Archives for May 2012

May 2012 - Page 3 of 15 - Money Morning - Only the News You Can Profit From

This is the Stock Market to Invest in Now

Rumors are flooding Wall Street that a global economic slowdown is upon us. Europe is headed for a recession and the euro had its worst week in over a year against the dollar. If there is a slowdown, what does this mean for investors – and more importantly, where investors’ should put their money? Money […]

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How To Find the Best Online Broker for You

Internet stock trading has soared in popularity recently – but most investors still are not well versed in how to find the best online broker for their needs.

Finding an online broker may seem easy. Nowadays, all the resources you need are at your fingertips, 24 hours a day, seven days a week. There are many reputable sites that have become household names.

While you may recognize the E*Trade (Nasdaq: ETFC) from the catchy commercials it runs during the Superbowl, you might find you fall short of actually knowing if E*Trade is a good broker for you.

When it comes down to it, selecting an online broker requires some serious thought. Several factors must be weighed, and what is good for your neighbor, brother, or co-worker might not be the best option for you.

These brokers provide a service, but a personal one; it is more akin to choosing a doctor than choosing a restaurant or drycleaner.

Here is a three-step breakdown of what to consider when picking the best online broker for you:

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Germany, Greece and the Game of "Chicken"

Summer unofficially kicks off this weekend, at least here in the U.S., as we celebrate Memorial Day.

Before we even get to the "official" beginning of summer on June 21, sweat will be pouring from every banker's brow on June 17.

That's the day Greeks go back to the polls to basically determine whether or not they want to remain in the Eurozone.

The game of chicken is on.

Germany has basically said to Greece, we aren't going to ease up on the austerity requirements imposed on you so you could get more money from all of us, so, if you think that by electing a left-wing group of groupies who are campaigning on easing your burdens by leaning on us, your fed-up creditors, go lean on Atlantis instead, cause that's where you'll end up… underwater, and lost.

The Greek politicians – at least the lefties throwing curveballs – think there's no way the Germans will let them exit the currency zone, and of course don't want them to exit the European Union.

They are saying to the population, elect us, we'll spit on their boots and they'll bend over to shine them themselves. And, in the end, we the people will prevail.

Don't you just love democracy at work?

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Europe Drives Gold Prices This Week, But Don't Lose Sight of Long-Term

Gold prices managed to eke out a slight gain Friday to move back above the $1,560 a troy ounce mark – but the precious metal has had a less-than-stellar run this week, on track for a 1.9% loss.

In London trading Friday, the spot gold price was up 0.4% at $1,563.71, bouncing from as low as $1,533.41 earlier this week.

The upward move in gold came as the euro rebounded some from two-year lows against the dollar. The euro inched up from early lows against the dollar Friday, although sentiment around the troubled currency remains guarded.

Gold's rise Friday also was attributed to bargain hunting, calmer markets and short covering ahead of the three-day holiday weekend.

This week continues gold's eleven-week downward trend as the state of Greece and the entire Eurozone region has kept world markets on edge and investors jittery.

Worries over Greece exiting the Eurozone prompted heavy selling in the currency this week as the ailing Mediterranean country, operating without a government, faces imminent default.

"Gold's direction seems to be driven more by the level of market risk aversion and the euro currently," BNP Paribas analyst Anne-Laure Tremblay told Reuters. "Market sentiment on gold is fragile at the moment. There have been tentative rebounds, but so far bullish momentum has yet to materialize."

As always, however, there's another side to this story.

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Facebook's (Nasdaq: FB) $16 Billion IPO: The Good, The Bad & The Ugly Truth

Face it, you want it. It seems that everyone wants a piece of the Facebook IPO.

But can you handle the truth? Will the hyped sensationalism be a boon or a boondoggle?

I'm not going to tell you what to do, whether you should buy Facebook sooner rather than later. That's up to you.

However, I will tell you that I won't be buying it right away. But I will be buying it if…

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FLIR Systems (Nasdaq: FLIR): Grow Your Portfolio With The "Eye in the Sky"

Smile…. you're on the 21st century's version of Candid Camera.

Whether you're an Islamic troublemaker in North Waziristan, a rowdy football fan, or a hopeful immigrant trying to slip across the border, the eye in the sky sees everything.

In the halls of power, there's a term for this. It's called the surveillance society. And it is one of the biggest trends inside and outside the military industrial complex.

Also known as ISR – intelligence, surveillance and reconnaissance-it's an outgrowth of more than a decade of war in Iraq and Afghanistan. It's a place where everyone has heard of unmanned aerial vehicles or UAVs.

But while UAVs are an amazing technology in themselves, they aren't very effective unless they can report on what they see -that's the ISR piece of the puzzle.

And that's precisely where a company like FLIR Systems Inc. (Nasdaq: FLIR) comes in. FLIR provides the optics and equipment to make it all happen both in the air and on the ground.

What Analysts are Missing About FLIR Systems

Founded in 1978, FLIR has developed a reputation for building world-class equipment.

And now that these systems have proven themselves in some of the harshest conditions on Earth, the company is expanding to a broad number of other applications in market sectors outside the military.

However, looking at FLIR's chart, it's an understatement to say that this specialty defense imaging stock has been hit hard by the budget cuts and the winding down of our presence in Iraq and Afghanistan.

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High Oil Prices: Worries Escalate Over $200 Oil and $6 Gas

Could new sanctions against Iran spark a crisis that drives oil prices to $200 a barrel?
The leaders of the Group of Eight (G8) economies certainly hope not.

Even still, they recently unveiled plans to tap into global emergency strategic oil reserves — just in case.

Citing their "grave concern" over Iran's nuclear program and the "likelihood of further disruptions in oil sales" G8 leaders put the International Energy Agency (IEA) on standby to tap the reserves at a moment's notice.

"Looking ahead we…stand ready to call upon the IEA to take appropriate action to ensure that the market is fully and timely supplied," said the statement summing up their meeting last weekend.

But the G8 may just be trying to calm the markets before the storm. History shows that tapping into the reserves won't do much to prevent higher prices.

And there's no reason to believe this time will be any different.

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Facebook Stock is Worth $7.50 a Share at Best

Duh on you if you bought the Facebook IPO.

Double duh if you're thinking of buying Facebook stock now that it's fallen to $32 a share and lost $17.16 billion off its initial $104 billion valuation.

The company is only worth about $7.50 a share. And, no. That's not a typo. There is no missing zero or a placeholder.

That's reality. What is ludicrous is that Morgan Stanley and Facebook executives thought the company merited a $104 billion valuation at 100 times earnings.

As my good friend Barry Ritholtz pointed out recently, both Apple (Nasdaq: AAPL) and Google (Nasdaq: GOOG) debuted at about 15 times earnings. Today they trade at 13.6 and 18.2 times earnings and 3.75 and 4.9 times sales respectively.

As I type, Facebook's market cap is $86.84 billion and its price to sales is ridiculously high at 21.01. I think that's way out of line.

So what should the numbers be?

Try this on for size. If we use Google's price to sales ratio of 4.9 (and I am being generous here for discussion purposes), that equals a total market cap of $20.24 billion or 76.68% lower than where it's trading today.

With 2.74 billion shares outstanding, that's equal to only $7.39-$7.50 per share.

No doubt I'll get the evil eye from the Facebook faithful and Morgan Stanley for saying this, but think about it.

Revenue is already slowing and the company does not and cannot possibly dominate the mobile markets that are becoming the preferred channel for millions of people.

Worse, startups are already cannibalizing Facebook's user base as concerns over privacy and who likes who mount.

Companies like General Motors (NYSE: GM) are deciding not to renew their advertising. This is going to hit Facebook to the tune of $10 million a year for the loss of GM alone.

More will undoubtedly head out the door for the same reason, since Facebook friends don't necessarily translate into revenue.

Corporate buyers are beginning to figure out that advertising on Facebook is simply not cost effective versus other media alternatives – gasp – including good old fashioned television and radio advertising, billboards and tradeshows.

Facebook Stock: At the Mercy of the Merely Curious

Many people think this isn't a big deal. They couldn't be more wrong.

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Tech Stocks: Can Meg Whitman Deliver the Next Great Turnaround?

Meg Whitman is aiming to be Hewlett-Packard's Lou Gerstner.

Gerstner was the CEO of International Business Machine (NYSE: IBM) from 1993 until his retirement in 2002, and is widely credited for IBM's turnaround.

How did he save IBM from going out of business and reverse its fortunes?

Well, among other things Gerstner made the difficult decision to lay off more than 100,000 employees shortly after his arrival.

And now Meg Whitman, CEO of Hewlett-Packard (NYSE: HPQ), has taken a page from IBM's playbook.

On Wednesday, Hewlett-Packard announced it would lay off 27,000 employees, or roughly 8% of its worldwide workforce, over the next two years.

HP hopes the layoffs will save the company $3 billion to $3.5 billion and it plans to reinvest those savings in research and development, innovation, and the overall quality and design of products.

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Where Are Oil Prices Headed?

The uncertainty looming around worldwide economies sent oil prices sinking below $90 a barrel yesterday (Wednesday), a level not seen since October of last year.

Benchmark crude slid $1.95 Wednesday to finish the day at $89.90 per barrel.

The decline came on the heels of several weeks of slipping oil, sparked by a plethora of less than stellar economic reports. The concerning data mostly involved Europe's ongoing sovereign debt saga.

Oil gained 0.5% in early afternoon New York trading Thursday, but the reasons for the rally were unclear.

"You don't know if this is just a short-covering rally or the start of a more significant rally," Andy Lebow, an oil analyst with Jefferies, told The Wall Street Journal. Lebow said that progress in the talks between Iran and Western powers about Tehran's nuclear ambitions could have spurred Thursday's price reversal.

If the gain isn't maintained, however, prices could head closer to $85 a barrel.

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