Archives for February 2010

February 2010 - Page 4 of 8 - Money Morning - Only the News You Can Profit From

Investment Strategies: For Market-Beating Profits, Here Are Three Stocks That Aren't on Wall Street's Radar Screen

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When I was an analyst at the uber-contrarian Avalon Research Group, we only initiated coverage on a stock if our opinion went against the consensus, or if the security was barely (or not at all) followed by Wall Street.

For this column, I'm going to focus on the latter – and show you how this seemingly unconventional investment strategy can actually make you a lot of money.

If you want quantifiable proof, consider this nice bit of research from Cem Demiroglu at Koc University in Turkey, and Michael Ryngaert at the University of Florida: In 2008, they conducted a study that showed that stocks without any analyst coverage experienced a 4.82% higher return than their peers after coverage initiation.

The lesson here is simple.

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Top 5 Shorts

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75% of the world's economic activity occurs outside the U.S. In this Fox Business interview, Money Morning's Chief Investment Strategist Keith Fitz-Gerald discusses stock investing in 2010 and focuses on the best emerging markets opportunities. For more specific recommendations, check out The Money Map Report, the vibrant advisory service from Keith and the rest of […]

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Toyota Recall Messages Lost in Translation

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On the face of it, Toyota Motor Corp.'s (NYSE ADR: TM) recall of more than 8 million vehicles appears to be a serious-yet-simple matter of a carmaker facing up to a long list of manufacturing errors. But an in-depth examination of the case reveals a much deeper cultural disconnect.

Like two people from two distinctly different cultures who find themselves locked in an uneasy marriage, the U.S. consumer and Toyota management are suffering from a failure to communicate.

And unless Toyota very quickly makes an all-out effort to close the communications gap, the Japan-based carmaker could find itself relegated to also-ran status, says Keith Fitz-Gerald, a recognized expert on Asian business who is also the chief investment strategist for Money Morning and The Money Map Report.

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Europe-China Connection Could Rattle Stocks

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I was watching the Asia Edge show on Bloomberg television Wednesday night when the lovely and smart Susan Li broke in breathlessly on her guest with news about China's consumer inflation numbers. Inflation was reported up just a touch in January, which was considered good news because if it was higher it would have made Chinese banking authorities more anxious to clamp down on interest rates and if it was lower it would have raised the awful specter of deflation.

The Shanghai stock market ended a fraction higher, so it was a bit anticlimactic. But the key thing to know is that the Chinese market still appears to be in a downtrend and that bodes ill for the rest of the emerging markets. The 50-day moving average of iShares FTSE/Xinhua China 25 Index (NYSE: FXI) has turned emphatically negative, as has the slightly longer 100-day average. The index fund also is already beneath its 200-day average, which tends to distinguish bull cycles from bear cycles.

Read more about the Europe-China connection...

Buy, Sell or Hold: Buying Into Brazil by Betting on Vale (NYSE: VALE)

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On Oct. 27, 2008, I strongly recommended that Money Morning readers invest in the Brazilian stock market through the iShares MSCI Brazil Index Fund (NYSE: EWZ).

It was a momentous decision. The U.S. economy and the global financial system seemed to be coming to a precipitous end.

The day before Money Morning published my lengthy analysis and recommendation, The New York Times published an editorial by the newly anointed economics Nobel laureate Paul Krugman, entitled "The Widening Gyre." Krugman in that editorial criticized those of us who believed emerging economies would decouple from the financial melee that was wrought by the over-leveraged and imbalanced developed economies.

"The really shocking thing, however, is the way the crisis is spreading to emerging markets – countries like Russia, Korea and Brazil," he wrote. And he derided the notion of "the supposed ability of emerging market economies to keep growing even if the United States fell into recession…. Now the emerging markets are in big trouble."

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How to Profit as Wall Street Insiders Push Oil Prices Skyward

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Most forecasts are calling for oil to edge up slowly over the next year. Or, that's what Wall Street wants you to believe anyway.The big Wall Street firms control millions of barrels of oil and can direct their clients' money into oil. Which way do you think they want oil to go? Find out how Wall Street can manipulate oil prices… and the one move to make now to profit right alongside the "big boys."

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It's Time For "Banks" to Stop High-Risk Trading

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When members of the Senate Banking Committee recently asked Paul A. Volcker how regulators would identify banks engaged in excessive, high-risk trading, the former U.S. Federal Reserve chairman quipped:  "It's like pornography – you know it when you see it."

Volcker wants to make it illegal for banks to engage in such high-risk activities as "proprietary trading" – when an institution trades for its own accounts, as opposed to making trades for customer accounts. But as Volcker's comment illustrates, the proposal – known as "Volcker's Rule" – the whole concept of high-risk trading is pretty hazy and hard to define.

Just as hazy is the definition of what now constitutes a bank.

Long gone are the elegant subtleties of form and finesse that once defined the bank. In recent years, the entire concept has been cheapened by the vulgar obviousness of grossly enhanced compensation schemes.

No company better embodies this transformation than Goldman Sachs.

To find out why high-risk trading should be banned, read on…

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Investing Strategies: How to Decode the New Option Symbols That Take Effect Today

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If you're a veteran options trader, you'll find that a major change to the rules of the game takes effect today (Friday). Today was the deadline for quotation systems, order-entry platforms and other electronic programs around the globe to begin referring to option contracts by entirely new identifying symbols.

The old option symbols – simple four- or five-character letter codes that have been in use since the Chicago Board Options Exchange (CBOE) first started trading standardized listed options back in 1973 – are being replaced with new, more-definitive codes containing a combination of up to 22 letters and numbers.

The new symbols are designed to provide a complete description of each individual option – one that can be universally understood by everyone in the markets, and by the data-transmission computers and electronic quotation systems.

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Eurozone Action on Greece Fails to Defuse the Ticking Global "Debt Bomb"

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European leaders said yesterday (Thursday) that they were prepared to take a "determined" action to stave off the worst crisis in the euro currency's 11-year history. But their plan was short on details and is unlikely to totally dispel fears of a possible default by Greece.

European Council President Herman Van Rompuy said assistance for Greece would be forthcoming. But his speech lacked specifics about exactly what form that assistance would take and he offered no timeline for when aid for Greece would be initiated.

The statement seemed to be primarily aimed at reassuring markets that the EU wouldn't allow Greece's ballooning deficit to spark a debt crisis.  It simply ordered Greece to clean up its accounts and gave the International Monetary Fund (IMF) a monitoring role.

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