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September 2011 - Page 2 of 10 - Money Morning - Only the News You Can Profit From

In Today's Crazy Markets, Here's the One Global Region to Invest in Now

Money Morning global investing guru Martin Hutchinson has identified the one global region that he's focusing on as the world's next big profit play.

You'll be stunned to see what he's discovered.

But you'll also be wise to listen.

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'Occupy Wall Street' Protests Wear On for 10th Day

For more than a week now hundreds of citizens have "occupied" Wall Street in an effort to protest the financial system and the coddling of big banks.

Protestors have been present at Zuccotti Park near Wall Street since Sept. 17. The goal is to "flood into lower Manhattan, set up beds, kitchens, peaceful barricades and occupy Wall Street for a few months," according to "Occupy Wall Street," the group behind the show of civil disobedience.

The Wall Street protests started out quietly enough, but gained national media attention when allegations of police brutality surfaced. Several videos on the group's Web site show police officers using pepper spray on passive activists.

In many ways, the protests seem long overdue. Since the economy collapsed in 2008, thousands of protesters have descended on Washington at various times to protest government spending and bailouts. However, the financial firms behind the collapse of the global economy have managed to evade accountability with savvy PR and extensive lobbying efforts.

The Dodd-Frank Financial Reform and Consumer Protection Act did little to rein in large U.S. banks, and many of the largest corporations in America continue to dodge taxes through creative accounting.

Just last month, Rolling Stone reported on malfeasance and corruption at the Securities and Exchange Commission (SEC).

The SEC allegedly destroyed the files of some 18,000 investigations, thus whitewashing the records of countless financial firms and Wall Street players – some of whom played a key role in the financial collapse of 2008.

Protestors in New York carried signs bearing slogans such as: "End Corporate Personhood," and "How Do We End the Deficit? End the War, Tax the Rich."

Many of the protesters are young, not surprisingly. Youth unemployment stands at 18% — double the national rate. Furthermore, it's the younger generations of America that will suffer the most from cuts to federal spending. Social Security, Medicare and other benefits have all been jeopardized by previous generations, who overspent on tax cuts, entitlements, and wars.

"There's a major divide between the rich and the poor in this country," protestor Alexander Holmes, 26, told the New York Times, summing up his frustration. "One in 10 people are unemployed and my vote is nullified by corporate lobbyists."

News and Related Story Links:

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The Stocks Insiders are Buying

Investors looking to glean tips by analyzing the stocks insiders are buying may have had some difficulty recently: A lot of the insiders have disappeared.

Insiders – top executives, directors and large stockholders – are in the best position to judge whether the fortunes of their respective companies are looking bright or dismal. When they like what they see, they buy their company's shares – when they don't, they sell.

These in-the-know investors typically load up on stock when shares are cheap. They bought heavily during the market lows of 1987, 1998 and 2008-2009. They also continued purchases in 2010 after the market had its worst August performance since 2001.

This year had been no different – until now.

"They've stopped buying," Charles Biderman, chief executive officer of investment research firm TrimTabs, told MarketWatch. "Insiders aren't buying this rally. It looks to me that insiders are uncertain as to what's happening."

There are still some stocks insiders favor – but a frighteningly fewer number than just last month.

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Prepare to Profit From the Next Stock Market Crash

The notion of a stock market crash is a terrifying thought for most investors.

But it shouldn't be.
After all, stock market crashes, properly played, can be just as profitable – if not more so – than bull-runs.

Of course, the trick to profiting from stock market crashes is predicting them.

That's where I can help.
You see, a relatively simple analysis shows that the Dow Jones Industrial Average has gotten ahead of itself. More than that, it's giving a pretty clear signal about where the blue-chip benchmark is headed.

Let me explain …

A Market Mismatch

Despite any recent losses the stock market is still extremely high by historical standards.

Remember, it wasn't so long ago – February 1995 – that the Dow first passed 4,000. That was thought to be a pretty high level at the time, as it was almost 50% higher than the 1987 peak.

The Dow closed yesterday (Monday) at 11,043.56, which is inconsistent with economic growth prospects.

That is, nominal gross domestic product (GDP) in the second quarter of 2011 was up 105% from the first quarter of 1995. So if you assume that the stock market over time should follow national output, then a middling level for the Dow today would be about 8,200 – more than 2,500 points below the present level.

And keep in mind that that's a middling level – not a bear market.

If you want an idea of how far the Dow might slump in a bear market, you can take the 777 at which the index stood in August 1982 – before the great bull market began – and inflate it by the progress of GDP since then. If you do that, you get a bear- market target of about 3,600 for the Dow.

Incidentally, a few years ago I met Kevin Hassett, the AEI scholar, who along with James Glassman wrote a book in 1999 called "Dow 36,000: The New Strategy for Profiting From the Coming Rise in the Stock Market." He's a very nice guy. I made a bet with him that the Dow will reach 3,600 before it gets to 36,000. He's teased me about it since saying I lost my chance, but it looks as though I may get him yet.

A Matter of Motivation

The stock market may be significantly higher than it was in 1995, but I assure you our economy is no better off.

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Why Investors Relish Corporate Spin-offs

Corporate spin-offs, though not as sexy as mergers or initial public offerings (IPOs), often reward stockholders of both the parent and offspring companies – if they're patient.

In fact, the stocks of 60% of spin-off companies end up in positive territory one year after a split, according to London-based The Spin-off Report.

"There's value in the [spin-off] company prior to the event that generally gets missed," said Ryan Mendy, Chief Operating Officer of The Spin-off Report.

After some slow years during the market downturn of 2008-2009, corporate spin-off activity has revived.

Globally there have been 46 spin-offs of companies valued at over $250 million this year, according to The Spin-off Report. That compares with 36 last year and just 27 in 2009.

A few of the recently announced major spin-offs include The McGraw Hill Companies Inc. (NYSE: MGH), Tyco International Ltd. (NYSE: TYC), and Kraft Foods Inc. (NYSE: KFT).

Tyco is actually splitting into three pieces, which analysts estimate could boost shareholder value by 60%.

"The idea is to create smaller and more focused businesses," J. Randall Woolridge, finance professor atPenn State University, told USA Today.

Both spin-offs and their parents tend to outperform the market. According to a study done by The Spin-off Report of more than 500 corporate spin-offs between 2000 and 2010, the stocks of 58% of the parents and 60% of the spin-offs were up after one year.

Better yet, they were up significantly. The parent companies climbed more than 17% on average and the spin-offs themselves soared more than 24%.

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HSBC Says Gold Will Average $2,025 Next Year – Here's the Move You Need to Make Now

HSBC Holdings PLC (NYSE ADR: HBC) just predicted that gold prices will likely average $2,025 a troy ounce in 2012 – stating that investor fears about the Eurozone and other regions of the global economy will send them rushing back into such safe-haven holdings as gold. We told you that quite some time ago. As […]

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Housing Market has Changed – Risks are not Recognized

Global Economic Intersection Article of the Week Back in May, I posted an article on Minyanville asserting that all-cash buyers have kept several major housing markets from collapsing. (See All-Cash Buyers Preventing Collapse of Housing Markets.) With new evidence in to support this claim, now is a good time to revisit this important issue and […]

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Five Ways to Profit from Cybersecurity Stocks

No matter which way the market's headed, companies won't skimp on protecting themselves from a growing number of dangerous communications attacks – meaning now's the time for us to profit from cybersecurity stocks.

The number of computer "hackers" who tap into networks for sensitive corporate and personal information has soared as an increasing number of new technology products hit the markets.

These cybercriminals have found ways to assault systems previously thought to be highly secure and sophisticated: The International Monetary Fund, the French Ministry of Finance, and global security company Lockheed Martin Corp. (NYSE: LMT) have all been hacked this year.

Computer industry sources estimate that more than 400 new threats to data security – targeting everything from huge government and corporate processing systems to smartphone applications – are identified every month, according to a CBS News report earlier this month.

What's worse – protection from these threats isn't cheap.

A report released by online security specialist Symantec Corp. (Nasdaq: SYMC) in early September said cybercrime "cost victims $388 billion in time and money" in 2010, "hitting 431 million people in 24 countries."

And these cyberthieves are just getting started.

Cybercrime: A Growing Epidemic

While cloud computing has been a game-changing trend for the computer industry, it has a dangerous – and pricey – side effect. It has increased the avenues hackers can take to access sensitive data.

The booming smartphone industry has also created a vulnerable consumer base. Symantec estimated that 54% of adults who access the Internet via their computers or smartphones have been victims of virus or malware attacks so far in 2011 – a percentage that's almost certain to climb much higher as smartphone users download increasing amounts of data.

And the risks aren't limited to computers and phones, as evidenced by the hacking last April of Sony Corp.'s (NYSE ADR: SNE) PlayStation Network. The attack exposed the personal information of almost 100 million users and forced Sony to shut down the network.

These growing threats have led major players like Apple Inc. (Nasdaq: AAPL) and International Business Machines Corp. (NYSE: IBM) to beef up their security divisions.

Companies without in-house cybersecurity teams have been on the hunt for a good takeover target to bring such expertise on board.

Intel Corp. (Nasdaq: INTC) about a year ago paid $7.68 billion to buy out McAfee Inc., a leading global supplier of computer security software. Digital-product supplier Imation (NYSE: IMN) last week bought the security hardware business of privately held IronKey Corp.

But a slew of companies are solely focused on computer security, and among them are these five hot profit opportunities.

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Buy Coeur d'Alene Mines Corp. (NYSE: CDE) – While Silver's On Sale

Silver prices plummeted 17.7% Friday – their worst one-day loss since 1984 – to finish off a week that saw the "other" precious metal nose-dive 27%.

Silver was hardly the only casualty: Investors pulled money from stocks and metals in favor of cash, U.S. Treasuries and the U.S. dollar.

But here's the key point: This silver pullback won't last forever, and fleeing silver – or top silver stocks like Coeur d'Alene Mines Corp. (NYSE: CDE) – will prove to be a costly mistake.

As ugly as this week has been – and even if it carries over into this week, or even beyond – this will prove to be just a temporary reversal.

And once it's over, silver prices will "break out" and head for much higher highs.

Here's why.

Europe's Banking Crisis and Silver Prices

Weak European banks are driving the current metals price pull back. The European Union (EU) reported Thursday that 16 "fragile" European banks need more capital. They're facing margin calls, much like the U.S. banks were in the fall of 2008.

But someone will come to the banks' rescue.

They'll be fixed when the European Central Bank (ECB) prints fresh batches of money and pushes them into the weakest institutions.

When that money is released into the system and the extra liquidity is sloshing around, silver will soar to new all-time highs – just like when the U.S. government bailed out banks in 2008, and the "white metal" started a tear that's led to gains of 200% to date.

If you avoid the silver market now, you'll miss out on these significant gains, like the ones headed for Coeur d'Alene Mines Corp., the largest U.S.-based silver producer.

You see, this mining giant is about to bring online some of the largest silver mines in the world. The higher silver prices soar, the more money this miner rakes in.

Simply put: Coeur d'Alene Mines shows all the signs of becoming a future silver king, and is a "Buy" before silver prices take off again. (**)

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Investment Safety Strategies: Eight Ways to Survive a Stock Market Crash

After a barrage of bad news — a disappointing move by the U.S. Federal Reserve and a couple of really bad days for the world's key stock markets last week — it would be understandable if you wanted to dump all your investments, stick the cash in a duffel bag, and move to the hills.

As an investor, that would be the biggest mistake you could make, says Money Morning Chief Investment Strategist Keith Fitz-Gerald.

Although Fitz-Gerald is anticipating the whipsaw volatility to continue – and believes U.S. stocks are in for a particularly tough stretch – he's telling investors to stay invested if they can, stick with a solid game plan, and look for opportunities as they develop.

In fact, there are eight "mini-strategies" that investors can take that will let them navigate this near-term volatility, survive even a deep market downturn, and remain in the hunt for wealth-building, long-term investment profits.

"The key is remaining flexible and focused," notes Fitz-Gerald. "R emember, even the strongest trees bend in the wind."

A Hint of What's to Come

U.S. stocks started to skid in earnest Wednesday afternoon, after U.S. Federal Reserve policymakers announced an "Operation Twist" economic-stimulus strategy. The strategy wasn't well-received by investors, and the central bank may have exacerbated investor angst on a worldwide scale by stating that it was worried about global growth.

On Wednesday and Thursday the Dow Jones Industrial Average lost 675 points, to 10,733.83, a 5.91% drop. The Standard & Poor's 500 index fell 72.43 points, to 1,129.56, a 6.03% drop.

Last week's skid was just the latest episode in an erratic market that has seen the Dow zig-zag to a 16.21% loss from its peak of 12,810.54 on April 29. The sell-off spilled over into markets in Asia and Europe, and Fitz-Gerald says the pain is far from over.

He believes that key U.S. stock indices will re-test their lows of March 2009. If you've blotted those details out as a bad dream, we're talking about a stock-market bottom of 6,547.05 for the Dow and 676.53 for the S&P 500.

That put the Dow 7,617 points below its all-time high of 14,164 reached in October 2007 – a 53.78% drop. And the S&P's 56.8% decline knocked the index down 889 points from 1,565.15.

The Safety Strategies to Embrace Now

Worries about a decline of that magnitude could make the market sidelines seem like alluring real estate. Instead of cashing out, though, Fitz-Gerald says investors should follow these eight guidelines, while keeping an eye on their long-term investment goals.

Investors should:

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