We've already seen the effects of the global currency wars – the so-called "race to the bottom" that's helped send gold to all-time-record highs. And we'll soon see the fallout from the worldwide skirmish over rare-earth supplies, which is certain to impact the high-tech sector. Trust us when we tell you that the next big […]
Archives for November 2010
November 2010 - Page 2 of 9 - Money Morning - Only the News You Can Profit From
If you're looking to navigate the global markets with the lowest losses and the richest gains, education and research can be two of an investor's best tools – but a peak inside the financial minds of billionaires doesn't hurt, either.
Those looking for another weapon to add to their investment arsenal last week had a chance to see where the market's biggest hitters have been hunting for profits – and where they have scored the biggest gains.
Last week marked the third-quarter disclosure of the biggest U.S. investors' holdings, allowing an infrequent glimpse into the stock decisions of some of the most successful money managers.
Warren Buffett, John Paulson and George Soros were some of the biggest-name investors to make Form 13F disclosure filings, which the U.S. Securities and Exchange Commission requires of money managers with holdings in excess of $100 million. Forms are due within 45 days of a quarter's end, with current reports covering the quarter that ended Sept. 30.
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Ireland's debt crisis has destabilized its government and is fueling speculation that the $118 billion (85 billion euros) bailout may not be enough to keep it from spreading to other Eurozone countries including Portugal, Spain and Italy.
Nervous financial markets yesterday (Tuesday) continued to suggest global investors lack confidence that some governments will be able to manage their debt and cast doubt on the European Union's (EU) ability to contain the crisis.
London Timesthe bond markets are comparable to "hearse chasers" who would soon "take Portugal and Spain to task."
EU leaders tried to calm the markets and issued assuring statements that Ireland's bailout will halt contagion in the euro region, but investors focused on Portugal, which hasn't cut government spending and for years has been mired in sluggish economic growth.
As if the stock market hadn't received enough bad news yesterday (Tuesday), reports surfaced that China's banks have nearly hit their lending quotas for the year – meaning the world's fastest growing, and second-largest, economy will cool considerably over the next few months.
However, the news – out of China at least – might not be as bad as it seems.
Political strife resonated throughout the investing world yesterday as North Korea and South Korea exchanged fire over Yeonpyeong Island and Irish Prime Minister Brian Cowen pledged to dissolve that country's government and allow for an early election in January.
Strictly economic headlines weren't any consolation as it was revealed that China's banks are unlikely to extend many new loans as 2010 draws to a close.
"Black Friday" was once known as the day that holiday shoppers rose before dawn to get in line at their favorite retailer for once-a-year discounts.
In recent years, however, Black Friday has morphed into a month-long retailing bacchanalia that's defined by extended in-store hours, Internet-only deals and smartphone-user specials.
The National Retail Federation estimates that 138 million shoppers will hit stores this weekend, and merchants hope that will signal a full-fledged return of reticent U.S. consumers.
After two straight seasons of lackluster holiday sales results, eager retailers used their best efforts to jumpstart this year's holiday shopping season, rolling out more Pre-Black Friday deals than ever before. Electronics specialist Newegg Inc. even held a "Black November" campaign starting after Halloween.
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Stock options are a valuable tool for any investor who wants to increase income, maximize returns and better control risks in his or her stock portfolio. They can be used alone, in combination with other options, or paired with their underlying securities.
Yet few investors make an effort to use – or even understand – options strategies, despite their benefits.
If you're among this group of reluctant option traders, it's probably because you're a victim of what I call "The Options Myth," which goes something like this:
"Options aren't for you. Only really sophisticated and experienced investors should consider options. With options, it's all or nothing; you can lose your entire investment. At least with a good stock you know it's not going to zero. If you're wrong, you've always got a chance for a comeback because you still own something!"
This mantra is chanted to clients by literally thousands of financial professionals around the world – "advisors" who either don't understand options themselves or view them exclusively as ultra-high-risk. Some mainstream brokerage firms – Edward Jones, for example – even refuse to let their account holders trade them.
But the truth is that options really can be for you – and they should be, whether you're a go-for-the-gold speculator, an average investor looking to hedge your portfolio against market pullbacks, or a retiree seeking to get a little extra cash flow from your dividend-paying shares.
As a veteran trader, I have a tendency to look past the day's top headlines. That's why a recent Bloomberg News story – which stated that China sold a net total of 769.2 billion yen ($9.24 billion) worth of Japanese debt in September – really caught my eye.
By itself, this story probably wouldn't be a big deal. But this development is the start of an important new trend in the global currency markets. And the following three factors tell me that we should be taking a close look at why China has decided to dump Japanese debt. For instance:
- Given that the same thing happened in August, September marked the second straight month Beijing has sold more Japanese securities than it purchased.
- This marks the reversal of a seventh-month stretch of China being a net purchaser of Japanese debt.
- The two months of sales nearly wiped out the net surplus of 2.32 trillion yen ($27.86 billion) that China had amassed as a result of seven months of buying Japanese debt.
- Finally, the 2.02 trillion yen ($24.26 billion) worth of Japanese debt that China sold in August was China's single-largest monthly sale of Japan government bonds since 1995, when these statistics first started being recorded.
While there are other conceivable explanations, my take is that China is definitely unloading its yen-denominated holdings, and shifting its investments elsewhere as part of a much bigger reallocation strategy. As investors, this is a trend that we need to track – and to react to.
Let me explain….
Apple Inc. (Nasdaq: AAPL) will escalate the war for smartphone dominance in early 2011 by releasing a new version of its iPhone to run on the popular Verizon Wireless (NYSE: VZ) network, the biggest U.S. carrier by subscribers.
However, the phone won't make it out in time for the Christmas season, as many had hoped.
Apple will be ramping up to mass produce the new touchscreen handset by the end of 2010 and release it in the first quarter of 2011, people familiar with the matter told The Wall Street Journal. While the phone would be similar to the iPhone 4 sold by its current carrier, AT&T (NYSE: T), it would be based on an alternative wireless technology used by Verizon, the people said.
The Verizon iPhone will mark the end of AT&T's agreement with Apple that gave the telecommunications giant exclusive rights to market and sell the handset since 2007, when Apple Chief Executive Steve Jobs introduced the original iPhone.
Verizon has been testing its networks and capacity to handle the heavy data load by iPhone users, seeking to avoid the kind of bad publicity that plagued AT&T after booming sales of data-hungry iPhones crippled its network.
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In the banking crisis we learned that a group of U.S. banking and insurance firms are allegedly "Too Big To Fail." Now the world's largest mining company BHP Billiton Ltd. (NYSE ADR: BHP) has grown so large it is struggling to make meaningful deals, introducing us to another phrase: "Too Big To Grow."
BHP's dilemma is not surprising. Its downside is that, as the largest mining company in the world, it has outgrown its roots. BHP's current management has shown it cannot pull off a major transaction while handling a company of this size.
Its heavy weight becomes an overwhelming force in any sector it applies its resources towards, which has caused the company to have its last three planned mergers stopped by regulation red tape. Nations are not interested in having their prime natural resource company swallowed up and then forgotten about by a mining behemoth.