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Two Safe Ways to Profit From the "Alibaba Shockwave Effect"

In the mid-1990s, I was fortunate to meet and start working with an Upstate New York money manager named Anthony M. Gallea.

The relationship began when I attended and wrote stories about some of the investment seminars he periodically held for prospective and existing clients. He then became a “source” for some of the investment stories I periodically wrote for Gannett Newspapers. And we ultimately collaborated on a pretty successful book about “Contrarian Investing” that was published by Prentice Hall.

Along the way, Tony shared some pretty important snippets of investing wisdom…

  • Stock Market

  • Is Harry Dent's Stock Market Crash Prediction as Crazy as it Seems? Declining Business Economic forecaster Harry Dent just made another dire prediction, and investors should hope he's wrong.

    Dent, bestselling author and financial newsletter writer, told CNBC Tuesday that he sees a stock market crash in the United States starting in the third quarter of 2013 and continuing for a year and a half.

    Dent said real estate prices and stocks would plummet more than 60% by the end of 2014, or sooner, meaning the Dow Jones Industrial Average would fall below 6,000. He also said the United States would be close to bankruptcy by then.

    Dent cited U.S. demographic shifts and the nation's debt crisis as the main drivers of a crash. He said had it not been for the U.S. Federal Reserve's recent moves to stimulate the economy, the stock market would already have collapsed.

    "We call this the economy in a coma," he said. "Basically, without these trillions of dollars of stimulus, we would be in a downturn, in a depression, because we also have $42 trillion in private debt, the greatest debt bubble in history, and that needs to unwind."

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  • Five Stock Market Charts Bears Have Been Waiting For Bear market edit As the bull market tries to enter its fifth year, many are wondering if it still has legs - but a handful of stock market charts warn there's high risk of a coming sell off.

    In fact, a recent report from Credit Suisse Group AG (NYSE ADR: CS) outlined 10 technical factors that show the market is at its most risk-on level since just before the stock market crash that began in 2007's third quarter.

    "Many of our tactical indicators point to a consolidation phase in the equity markets, in the near-term," Credit Suisse Global Equity Strategist Andrew Garthwaite said in a note to clients.

    For a closer look at this bearish forecast, check out these five stock market charts pointing to a pullback.

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  • Nine Lessons From The Greatest Trader Who Ever Lived Chess battle The stock market has certainly produced its share of heroes and villains over the years. And while villains have been many, the heroes have been few.

    One of the good guys (for me, at least) has always been Jesse L. Livermore. He's considered by many of today's top Wall Street traders to be the greatest trader who ever lived.

    Leaving home at age 14 with no more than five bucks in his pocket, Livermore went on to earn millions on Wall Street back in the days when they still literally read the tape.

    Long or short, it didn't matter to Jesse.

    Instead, he was happy to take whatever the markets gave him because he knew what every good trader knows: Markets never go straight up or straight down.

    In one of Livermore's more famous moves, he made a massive fortune betting against the markets in 1929, earning $100 million in short-selling profits during the crash. In today's dollars, that would be a cool $12.6 billion.

    That's part of the reason why an earlier biography of his life, entitled Reminiscences of a Stock Operator, has been a must-read for experienced traders and beginners alike.

    A gambler and speculator to the core, his insights into human nature and the markets have been widely quoted ever since.

    Here are just a few of his market beating lessons:

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  • The Best and Worst Stocks of 2012 As we prepare to invest in the New Year, we can learn from the five best and worst performing stocks of 2012 in the Standard & Poor's 500 Index.

    While any investor would have loved to know this list a year ago, it's a good guide for 2013. Several of the factors that drove these share prices up and down in 2012 haven't changed.

    The best stocks were led by signs of a recovery in housing, a slight return of consumer confidence, and the U.S. Federal Reserve's unprecedented monetary easing measures.

    "The sector leaders are what one would expect with the [Fed] policy and with continued monetary injections into the economy this year through bond purchases," Peter Jankovskis, co-chief investment officer at Oakbrook Investments LLC, told The Wall Street Journal. "By pumping money into the economy the Fed boosts consumer confidence-and spending-which one would expect to boost consumer and financial shares."

    While the leaders' success was tied to central bank actions, the biggest losers simply stumbled from their lack of innovation, inept management, and failed business models.

    Best Stocks of 2012

    Here are the best performing stocks in the S&P 500 for 2012:

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  • Three Stocks to Buy in Next Year's Most Promising Sectors Whatever 2013 brings for the markets, there will be plenty of quality stocks to buy - if you know where to look.

    Overall, the markets are expected to have another positive year.

    A survey of 10 top financial strategists by Barron's projects the Standard & Poor's 500 will close at 1,562 in 2013, a 10% gain from current levels. (By the way, last year's picks outpaced the broader index by 6%.)

    That would follow modest gains in 2012 of 13.5% for the S&P 500 and 8% for the Dow Jones Industrial Average.

    For next year, Wall Street's top guns predict certain sectors of the market - technology, industrials, and energy - will lead the charge higher. Companies in more defensive sectors like consumer staples, telecoms, and utilities, will be laggards.

    So let's take a closer look at three stocks to buy from among these favored sectors that should be an excellent place for your money in 2013.

    Stocks to Buy in 2013: Cheap Tech

    Tech stocks are hugely profitable and as a group currently carry a forward P/E ratio of about 11.

    That's cheap versus historical levels.

    Tech is also a bellwether for when companies start to invest capital.

    "When we get an upturn in capital expenditures, it will show up in tech first," Barclays' Barry Knapp told Barron's.

    One stock to buy that has a rock solid balance sheet and a mountain of cash is Cisco Systems Inc. (Nasdaq: CSCO).

    Once the world's most valuable company with a market cap of $500 billion, Cisco's shares sank sharply when the tech bubble burst in 2000.

    And the stock is still dirt cheap, trading around $20 a share, roughly 10 times next year's earnings. Plus, the company is sitting on more than $48 billion in cash, worth about $9 a share.

    With a dominant market share of 60%, CSCO is the de facto choice in the switching market.

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  • ICE-NYSE Deal Signals Major Change in Future of Trading Intercontinental Exchange (NYSE: ICE) announced Thursday it will acquire NYSE Euronext (NYSE: NYX) for $8.2 billion in cash and shares. What does it mean?
    Keith Fitz-Gerald weighed in. Read More...
  • Stock Market Today: Biggest Winners and Losers The stock market today rallied for a second session on hopes lawmakers in Washington will ink a fiscal cliff deal before year's end.

    In afternoon trading Tuesday all three major index were sharply higher. The Dow Jones Industrial Average soared some 90 points by 2:30 p.m., the Standard & Poor's 500 Index climbed 11, and the Nasdaq jumped 33. That followed Monday's gains of 100.38 points, 16.78 points and 39.27 points, respectively.

    With few economic releases scheduled for Tuesday, investors' focus was pinned on Washington. House Speaker John Boehner, R-OH, and U.S. President Barack Obama continued to haggle over a fiscal cliff deal, with the president making a counter offer late Monday.

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  • Stock Market Today: U.S. Markets Flat; Focus Shifts to Europe The stock market today opened quietly in the United States as investors prepared for a very busy week ahead.

    Just after the opening bell on Wall Street, all three major indexes were flat.

    As Barron's noted, the average daily volume on the NYSE last week fell to 3.3 billion shares, compared with 5.5 billion that changed hands during the same period in 2009, when we were slowly emerging from the Great Recession.

    The "fiscal cliff," which could drain $607 billion from the U.S. economy through tax increases and spending cuts, dominated U.S. news and moved markets.

    But the fiscal cliff, along with the $16.4 trillion national debt and the growing federal deficit, took a back seat Monday as the focus shifted to Europe.

    Anxious market participants kept a wary eye on Italy after Prime Minister Mario Monti announced he is resigning, citing a loss of support in Parliament. Italian bonds plummeted with the yield on the 10-year rising the most since August.

    French, Belgian and Austrian 10-years dropped to euro-era lows, and Spain's debt also declined.

    Bucking the trend was Greece, where bonds gained after the ailing country pushed further out the deadline for buying back some of its mountainous debt.

    Elwin de Groot, a senior economist at Rabobank Nederland in Utrecht, Netherlands, told Bloomberg News: "We are seeing a selloff but I wouldn't call it a panic yet. The auction this week could be an interesting litmus test for investors. This has also created uncertainty for
    Europe-wide policymaking."

    Italy's deep-rooted economic troubles and political drift have been taken too lightly, a bevy of analysts warned.

    As Nomura Securities' Silvio Peruzzo wrote in a note to clients, "Markets have grown too complacent about Italy, in our view."

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  • Stock Market Today: Gauging the Fiscal Cliff Effect U.S. markets were mixed and relatively quiet Monday as investors digested the weekend news that fiscal cliff talks had failed to lead to a deal - possibly even derailing earlier progress.

    Just before 2 p.m. on Wall Street, the Dow Jones Industrial Average was down 26 points, and the Standard & Poor's 500 Index and Nasdaq were both treading slightly lower.

    On the economic calendar to kick-off the busy week were reports on October construction spending, November manufacturing and auto sales.

    What's Moving the Stock Market Today

    • Manufacturing Data
    Data released Monday from the Institute for Supply Management revealed the U.S. manufacturing sector dipped back into contraction in November. Businesses reined in spending and curbed expansion projects while they anxiously await the looming blows from the fiscal cliff.

    The ISM's manufacturing purchasers' index fell unexpectedly last month to 49.5 from 51.7 in October, marking the lowest reading since July 2009. Forecasts were for a reading of 51.5. A reading above 50 suggests expanding activity. Monday's reports gave no such hints.

    According to economists surveyed by Dow Jones Newswire, demand has slowed in the second half of 2012. The culprit is the imminent fiscal cliff.

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  • With the Fed Out of "Bullets," A Stock Market Crash Will Really Hurt Hang onto your hats. It's getting windy out there. Stuff is blowing all over the place.

    Oh, that's not wind! That's a giant fan.

    Well then, that must be why this "stuff" stinks so bad.

    What stuff?

    How about the Dow Jones Industrial Average falling more than 1,000 points from multi-year highs reached only a few weeks ago?

    Or that the Dow has nosedived 5%, ever since the fateful morning last week when we found out that polls don't mean anything, that Republicans don't have memories like elephants, and that Obamarama is still the game we're playing?

    Or that the Nasdaq - you know, that tech bellwether index that a lot of analysts believe is our economic canary in the coalmine - is down 10.6% (technically in "correction" territory) since reaching its highs back in late September? Or that it's down 5.5% since the elation, I mean election?

    That's not only stinky stuff; it is scary stuff.

    Supposedly the reason the market is going down is that we're nearing the fiscal cliff and may be heading over it. But that outcome doesn't worry me.

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  • Stock Market Today: Why We'll Continue to "Drift Sideways" The stock market today opened higher before falling once again as fiscal cliff concerns continue to weigh on investors' minds.

    • Stocks continue to slide- After Cisco Systems Inc. (Nasdaq: CSCO) reported its fiscal first-quarter earnings the markets started the day positive, but quickly turned red. One week after the election, fiscal cliff concerns continue to mount as the president and Congress meet later this week to hopefully negotiate a deal. So far no progress has been made on the debt reduction talks and until that happens don't expect the markets to change course. "We will continue to drift sideways until we see some progress on the fiscal cliff negotiations," Peter Jankovskis, co-chief investment officer for Oakbrook Investments told Bloomberg News in a phone interview.
    A major reason for the post-election sell-off is the prospect of higher taxes next year, and yesterday U.S. President Barack Obama made it clear his agenda on that issue has not changed.

    • President calls for $1.6 trillion more in revenue- When President Obama meets with congressional leaders on Friday he will ask for double the amount of revenue that was discussed at budget talks in 2011. On Tuesday, the president met with union leaders and other liberal groups and stated he will now seek $1.6 trillion in additional revenue over the next decade. That will be accomplished partially through higher tax rates, something Republicans have not yet said they would agree to. But Republicans have offered to accept extra revenue if Democrats can agree to making structural changes to entitlement programs. "New revenue must be tied to genuine entitlement changes," Senate Minority Leader Mitch McConnell, R-KY, said Tuesday. "Republicans are offering bipartisan solutions and now it's the president's turn. He needs to bring his party to the table." An agreement, which included $800 billion of extra revenue, between House Speaker John Boehner, R-OH, and President Obama failed when the President asked for $1.2 trillion in additional revenue. That deal would have lowered the deficit by $4 trillion over ten years, and now President Obama is seeking $1.6 trillion, a number much higher than Republicans will likely agree to.
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  • What Happens to the Stock Market in an Election Year? With just about six weeks to go until Nov. 6, many investors are wondering how Election 2012 will affect the stock market as a whole and their portfolios in particular.

    There are many theories about what can happen to the stock market following a presidential election - although the performance spread is pretty wide.

    The highest election year return for the Standard & Poor's 500 Index takes us back as far as 1928, when Herbert Hoover beat Al Smith. The S&P 500 returned 43.6%.

    But the heady atmosphere just before the 1929 stock market crash probably had more to do with that high return than Hoover's election-or Smith's loss.

    The lowest return in the 80-year period came in 2008, when now-President Barack Obama beat John McCain. The S&P 500 dropped 37%. Once again, the 2008 financial crisis probably had a greater impact on that result than who won or lost the election.

    So what is likely to happen four years later, with the economy still struggling to recover and the S&P 500 ahead about 15%?

    Let's take a look.

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  • Who Says Money Can't Buy You Love? Not the Banksters Remember Tim Pawlenty, the former two-time Governor of Minnesota?

    Remember when he made a bid for the Presidency this go-round, but bowed out after a poor showing in Iowa?

    Remember that during his brief run he acted like he was a Wall Street critic, admonishing the Street to "get its snout out of the trough?" Remember that?

    Remember that T.P. became national co-chair of Republican presidential candidate Mitt Romney's run for the roses?

    Do you remember that T.P. was a top contender for the V.P. slot that eventually went to Paul Ryan?

    Don't worry if you don't remember any of that stuff about T.P. because none of his past politics matter (he's a Republican don't you know?) now that he has a new job.

    Oh yeah, with less than 45 days before his buddy Mitt faces off against a resurgent incumbent named Obama - you probably don't remember because it just happened a few days ago - T.P. quit the campaign for a new gig.

    You can't blame him. Everybody loves money, and the lure of a reportedly near $2 million salary is mighty enticing. So he took the job.

    Guess what he's up to now?

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  • Stock Market Today: Markets in the Red Ahead of Jackson Hole Here are the major headlines in the stock market today.

    • Consumer spending gains most in five months- Consumer spending rose for the first time in three months, increasing 0.4% in July from June but slightly below expectations of 0.5%. This follows no change in June and a slight drop in May. The gain was the best in five months for consumer activity which accounts for roughly 70% of the economy. Even though it was a good monthly gain, U.S. consumers' purchases advanced at a 1.7% annual rate in the second quarter, the smallest increase in a year. "The quarter is getting off to a decent start," Gus Faucher, a senior economist at PNC Financial Services Group Inc. told Bloomberg News. "The consumer's situation is slowly improving, but the job growth isn't there to support really big gains in future spending."
    • Jobless claims remain unchanged- The number of people filing for initial unemployment claims matched last week's upwardly adjusted figure of 374,000. Economists on average expected this week's initial claims to be 370,000 and the data suggests that hiring is not improving. The unemployment rate, which moved up to 8.3% in July, has been stuck above 8% for more than three years, the first time this has happened since the Great Depression.
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  • Stock Market Today: GDP, Home Sales Fail to Lift Market Here are the major headlines in the stock market today.

    • GDP revised slightly higher in second quarter- Even though U.S. gross domestic product (GDP) was adjusted to 1.7% from 1.5% during the second quarter, the fact remains that it was depressingly low. Since the U.S. officially exited the recession in mid-2009, GDP growth levels have been stagnant and economists do not expect the rest of 2012 to be any different. The U.S. is projected to grow 2.0% in the third quarter and 1.9% in the final three months of the year. The government will issue its third and final estimate of second quarter GDP in several weeks. "It shows slightly better government spending and consumer spending but overall the data suggest the economy stays in slow growth mode and is not likely to change," Peter Cardillo, chief market economist at Rockwell Global Capital in New York told Reuters." This certainly strengthens the hands of the Fed to aid the economy."
    • Gas prices rise 5 cents nationwide- AAA reported that gas prices will be a nickel higher on average when consumers head to the pump Wednesday, sparked by the destruction of Hurricane Isaac. Prices on average are $3.804, the highest level since May. Today's spike is the biggest one-day move since February 2011 when concerns over Libya caused prices to rise. Some states, particularly those in the Midwest who receive most of their oil or gas from the Gulf, saw the largest increases. Ohio had the largest rise with a 13.9 cent increase, followed by a 13.2 cent rise in Indiana and a 12 cent rise in Michigan.
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