Stock Market Today
If This Stock Doubles, Thank North Korea
When I was growing up, my Dad used to tell me that "things never get as bad as you think they could."
But he also always counseled me to never take a risky situation for granted, and to always be prepared.
With the flurry of menacing threats coming out of North Korea lately, I'd call that timely advice these days.
Of course, bellicose rhetoric from the Democratic People's Republic of North Korea (DPRK) is really nothing new. Pyongyang has repeatedly threatened to strike at "the heart" of the United States. And a propaganda poster that's popular in that country shows a shredded American flag and an exploding Capitol Hill dome being struck by additional North Korean missiles.
But I have to tell you, the threats all took on an entirely different tone last week as the U.N. Security Council pushed for brawny sanctions. The hyper-militant North Korea actually threatened to launch a "pre-emptive" nuclear strike against the United States – and anyone else it views as an "aggressor."
In a statement carried by the Korean Central News Agency (KCNA), a North Korea foreign ministry spokesman said "now that the U.S. is set to light a fuse for a nuclear war, (our) revolutionary armed forces… will exercise the right to a pre-emptive nuclear attack to destroy the strongholds of the aggressors."
To top it all off, that spokesman also warned that a second Korean War was now "unavoidable."
Here's why you should be more than a little bit concerned…
Best Stocks to Buy to Play this Energy Sector Reversal
The Canadian oil and gas industry has endured difficult conditions for the past few years and it is more than reflected in the share price of leading producers in that country.
It appears, however, we may have reached a point where a turnaround is imminent and investors can reap the rewards of this reversal if they know the best stocks to buy.
The problems facing Canadian energy companies have included a pricing differential in favor of the rest of the world, as well as roadblocks in getting their products to the marketplace.
Attempts to develop non-U.S. markets, build new pipelines and increase refining capacity have been met with strong opposition from environmental groups in Canada. Technological advances like fracking in countries like the United States have provided stiff competition for traditional methods and are far cheaper than oil sands projects that are a large part of the Canadian energy landscape.
There is a good chance that many Canadian oil and gas producers have reached what legendary investor John Templeton used to call the point of maximum pessimism.
But Canada is starting to take action to reignite the industry.
Five Reasons the Dow's New Highs Are "Bull-o-ney" and What to Do About It
While many investors want to celebrate the Dow hitting seven straight new all-time highs, things are not exactly as they appear.
Today I want to talk about why the hoopla surrounding the Dow is misplaced and what that means for your money. Then, I want to offer a few thoughts on what's next for the markets.
Let's start with the problems behind the Dow's numbers. There are a few things you should know:
1. The Dow Jones Industrial Average is made up of just 30 stocks representing approximately 19.66% of the total market capitalization of the NYSE and Nasdaq, combined.
Despite the fanfare, this is hardly representative of the much larger picture, which is why I encourage investors to track the far broader and much more indicative S&P 500 instead.
2. The Dow is not inflation adjusted, so comparing it to previous price levels is like comparing oranges to bananas at best.
In fact, the Dow remains approximately 10% below its all-time inflation-adjusted high and would need to top 15,731.54 to really qualify for the record books, according to CNBC.
3. The Dow is price weighted, so big companies artificially distort the rise.
Take Microsoft Corporation (NasdaqGS: MSFT) and International Business Machines Corporation (NYSE: IBM), for example. The former is trading at $27.80, while the latter is trading at $209.14. According to the Dow methodology, this means that IBM has roughly 6.6 times the impact that MSFT does despite the fact that both companies share a market cap of approximately $233 billion.
4. The movement in the Dow doesn't actually reflect consumers who feel poorer.
Average inflation-adjusted private sector earnings have been essentially flat for the last five years, and median U.S. household income continues to drop. It's off 3.6% in January alone. Unemployment remains chronically high and inflation is hardly under control, as Team Bernanke asserts.
The last time the Dow was at these levels, regular gas averaged $2.75 a gallon. Now it's $3.73. U.S. debt as a percentage of GDP was just under 40%. Now it's nearly 75%. Consumer confidence was 99.5. Today it's 69.6.
Further, 70% of Americans reported adjusting their spending plans to cope with the 2% payroll tax hike that came into effect January 1st, 2013.
5. The Fed's meddling is creating artificially low interest rates and false liquidity.
Both are creating an updraft sustained by nothing more than an addiction to cheap money.
Speaking of which, the Fed is still pumping $85 billion a month into the economy on top of the $2 trillion it's already spent. There's a huge disconnect between the markets and the economy. The former is pulling ahead while the latter has more holes in it than Swiss cheese.
Ergo…despite being one of the most watched, commented upon and observed indexes in the world, the Dow is basically irrelevant.
What You Need to Know About Investing in Graphene
Turns out you aren't the only ones who want to know more about this exciting new field. My good friend and colleague, William Patalon III, decided to interview me for his excellent advisory service, Private Briefing.
Since this is becoming such a popular topic for investors these days, I thought I would share the full interview with you today. It's a comprehensive look at the forces driving this sector.
And it contains some background material about me that you probably don't already know.
Here's the Private Briefing interview. I hope you enjoy it…
Three Safe Stocks to Buy in a High-Flying Market
Even though the Dow Jones Industrial Average has reached record highs, investing hasn't got any easier. When the markets make a major move higher, investors always run the risk of buying at the top.
It's called chasing momentum and it can be damaging to your portfolio.
That's what happened to Apple (Nasdaq: AAPL) shareholders who jumped in at $700 only to watch as the price later dropped to less than $420/share. With little change in the company's outlook, Apple investors who bought near the peak managed to lose 40% in a bull market.
But the truth is you don't have to chase the market. There is a safer, and in the long run, more lucrative approach.
The stocks to buy are what I call "heirloom stocks."
These are stocks you buy, hold and watch them grow-steady earners you can rely on to fund a growing prosperity in retirement, or leave to your grandchildren knowing that the expenses of their lives will be safely covered.
Stocks to Buy: Time to Pull the Trigger on These Three Winners
U.S. gun sales are at an all-time high. Ammo is flying off store shelves as well.
And that bodes well for companies in the firearms industry, putting the three mentioned below on many investors' "stocks to buy" list.
Fact is, demand for guns and ammo over the past few months is breaking all records. Just take a look at statistics compiled by the FBI's National Instant Criminal Background Check System (NICS).
In February, NCIS recorded 2,309,393 background checks – 32% higher than February 2012. December 2012 saw the most background checks in any month in U.S. history, when nearly 2.8 million background checks were performed.
Altogether, the FBI recorded more than 16.8 million background checks for gun purchases in 2012, the highest number since they began publishing the data in 1998.
What's more, the actual number of weapons sold could be even higher because customers can purchase multiple guns for each check, USA Today reports.
In fact, demand is so high, the companies that make these products are having a hard time keeping up.
Dale Raby, manager at Gus's Guns shops in Green Bay, WI, told The New York Times his inventory of guns and ammunition was almost wiped out, especially AR-15 military assault rifles.
"I almost had fistfights over…that type of gun," Raby said.
"If I had 1,000 AR-15s I could sell them in a week," Jack Smith, an independent gun dealer in Des Moines told the Times.
Around the country, many guns are simply out of stock and prices are skyrocketing.
Why Recession 2013 Has Already Begun and What to Do About It
Pay no attention to the new market highs or the cheerleading of government officials – recession 2013 is already here.
That's what Lakshman Achuthan, co-founder and chief operations officer for the Economic Cycle Research Institute (ECRI), is saying now.
Achuthan told the Daily Ticker that ECRI believes the U.S. economy has been mired in a "mild recession" since the middle of last year.
And yes, he insists that recession 2013 is already underway despite record highs for the stock market and an obvious lack of the most widely accepted definition of a recession – two consecutive quarters of negative gross domestic product (GDP).
"What we see here … are the hallmarks of a recession," Achuthan wrote in a report on the ECRI Web site. "Separately, we are not seeing signs of an imminent growth upturn that so many claim to see."
- Dumping Apple Stock for Google: How Investors Could Get Burned