarter since…well, 2008-2009 and we can send ‘Bread & Butter Thank You’s’ to all the folks in Congress, The Administration, Rating Agencies, EU Leaders, Greece, Leveraged Traders, Dems, Tea Party Activists and the list goes on as more and more worry about ideology (Oh, waiter, I’ll have a plate of Ideology with a side-order of Being Right fries.), than getting the economy cooking, putting people to work and fixing the mortgage mess. Wha’s the damage at the end of the quarter? Dow minus 12%, S&P 500 index minus 14%, Germany’s Dax minus 25%, Oil minus 16% (gas isn’t down 16% but the price of oil is on a strengthened dollar!), and the 10-year Treasury fell 122 basis points year to date. European stocks were off 17% just in the last quarter and oil was off 11% in the same time period.

A September Massacre, according to Barrons.com. This is no recession or double dip, say many experts, this is for the most part investors getting liquid and stepping aside from a possible recession. Most give it a 50-50 chance in Europe and far less than that in the United States. But, like someone who watches too many doctor shows on television and thinks they have every new TV disease we could talk ourselves into getting sick.

Lack of Confidence in Leadership. ‘Put me in, coach!’, 5 more years of this or ? Looking over at the other side there is no savior. A President over his head and a Congress that hasn’t earned a paycheck. Jet Blue President David Barger told CBS News that it has taken Congressional resolution to keep the FAA funded 22 times in a row! This past summer the FAA had to furlough 4000 workers because of lack of money. This isn’t the way you’d run a business let alone a nation.

There is something drastically wrong with our government when they don’t take seriously the welfare of millions of Americans. Congressional bickering and lack of leadership poses more than a problem as the country meanders with no direction or leadership and none being offered from the other side. This is reflected in the manic stock market.

Emotion Driven Concerns about a slowdown in China caused a huge selloff in consumer discretionary stocks last Thursday and Friday. Morningstar investigated and came up with the view it was panic selling! The sell-off was driven by a ‘Poll’ of investors and not be actual facts. The markets have gone from dumb to dumber. It’s been all fear motivated.

Not since High School (pre-1958 era) has there been such opportunities in stocks with the 10-year yield 2% with the Dow yielding 2.8% and the S&P 500 index about 2.2%. And The Bernanke Twist attempting to lower the longer-end maturities even further. Values being seen in global company stocks. With minimal chance of appreciation we may see a return to where the only return in stocks is their dividends.

Insurers get crushed in low interest environments. Many life and annuity companies have already lowered rates to almost their fixed guarantees.

Investment Soap Box Keep it simple, use dividends, check history for what performed well in previous set-backs, you’d discover that after the Dot Com Collapse markets performed in negative territory for two years. Utilities, small caps and mid-cap funds performed better for the 10-years starting in 2001 than the S&P 500 Index.

Barrons.com I read each Sunday for picks and pans and sensible outlook and a week ago Sunday it was doom and gloom and nothing positive or uplifting. Oil for the end of the quarter was less than $80 a barrel and that hadn’t translated into cheap gas, still hovering around $3.45 a gallon. Gold was $1627; and some were calling for it to reach $1100-1400. There was an article pointing to lower tech profits and another warning investors to sell banks stocks, if they hadn’t already. Yes, last week’s Barrons.com message could have haunted a four bedroom house with 2 1/2 baths– it was that scary.

Yahoo the search engine people use for everything but a search engine has no real personality like a Google or Amazon. It does its job well but no one says to ‘Yahoo’ like people say to ‘Google’. Folks who use Yahoo have a specific task in mind when they use it and ignore it for anything else. With that lack of knowing what it is that makes Yahoo a Yahoo the firm’s stock meanders about with no direction. News reaches us that Alibaba Group is interested in buying Yahoo. Yahoo owns 40% of the Chinese search engine Alibaba which makes this a very interesting story, and possible trade? Yahoo closed around $13 at the end of the quarter.

America Cannot Afford To Wait! Did I mention that we are rudderless and leaderless as politics overtakes sensible government. Christie says ‘nyet’ but 63% of Republicans hadn’t a notion of who or what he stood for.

Confused? Join the Group! From several sources we get (1) Don’t buy on Dips (2) It’ll be 10-years before we get to normal (3) U.S. stocks look to be the pick of the litter for a 4th quarter rally. All that from some celebrated writers like Jonathan Burton and Alan Abelson. Certainly Europe is in deep do-do (or is it ka-ka?) The word is that mo’ money being tossed to Greece is simply buying time for big European banks to spread their bad paper around; and at some time the music stops and there are no more chairs.

Can’t gussy up last Monday. Wall Street insiders said when markets opened they didn’t know which way to trade but then someone said sell and so everyone did. It was everybody into the pool as all indices fell. Gold was up a eleven dollars at the close but oil fell to under $80 and some experts were warning of the markets falling to Bear Territory. It was all about the banks as BAC dropped under $6.00 and Tech was hit with another wave of selling (remember this is the land of Google, Amazon and Apple!); as the technology sector found its way to its lowest level in a year. Germany was off 2% and Hong Kong Hang Seng Index fell 4.4%.

Vrooooom even good news from the autos didn’t lift any boats Monday as domestic car makers saw big gains in September. Ford lagged U.S. autos but still posted a 9% increase from last September. GM was up in sales almost 20% and Chrysler, assisted by its FIAT association, saw a 50% increase of its sales of the Chrysler 200, 300 and Jeep Wrangler. All this and auto stocks still tanked across the board. Reid Bigland of Chrysler U.S. sales said, ‘We have now gained more retail market share than anyone in the country. There is no double dip downturn going on around here.’

Grrrreat News! Wall Street’s getting more pessimistic. According to the contrarian indicator the more bearish the analysts the more bullish for stocks. Currently the indicator is in neutral territory but falling….fast!

The action on Tuesday was all over the place. Some investors moved more into cash to wait out the volatility.

It’s not like European Leaders don’t know what the problem is or what to do to curtail, or at least slow-down, the process. Unknown to many U.S. investors several large banks have already bellied up. On Tuesday Euro-Official worked on breaking up Dexia, SA, a Belgian-French bank that is one of Europe’s 20 largest. The agreement called for a separate entity that would hold the bank’s bond portfolio and other noncore assets. This has been labeled as the ‘bad bank’. Dexia is also expected to sell of assets including its investment management business. In Spain the government has taken over, recapitalized or restructured more than a dozen local banks that were exposed to the country’s real estate market.

Tuesday saw markets whipsaw and finally close up as the above chart shows. Gold finished down for the day-

Palin announced late last Wednesday she would Not run for President. There’s more money in being a Kingmaker…

Protestors in Wall Street demanded jobs, showed support for the President, end to policies that serve only the wealthiest, demanded responsibility attached to those CEOs that created the global depression, a jobs creation program and restore the massive cuts to education, health care and social services that have battered New Yorkers ( and I would assume other citizens). Why did the news refuse to show this protest until it was 2 weeks old? As an aging hippie I love the smell of tear-gas in the morning…

Another Depression? Bring ‘er on! The WSJ CFO Report said that, ‘The massive hoards of cash that American Companies have accumulated over the past 2 years as they waited for signs of s solid rebound might allow them to escape the worst impact of a massive contraction.’ Junk bonds, those holdings of company borrowings that are not investment grade, have not defaulted in numbers that would indicate a massive corporate capitulation. Only 2% default rate. Many companies have also paid down their debt as as example Ford Motor. The average industry default in junk bonds average 4%. Companies will still maintain massive cash hoards going forward as a lesson learned and less likely forgotten for at least several years.

The President’s News Conference Mid-Day Thursday was an opportunity for him to promote his jobs bill. He warned that those that voted against it would have some ‘splaining to do. He said this was a job program that was first suggested by Republicans. Those of that persuasion, however, were of the deny-deny party and you can expect nothing from this Administration or Congress.

Republicans, Wall Streeters and Businesses will sit on their hands until shortly after the election when it is expected a new Administration moves into the White House.

Secretary Geithner was quoted in various sources as saying that our banks not lending is a threat to the economy. No kidding! Anyone over the age of 12 knows that banks loan only when the person doesn’t need it and refuse when you do. It’s a law- somewhere.

SPDR University – The State Street SPDR ETFs are a comprehensive fund family and send to me the occasional note about current economic and investment conditions. This latest is on emerging markets, which lately have been under some scrutiny. Boiled down there is no immediate bubble in emerging markets but problems in Europe and the U.S. equity markets may create a shift in allocations toward ‘stretched’ emerging market valuations.

Steve Jobs left Apple in great shape! After his death shares did move down slightly but held their ground. Jobs, called The Edison of our generation, lead us into a new world with his innovative technical vision. Steve Wozniak, Job’s garage partner, said he wouldn’t be surprised if Apple continued on its path with a backlog of ideas from Jobs. The company has $76 billion in cash, a dominant position in Smartphone and tablet markets, technology in cloud computing along with delivery of software and computing power over the Internet. Analysts at Sterne Age noted that they were buyers of Apple on any weakness. Mr.. Wu said they have a $500 target on Apple shares.

Stocks gained Thursday- gold up $6.00- oil off .32 cents.

MarketWatch J.C. Parets wrote about the Market, ‘Maybe Not The Bottom but potentially the near term low is near.’

Funny thing about oil….will it fall to $50 or jump to $100? Experts see it moving to $100 before it’ll ever see $50. The reasons, according to Myra P Saefong, growing demand in emerging markets, little spare production, Middle-East and Africa tensions- all point to higher oil in the near term. At some point investors may realize the world economies are not as bad as some fear and the price of oil will move to $90-$100 a barrel. This is called the ‘Not Getting Worse’ Trade, according to Mickey Cargile, managing partner at Cargile Investment Management.

30-year Mortgages fall under 4%! According to Freddie Mac rates fell to 3.94%, a new record. In other news – personal spending increased while personal income fell by 0.1%

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Experts report the U.S. needs 150,000 new jobs per month just to stay even with 9% unemployment. September jobs report boosted early morning markets on Friday as jobs numbers came in as better than expected. But- the markets sold off as the numbers indicated that those numbers included 45000 Verizon workers coming back from strike. Friday’s stock market fell slightly except for oil. Gold closed $1642, off its feed by $11.

Sprint- price collapsed Friday as the company reported they may seek additional capital. The estimated price to sell and service the venerated iPhone estimated to be about $400 per unit. Morningstar has reversed its opinion on the stock saying they cannot recommend the purchase. There is some serious issues in the Board Room that investors are just getting a peek at.

Tight Trading Range: You don’t need to be a genius to figure that stocks continue to trade in a tight range between Bear and Bull markets- never getting too low or too high that they cannot be brought back down in a sell-off or up in a buying frenzy. Smart Money reported on some of the world’s biggest companies being treated as Dead Money. Included in the list were Microsoft, Pfizer, Wal-Mart, TimeWarner, GE and Ford Motor. Companies that are owned by millions but their stock price goes nowhere even though they are and have been earning machines.

Shopping for recession proof stocks? WallStreet.com posted a list in the most recent blog. Included in their list: Coca-Cola, McDonalds, General Mills, Altria, Johnson & Johnson and Proctor and Gamble.

The Rich continue to spend even as markets tank, according to a new report at Bloomberg.com. In the past the affluent spent according to the stock market but no more. When the Depression hit three years ago luxury sales plummeted by 9% but today luxury may be the shopping leader for 2011. Younger affluents were more apt to buy for bragging rights.

Paul McCartney 69 married New England trucking heiress last weekend. John Lennon would have been 71!!!! last Sunday. And Ringo still married to Barbara Bach. You tell me which is the most amazing.

Finally –2 banks closed Friday according to WSJ; one in Minnesota and another in Missouri. Since this summer the pace of banks failing has picked up slightly. To date the total banks closed in 2o11 is at 76.

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