Archives for March 2012

March 2012 - Page 6 of 12 - Money Morning - Only the News You Can Profit From

iRobot's (Nasdaq: IRBT) Timing Couldn't Be Better For Investors

iRobot Corp. (Nasdaq: IRBT) made the right decision.

And the Pentagon just proved it.

The small-cap robotics leader knows only too well it needs to increase its private sector sales as America works to cut defense spending.

That's why iRobot Corp. has reorganized to target the health care, retail and security industries.

For investors, the timing couldn't be better.

After all, the Defense Department has announced several new robotics breakthroughs in recent days.

This shows the U.S. military is still completely committed to using robots to win the War of the Future.

But now that American troops have left Iraq, the Pentagon's top brass is pinching pennies like never before.

And yet…it has new robots to brag about.

In a moment, I'll tell you all about them. But first…

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Apple Stock (Nasdaq: AAPL) at $600: Too Far Too Fast?

After Apple Inc. (Nasdaq: AAPL) touched $600, it set off speculation about whether the stock is truly worth $600 a share.

Some consider Apple's parabolic run-up in price as a warning sign of a bubble. In December Apple was still trading under $400.

Others look at the escalating sales growth of such Apple products as the iPhone and iPad and see justification for a $600 stock, a $700 stock, or even higher.

So we at Money Morning thought it would be worth comparing Apple's annual earnings numbers with the rise in its stock price since 2006, the year before the iPhone debuted.

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Tech Stocks to Watch: Cisco (CSCO), Apple (AAPL), Demandware (DWRE)

Tech stocks continued their all-star year yesterday (Thursday) with a Cisco Systems Inc. (Nasdaq: CSCO) deal, a new intraday high for Apple Inc. (Nasdaq: AAPL), and an explosive first-day performance for Demandware Inc. (NYSE: DWRE) moving markets.

The tech-heavy Nasdaq closed up 0.51% to 3,056.37.

Here's why these are the tech stocks to watch today (Friday):

Cisco Systems (CSCO) makes play for video: Cisco Systems Inc. (Nasdaq: CSCO) announced a $4 billion deal with video-software specialist NDS Group Ltd, a small company based outside London.

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It is Deja Vu All Over Again in the Energy Markets

There's been quite a bit of news on whether the government will tap the Strategic Petroleum Reserve (SPR) to combat rising gasoline prices.

I get the feeling I've been here before.

In fact, I wrote about this very topic just three weeks ago. And sure enough, we had conflicting reports on the subject yesterday.

But despite what my wife Marina may think, I don't cause events in the oil markets merely by writing or talking about them.

She remains convinced that when I go on television and discuss higher oil and gas prices, my words provide energy firms the green light to raise them.

The reality is that I just know how politicians think (and panic) when it comes to the energy markets. So please, refrain from shooting the messenger.

Yesterday we also witnessed mixed messages from both politicians and the market.

Crude oil prices initially dove more than $3 per barrel in both London and New York when the story broke that there was a joint U.S.-U.K. agreement to release volume from each country's strategic reserves.

Later in the afternoon, prices shot back up quickly in New York (by that time the market had closed in London) following a White House denial that any such deal was in the works.

Still nobody inside the Beltway is claiming the idea is now off the table.

Was yesterday a trial balloon? Some junior staff member with an itchy dialing finger?

A hasty press release?

All are certainly possibilities.

But the confusion created in the aftermath of the "leak" hides one very simple, inconvenient truth.

There are few, if any, genuine options to offset rising gasoline prices.

Everything we need to do will take a few years to work out.

And it should. But you and I need to continue this conversation.

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Bank Stress Tests and the All-Clear-to-Rally Signal

Earlier this week I repeated that I've been cautiously bullish (too cautious, I also said) since October.

I also told you I was optimistic that all the major indexes would break through the important psychological, headline, and large-round-number resistance levels they started flirting with two weeks ago.

Boy, was that an understatement.

On Tuesday, markets blew the lid off of any impediments in their way.

In fact, the price action was so fast and furious you'd have thought the Federal Reserve said something about keeping interest rates low, or maybe that some good news about bank stress tests had leaked out.

And to think, only one week earlier, markets had a steep fall from grace on account of Fed Chairman Ben Bernanke not saying anything about another round of quantitative easing.

What a difference a week makes.

In case you missed the psychology of the market, it went like this…

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Warren Buffett's Takeover Targets: Grab Shares Now...Get Rich When Berkshire Buys

Iconic investor and Chairman and Chief Executive Officer of Berkshire Hathaway Inc. (NYSE: BRK.A, BRK.B) Warren Buffett announced that his company was eyeing acquisition targets, sending many "follow the guru" investors on a search for the next big takeover.

Berkshire's cash rose to a three-year high of $38.2 billion and Buffett said the firm was on the prowl for new buyouts.

"We will need more good performance from our current businesses and more major acquisitions," wrote Buffett. "We're prepared. Our elephant gun has been reloaded, and my trigger finger is itchy."

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Forget About the Trade Deficit, Now is The Time to Invest in China

You may have heard that China just posted the biggest trade deficit figures in over a decade .

Naturally, this caused the usual suspects who have been waiting – some would say hoping – for a Chinese crash to jump up and down with excitement.

But not so fast guys… one set of figures doesn't tell the entire story.

The truth is the $31.5 billion trade deficit is actually a sign that things inside China are growing and that imports are becoming a more viable part of China's future than ever before.

It's exactly as I've been telling Money Morning readers for several years now.

Up some 39.6% year-over-year, the numbers are far ahead of expectations and a good deal higher than the 15.3% contraction China experienced in January.

True, exports climbed at only 15.3% versus the 18.4% expected rate, but that's still plenty positive at a time when the so-called developed world is on track for overall growth of 1.3% according to The Conference Board.

Get used to it.

As China's wealth rises and its internal consumption strengthens, imports are going to decouple from exports and deficits like these will be the norm.

If anything, these numbers reinforce the notion that investors should be actively looking to China and be accumulating Chinese investments.

What Smart Investors Recognize about China

What's changed?

For starters, how China processes its imports. It used to be that the majority of stuff we sold them was fashioned into exportable goods that came boomeranging back to our shores as finished products.

In other words, we sold China handles and steel and they sold us shovels.

Maybe I'm exaggerating, but not by much. Today, more of China's imports now go straight to domestic consumption than we've ever seen before.

What's happening is not magic. There is no rocket science. No hocus pocus.

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"Jerry Maguire" Waves Goodbye to Goldman Sachs (NYSE: GS) and its Muppets

By now you've heard about Greg Smith.

He's the former executive director of Goldman Sachs (NYSE: GS) who pulled a Jerry Maguire on Wednesday while resigning from the illustrious Vampire Squid.

In his New York Times op-ed piece, otherwise known as the scorched-earth letter, Mr. Smith explained that he resigned from Goldman because he could no longer abide by the firm's culture of ripping-off clients to line their own pockets.

The blunt frontal assault on the firm he once revered was a career move. What kind of career move remains to be seen.

But before I get into what really goes on behind Wall Street's velvet ropes and what Mr. Smith's pronouncements about Goldman's culture says about Goldman, let me say this about his future employment prospects.

I'd come out of retirement and start a new hedge fund if Mr. Smith would come on board.

In fact, after hearing all the hoopla about how he has burned any and all bridges he might have had as a Goldman alum and how he'll never work on The Street again, I can't help but laugh.

And I'm not the only one.

Bill Singer, a noted New York securities attorney who's not shy about speaking his mind openly and honestly, said to me, "Seriously, if the guy has as little as a $10 million book of business there'll be people all over him to come on-board. Not only that, but there are a lot of firms that would want to throw this in Goldman's face by hiring the guy."

Greg Smith's Jerry Maguire-like moment might just be the best career move he's ever made.

And I'm serious; I think he'd be a great addition to my new hedge fund operation. What do you say Greg?

Nothing New About Goldman Sachs

One thing is for certain: as biting as Smith's commentary was on Goldman Sachs, there were no new revelations about how the firm operates.

The bottom line about Goldman, according to Smith's op-ed piece, is that "people [at Goldman] push the envelope and pitch lucrative and complicated products to clients even if they are not the simplest investments or the ones most directly aligned with the client's goals. Absolutely. Every day, in fact."

Like I said, Smith's not delivering any revelations. It's not an insight into just Goldman, either. This mantra is essentially the Street Creed.

Wall Street only needs clients to make money for itself.

If you don't understand that, you don't know how the game is played − or how it's won.

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Tech Stocks Soar on "Off the Charts" Demand for Apple Inc.'s (Nasdaq: AAPL) Products

If you're invested in technology stocks, you've had a great ride lately.

With demand for Apple Inc.'s (Nasdaq: AAPL) products soaring, tech stocks will continue to do well.

Tech stocks have posted a whopping 16% return in 2012, the top performing sector in the Standard & Poor's 500 index. By comparison, the broader market has notched just a 9% gain year-to-date (YTD).

"Large-cap technology stocks have exceeded our expectations with better revenues, earnings, margins and cash flows," Michael Sansoterra, a sub-adviser for the Ridgeworth Large Cap Growth Fund, told The Wall Street Journal. "You just can't find that elsewhere in the large-cap growth space."

Tech Stocks Offer Bargains

Even as they march higher, prices for tech stocks are a relative bargain.

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The Bernanke Effect on Gold Prices, Silver Prices Means Time to Buy Metals

Gold prices hit a two-month low Wednesday after the Federal Reserve indicated no new stimulus measures would be issued, and silver prices slumped to a seven-week low.

The metals fell after the Fed, led by Chairman Ben Bernanke, announced a positive outlook on the U.S. economy. The Fed reaffirmed it would hold interest rates near zero through 2014, and failed to mention any more means of stimulus.

Without more Fed steps to stimulate growth, and with more positive U.S. economic data, investors expect the dollar to strengthen which puts downward pressure on gold and silver prices.

But the long-term outlook for gold and silver is the same, and investors should instead take the Bernanke Effect as a key time to buy metals.

"This should be treated as an opportunity to buy, or if you already own but feel you don't own enough, to accumulate," said Money Morning commodities and mining expert Peter Krauth. "These two precious metals remain in a secular bull market and are integral to every investor's portfolio."

The Bernanke Effect on Gold Prices, Silver Prices

After Tuesday's Fed announcement, gold for April delivery fell $51.30, or 3%, to finish at $1,642.90 an ounce. May silver slumped $1.40, or 4.2%, to $32.18 an ounce.

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