Best Investments 2013: Are TARP Warrants the Way to Play Banks?
Believe it or not, the big bank rescue plan known as the Troubled Asset Relief Program (TARP) actually has created some of the best investments for profiting from a banking recovery.
As you may recall, the federal government gave money to troubled banks in order to shore up balance sheets wounded by falling real estate and mortgage security prices. As part of the program, the government took an equity stake in these institutions in the form of preferred stock and equity warrants.
When the funds were repaid, the securities – including the warrants – were auctioned off to the public.
Equity warrants are a form of derivative security that gives the holder the right to buy a stock at a certain price until the expiration date. This is much like a stock option but warrants are usually issued for a much longer period of time. They are usually traded on the exchange and are priced based on the strike price, current interest rates and length of time until expiration.
Most of the TARP warrants still have a long time to go until they expire. The majority last until about 2018.
And now is looking like a good time to buy in to these warrants.
Online Gambling: Will Other States Follow Nevada's Lead?
The card sharks out there can rejoice. Online gambling is now legal – in Nevada.
And other states are watching – and waiting to see what happens. It's a good bet some of them will follow Nevada's lead and legalize online gambling.
Online poker playing had been in a deep freeze in the United States since 2011, when the federal government seized the domains and domestic assets of several online casinos – and millions in player bankrolls. The seizures were attributed to violations of the Unlawful Internet Gambling Enforcement Act of 2006. Tax issues, interstate gambling, fraud and money laundering were all at one time or another given as justification for the seizures.
But the game is poised to make a comeback, at least in Nevada and one company is bringing online poker out of the murky, obscure offshore world.
How to Invest in E-Cigs: The Cigarette of the 21st Century
They look like cigarettes, feel like cigarettes, taste like cigarettes – and, smokers will tell you – satisfy the craving for a smoke.
But electronic cigarettes, or e-cigs, don't have any of the offensive smoke that's so harmful to health. Instead, they feature an odorless vapor in which nicotine is delivered to the user. And they're sometimes allowed in public places where cigarettes are banned.
Studies show e-cigs make smoking healthier for smokers and those around them, while also helping smokers quit.
Plus, e-cigs cost about half as much as regular cigarettes.
Big tobacco continues to place bets that electronic cigarettes can keep the tobacco industry and its annual sales north of $750 billion and growing.
Altria Group Inc. (NYSE: MO), the world's biggest tobacco company and parent company of Philip Morris USA, is the last of the three major U.S. tobacco firms to get into the e-cigs game.
"There is no denying that adult tobacco consumers have shown interest in it," Marty Barrington, Altria's CEO, told investors during an earnings conference call last week.
Thanks to increased health awareness, as well as the introduction of several taxes which have led to the price of packs more than tripling in some cities, cigarette sales began declining over15 years ago and continue to do so, falling 6.2% in the first quarter of 2013.
Even though e-cigs were introduced almost 10 years ago, they are just starting to take off. Sales in the U.S. totaled $500 million in 2012 and are expected to double to $1 billion in 2013.
And a recent study by the Centers for Disease Control and Prevention found that 21% of adults who smoke regular cigarettes had used e-cigs in 2011, up from 10% in 2010.
So, now that e-cigs are growing more popular, what's the best way to invest in them?
This is What Happened With Delcath
Jim Rogers on Investing in Gold 2013
Money Morning Executive Editor William Patalon III recently had a chance to catch up with famed investor Jim Rogers on investing in gold, U.S. stocks, and the best commodities for 2013.
Renowned commodities investor Rogers is concerned about the worldwide economy, but he's not worried about the recent sell off in gold.
In fact, he stands poised to pounce on the yellow metal should it fall further.
The Untold Truth About Solar Stocks
The price of solar energy shares has been spiking, leading to the obvious parallel questions:
Is it sustainable?…Or what prospects exist for the average individual retail investor?
Before we address these questions, it would be best to lay some groundwork.
The increase in solar share prices has been just about across the board. This is most clearly seen in the rise in solar and related exchange traded funds (ETF). Guggenheim Solar (NYSEArca: TAN) has advanced 24.8% this past month, while American Vector Solar Energy ETF (NYSEArca: KWT) is up 15.2%. The iShares S&P Global Clean Energy Index (NasadqGM: ICLN) has improved 11.8%.
However, before you rush out and buy any of these ETFs, consider the longer view.
From December 1, 2012, TAN is down 36%, KWT is off 34.9%, and ICLN is weaker by 10.7%. The recent push up has resulted in some – apparently – better solar plays. Yet the medium-term perspective indicates the run up might not last.
Check Out Who's Hiding $32 Trillion in Offshore Accounts
More than two million emails that shed light on the biggest tax dodge in history – trillions of dollars hidden in offshore accounts – have been uncovered by the British newspaper The Guardian and the Washington, D.C.-based International Consortium of Investigative Journalists (ICIJ).
Some $32 trillion has been hidden in small island banking hubs which host a bevy of trust funds, shell corporations and other tax havens, the Tax Justice Network estimates.
This money is to the financial world what the Higgs boson and dark matter are to particle physics: It's tough to prove it's there, but the universe doesn't make much sense without it. It's just a matter of connecting the money to the people hiding it.
That's been a tall order… until now.
Has Sequestration Saved the U.S. Economy?
There's a Jamaican saying, "the higher the monkey climbs up the tree, the more his butt is exposed."
The point being that the more we rise, the more vulnerable we become.
That has truly come to pass for a pair of superstars of the dismal science. And it could have a big impact on how successfully (or unsuccessfully) we can get the U.S. economy back on the rails.
This is What Happened With Delcath
Shares of Delcath Systems Inc. (Nasdaq: DCTH) fell more than 40% yesterday after U.S. Food and Drug Administration (FDA) staffers said the company's experimental liver-cancer-treatment system would probably require another round of clinical trials. The surprise recommendation was contained in a briefing document that was posted yesterday on the FDA's Web site. The document outlines [...]
The Real Reason Government Is Paying Down the National Debt
After six years of non-stop deficit spending that has added $8.2 trillion to the national debt, the U.S. Treasury has announced that it expects to reduce the country's debt by $35 billion this quarter.
Given that national debt growth has rocketed past $16.7 trillion and is on track to exceed $17 trillion at some point in the fall, a $35 billion reduction is laughably tiny. It's just 0.02% of what we as a nation owe.
And in the very same statement, the Treasury admitted that in the following quarter it expects to be back to borrowing as usual – $223 billion worth, more than six times the amount it plans to pay down this quarter.
So why bother?
"I don't believe in coincidences," said Money Morning Chief Investment Strategist Keith Fitz-Gerald. "Our leaders in Washington on both sides of the aisle are terribly under pressure from the American public right now, and I think this is a very convenient announcement to say, "Hey, we're doing the right thing, keep us all in office for a little while longer.'"
And apart from any political motivations, Fitz-Gerald wonders whether the plan to pay down $35 billion of the national debt can even be considered legitimate, given the way the government borrows money from itself.
"It's like taking blood from the left arm and putting in in the right arm and calling it a transfusion," Fitz-Gerald said.