Wall Street Archives - Page 9 of 26 - Money Morning - Only the News You Can Profit From
We Warned You U.S. Stocks Could Plunge – Here's the Safety Play You Need to Make Now
U.S. stocks reversed course in the final minutes of trading yesterday (Monday) to push the Dow Jones Industrial Average back over 11,000 – but that still wasn't enough to make a dent in the index's 4.8% loss so far this month.
Europe debt fears and dismal economic news have caused the Dow to fall in five of this month's seven trading sessions, each time by more than 100 points.
We warned you September would be a tough market month – several times.
What's more, we showed you how to protect yourself.
How You Can Beat 'The Street'
I can't tell you how many times during the ugly trading days we've seen in recent weeks that I've heard someone say that the little guy can no longer compete – that he or she can't beat "The Street' – in today's stock market.
In fact, I hear it all the time: Wall Street has rigged the game, has turned Washington into its lapdog, and only wants to separate the retail investor from his or her money.
I guess such defeatist sentiments are understandable – especially on days like Thursday when the Dow Jones Industrial Average plunges more than 419 points. But they're also misguided.
You see, while most retail investors believe that they can't beat The Street because the "little guy" is disadvantaged, I hold just the opposite view. I know you can beat The Street, and beat the Big Boys at their own game, precisely because you are the "little guy."
How do I know this? Simple. I've helped tens of thousands of investors around the world do just that.
So let's deep-six the defeatist attitude and get down to business: The person who can most help your bid to outfox Wall Street is the one who's looking back at you from the mirror every morning. Just remember:
1) The playing field is level – even if you think it's not.
2) Small investors can be more nimble.
3) Professionals face risks that you don't have.
4) A proven portfolio approach can make you steadier than the markets.
5) You need to have the courage to participate to get started.
It's a Better Playing Field Than You Think
The typical personal computer available to retail investors has more power than the entire NASA Apollo Mission profile and the data you can pull off the Internet is truly stunning.
How I Made 52% Off the Last Stock Crisis
Man, what a week, right?
We all watched the world markets take a pretty bad beating. The Dow Jones Industrial Average plunged a horrific 635 points Monday and another 520 points on Wednesday, taking the blue-chip index to a level it hasn't seen since last September.
Markets in Europe and Asia tumbled as well, leaving investors shell-shocked.
It reminds me of how the markets reacted after the 2008 collapse of Lehman Brothers Holdings Inc. (PINK: LEHMQ).
Investors panicked. They dumped nearly everything. Stocks fell 29% in three months. Commodities fell an incredible 47% that autumn.
At the time, you couldn't turn on even the local news without hearing something negative about the markets.
But I'll let you in on a secret: I loved every minute of it.
I made a nice 52% profit in my personal forex account that fall, all thanks to the increased volatility in the markets.
Yes, the very thing that sunk stock and commodity prices caused my forex trades to soar higher and faster than ever.
It wasn't an isolated event, either. There are plenty of ways you can profit from volatile swings in the stock markets with foreign currencies.
Take now, for instance. As of this week, volatility has emerged in the markets with a vengeance. But that's exactly the kind of volatility that rewards traders. In just a moment, I'm going to show you how to use this volatility to your advantage.
Don't Get Suckered by Wall Street's Wimpy Gold Price Forecasts
I was scanning the news wires in search of a particular item late last week when a story caught my eye: It seems that Newmont Mining Corp. (NYSE: NEM), the world's No.2 gold producer, believes that the burgeoning demand from Asia's newly minted middle class will send the yellow metal up to $1,600 this year and even higher in 2011.
The Newmont story reminded me of another news item that I'd read just days before – a news-service poll of analysts that said that the current Wall Street consensus was for gold prices to reach $1,700 an ounce in 2015.
What a joke.
You see, just a few months back, when gold and silver prices seemed like they were jumping every day, Wall Street and the other Big Boys were blitzing us with messages explaining why we "had to" buy gold.
You heard it on the radio. You read it online. You saw it on the nightly news. We were even inundated with those late-night infomercials or "junk-mail" packets that detailed the benefits of those funky "collector coins" (including some that were "individually hand painted," no less!).
Gold was going to $2,500, $5,000 or even $10,000. And only fools weren't in gold – or so they claimed.
But when gold prices stopped running, so did Wall Street's aggressive forecasts. In fact, we've basically seen an about-face – as if the Big Boys are now low-balling their gold price forecasts.
Don't get suckered.
If you buy what Wall Street is selling right now, you'll lose in a big way – twice. You'll miss out on the major profits that will come when gold prices run up to their inevitable new highs. And – perhaps even worse – you'll get left behind and find your buying power eroded in a big way when the inevitable harsh inflationary pressures ultimately take hold.
Death Derivatives: Wall Street's Latest Ill-Advised Maneuver
I just spotted the next global "black swan."
But I think it actually looks like a giant Pteranodon.
I'm talking about so-called "death derivatives."
The Lowdown on "Death Derivatives"
After betting trillions on everything from liar loans to mortgages that never should have been issued in the first place, the big banks are back and they're betting on death – yours and mine.
It seems that Goldman Sachs Group Inc. (NYSE: GS), JPMorgan Chase & Co. (NYSE: JPM), Deutsche Bank AG (NYSE: DB) and others now want to help securitize "longevity risk" through a newly created derivatives market.
I don't know whether to laugh or cry.
Here's the deal. The banks want to collect billions in fees from pension funds and other institutions by issuing insurance that will manage the risks associated with living longer than the financial planners planned.
What Wall Street is proposing is to package up the fees from these instruments into bonds that are then securitized and sold to investors via a secondary marketplace the banks themselves will effectively create – a "death derivatives" market.
You might think this is farfetched, but the idea is actually far enough along that several financial institutions have already created mortality -rate indices that will be used to price and trade these death instruments.
Goldman's Facebook Deal Highlights the Dangers That Wall Street is Creating For Main Street
Goldman Sachs Group Inc.'s (NYSE: GS) $2 billion deal to finance Facebook Inc. combines the worst features of the last two speculative manias – the dot-com bubble of 1999-2000 and the Wall Street financing bubble of 2006-08.
At 25 times revenue and more than 100 times earnings, Goldman's Facebook deal smacks of the "dot-bomb" debacle. And the fact that this financing deal came to pass after a major Wall Street firm effectively drove a truck through two central features of securities regulation is more than a little reminiscent of the investment-banking shenanigans that fed into the global financial crisis.
The fact that history is repeating itself on Wall Street shouldn't surprise us. Nor should the fact that the Wall Street "rent-extraction machine" is once again operating in high gear.
One thing's for certain: One day the bubble will burst; and when that happens, the great bulk of the costs will be borne by ordinary Americans – as was the case back in 2008.
Why Wall Street's Record Performance Spells Danger For Investors
When U.S. taxpayers bailed out Wall Street back in 2008, the consensus was that this
Main-Street-led handout would bring down the curtain on a 25-year stretch of rampant – and too often reckless – speculation.
But that hasn't been the case.
In fact, in some areas, Wall Street deal volume is running at record levels.
In most cases, when an industry, sector or business is humming along and setting all sorts of records, that's very good news. It means profits are high, firms are hiring and shareholders are happy.
But when it's Wall Street setting the records, it can mean there's trouble ahead – lots of trouble. For instance, while overall profitability is down, those bottom-line figures do not determine Wall Street bonuses, which are expected to set a new per capita record. Junk bonds are being issued at double the previous record rate. Merger deals are cooking. And private equity is humming.
Smart investors will take steps to protect themselves from the looming fallout.
Miracle on Wall Street: Will a "Santa Claus Rally" Bring Christmas Cheer to Investors?
Seasonal market indicators are often spotty, but the so-called "Santa Claus rally" has some solid statistical backing.
The Santa Claus rally lacks a concrete definition, but the gist of the theory is that stocks perform well in December – particularly in the period between Christmas and the first days of the New Year.
Indeed, December traditionally has been the best month for U.S. stocks. The Standard & Poor's 500 Index has posted positive returns in December 77% of the time since World War II, compared to 59% for all 12 months.
Stock Market Faces Critical Test This Week
Stocks rose gently like heat waves off a radiator over the past week, as traders guessed, assessed and processed the results of the midterm elections and the Federal Reserve's decision to try to light a fire under the U.S. economy by buying a $75-billion pile of fresh, new Treasury bonds every 30 days for the next eight months.
The major indexes rose 3.5% amid a set of sessions when banks finally found footing, as they were the best performing group, up 1%. Laggards were industrials and utilities, ending flat. Breadth was positive, favoring advancers by 2-1. And the number of new highs swelled to 1,200 while new lows also rose, to 80.