Archives for February 2012

February 2012 - Page 10 of 11 - Money Morning - Only the News You Can Profit From

China's Economy: How to Beat the Coming Crash & Make a Bundle from China in 2012

There's not a day goes by that I don't see some variation of the theme that China is going to crash, or that somehow that nation will blindside us, and that its markets may fall 60%.

This is like saying the U.S. markets were in for a hard landing in March of 2009 after they had fallen more than 50%. Folks who bit into this argument and bailed not only sold out at the worst possible moment. They then added agony to injury by sitting on the sidelines as the markets tore 95.68% higher over the next two years.

People forget that the U.S. stock market – as measured by the Dow Jones Industrial Average using weekly data – fell more than 89% from 1929 to 1932, more than 52% from 1937 to 1942, and more recently experienced a decline of more than 53% from 2008 to 2009 – and that doesn't even account for four 40+% declines beginning in 1901, 1906, 1916, and 1973.

Each was a great buying opportunity, and following those meltdowns, our markets rose more than 371% from 1929 to 1932, more than 222% from 1949 to 1956, more than 128% from 1937 to 1942, and more than 95.68% in just over two years starting in March 2009 – one of the fastest "melt-ups" in market history.

People forget that world markets dropped 40%-80% in 1987. And as legendary investor Jim Rogers noted earlier this month, that was not the end of the secular bull market in stocks, either.

People forget that our nation endured two world wars, a depression, multiple recessions, presidential assassinations, the near complete failure of our food belt, not to mention the deadliest terrorist attacks the world has ever seen, and more.

And guess what? It's still been the best place to invest for the last 100 years. (But that could be about to change. Take a look at the new U.S. dollar report from Money Morning to learn the insidious truth behind America's global depreciation.)

So what if China backs off or slows down?

Click here to continue reading…

Read More…

Options 101: How to Win Big on Toll Brothers (NYSE: TOL) with a Calendar Spread

Last week, I explained how to profit from housing-sector stocks like Home Depot Inc. (NYSE: HD) using a modified option straddle.

Today, we'll look at an alternative options strategy – known as a long-term calendar spread.

This strategy is better suited to stable or trending stocks.

It's particularly appropriate for companies, whose share prices aren't likely to make a major move until the housing recovery picks up more steam.

In this case, I'm talking about a company like the Toll Brothers Inc. (NYSE: TOL).

The key for using a calendar spread strategy on Toll Brothers is the prospect of a slow-appreciation scenario. That's likely, given the news in the housing market isn't always so rosy.

For example, MSNBC reported on Saturday that, in spite of the lowest rates ever and home prices that are down by a third since 2006, mortgages now are much harder to get.

That type of news is the primary reason you probably don't want to buy a stock like Toll Brothers right -especially since it's already up 74% off the October lows.

However, that doesn't mean you can't profit from Toll Brothers using options to create a long-term calendar spread.

How to Structure a Toll Brothers Calendar Spread

Here's how it might be structured, based on prices available early this week:

To continue reading, please click here...

Five Ways to Make 2012 Your Best Year Ever

I hear it everywhere I go. I'll start investing again…

…when the debt problem is fixed.

…when the markets pull back a little.

…when the EU crisis is over.

…when the elections are over.

Chances are you've said some of these same things to yourself.

Yet, waiting is exactly the wrong thing to do. Time is something you never get back.

And when it comes to consistent investment returns, time is the one thing you always have to capitalize on – without fail.

Besides, waiting makes it harder to get back in the game. Ask anybody who missed the S&P 500's 99.53% run up off March 2009 lows that carried things until April 2011.

Or the 87.26% run up through July 2007 following the low set in 2003. Or the 569.25% move from November 1987 (shortly after Black Monday) through January 2000.

No. The way I see it, the thing to do is to begin investing the moment you decide you want to. That way you pique your imagination, your motivation and your returns.

Five Ways to Get Better Results in 2012

Here are five tips to help you get started:

To continue reading, please click here…

To continue reading, please click here...

Robo-Signing is the Tip of the Iceberg for the Banks

What may be good news for delinquent credit card holders may also be really bad news for banks.

It turns out the "robo-signing" of foreclosure affidavits is just the tip of the iceberg.

In what one judge called "robo-testimony," falsely attested-to statements by bank document custodians have been submitted in courts around the country by banks trying to win judgments against delinquent credit card debtors.

Apparently, tens of millions of credit cards issued by banks have not been accompanied by good recordkeeping, either.

Chasing down delinquent borrowers in court requires original credit agreements and accurate payment histories to verify outstanding balances and claims.

As it turns out, banks aren't providing them – either to the courts or to third-party debt collection companies that buy uncollected debts for pennies on the dollar.

As a result of these shoddy practices, judgments already granted to banks could be overturned and they could be sued by state attorney generals or pursued by the Consumer Financial Protection Bureau.

The same banks could even be potentially charged by the Justice Department under the Racketeer Influenced and Corrupt Organizations (RICO) Statutes for selling dubiously documented accounts to debt collection companies.

While some debtors will take comfort in what they read here, investors in banks may want to question how legal issues and regulatory investigations will impact their stocks.

To continue reading, please click here...

Glencore International, Xstrata Could Make the Next Biggest Deal in Global Commodities

Commodities supplier Glencore International (PINK: GLCNF) could be on the cusp of a multibillion-dollar bet on commodities with mining company Xstrata PLC (PINK: XSRAF). Switzerland-based Xstrata announced today (Thursday) that Glencore approached the company for an all-share offer in a "merger of equals." Glencore already owns 34% of Xstrata and wants to buy the remaining […]

Read More…

Dividends Abound in 2012

This year I expect the US economy to beat extremely low expectations. But leveraged and less careful companies will still slip, and commodity prices could swing widely depending on Europe's ongoing sovereign debt crisis. Meanwhile, US government regulation has suddenly become much less predictable, as the Obama administration fires up the Democratic Party base ahead […]

Read More…

Lack of Prosecution of Bank Fraud: Conflict of Interest?

by Guest Author Washington’s Blog Global Economic Intersection Article of the Week Obama’s Department of Justice isn’t prosecuting any big fish.  Indeed, the Obama administration is prosecuting fewer financial crimes than Ronald Reagan, George W. Bush, George H.W. Bush or Bill Clinton. This is true even though the big banks – such as Bank of America, Citigroup, JP Morgan and Wells […]

Read More…

NEWSFLASH: Mitt Romney Has Rich "Friends"

Campaign fund documents show that Mitt Romney is far more dependent on very wealthy donors than any other presidential candidate, making him even more vulnerable to accusations that he's too close to the rich. The former Massachusetts governor has raised just 9% of his campaign funds from small donors – contributions of $200 or less, […]

Read More…

Godzilla Will Come Out of Tokyo Bay Before Japan Rebounds

Let's talk Japan.

Every year some analyst comes out with a variation of the story that Japan is about to rebound.

Usually the argument goes something like this: Japanese markets are impossibly cheap and the central bank will be there to prevent a catastrophe.

Or sometimes there is another variation of the Cinderella story.

Either way, don't hold your breath. Japan posted its first trade deficit since 1980 last year and the big trade surpluses needed to drive the Nikkei back to its glory days are over.

At best, Japan is going to see balanced trade figures or a small surplus in the years ahead. It won't be enough.

If you're not familiar with what a trade deficit is, here's what you need to know: Japan imported $32 billion worth of stuff more than it exported for the first time in 31 years.

Fighting the Demographic Tide

Critics say there are mitigating factors behind the figures and they're right.

Against the backdrop of one of the world's fastest aging populations, one of the lowest birth rates on the planet, a renewed reliance on foreign energy, and a yen that is so expensive that Japanese corporations are offshoring production, it won't be long before the country eventually plows through its savings.

So $32 billion is just the beginning…

In fact, we are more likely to see Godzilla walk out of Tokyo Bay than we are to witness a return to Japan's halcyon days.

Worse, I believe that within the next five years, Japan will long for the good old days when the trade deficit was merely $32 billion, instead of $100 billion, $200 billion or worse.

Not one of the things I've just mentioned – that the critics cite as short-term influences – are anything but continuations of much longer-term trends. Nearly all of them are being driven by Japan's declining population.

You may not know this, but Japan's population is projected to shrink by 30% by 2060. That means the total population will go from 128 million people today to only 87 million people in less than 50 years.

That's hard to imagine since Japan is one of the most densely populated countries on the planet. But the effects are already visible.

In my neighborhood in Kyoto, for example, we see abandoned houses that fall in on themselves after people die and there are no longer any other family members to live there. We see schools that are shut down in the region because there are no kids to attend them.

We're also seeing companies shuttered because there are no markets for their products, including my wife's family kimono business, which closed after 300 years in existence.

Simply put, you just can't grow a population or its stock markets without people.

Japan also has no immigration policy to speak of, so there is no means of replacing the "silvers," or senior workers, who are leaving their productive years behind them.

By 2060 the number of people who are 65 or older is going to double. At the same time, the number of people in the workforce between 15 and 65 is going to shrink to less than 50% of the total population.

By 2050, there will be 75 retirees for every 100 workers. By comparison, in the United States in 2050 there will be about 32 retirees per 100 workers.

You'd think Japan could get "busy" and produce more children but even that's problematic. The country has one of the lowest birthrates on the planet. Many young Japanese simply don't want romance — let alone children.

In fact, many Japanese don't even want sex.

To continue reading, please click here…

To continue reading, please click here...

Buy, Sell or Hold: A Look at Carnival Corp (NYSE: CCL) After the Costa Concordia Tragedy

Carnival Corp. (NYSE: CCL) is the world's largest provider of vacation cruises operating under the names Carnival Cruise Lines, Holland America Line, Princess Cruises, and Seabourn in North America; and AIDA Cruises, Costa Cruises, Cunard, Ibero Cruises, and P&O Cruises in Europe, Australia, and Asia.

As you know, Carnival has been all over the news lately because of the deadly sinking in Italy, when the Costa Concordia suffered one of the largest cruise ship accidents in decades.

Since then, Carnival Corp. shareholders have taken some steep losses. Shares are down nearly 12%.

For investors, that leaves the question of what will happen to Carnival Corp. in the wake of the tragedy.

However, from strictly a business standpoint what investors need to know is that the ship is fully insured and at this stage it is the reinsurance firms that will have to fund the refloating and fixing costs.

So as tragic as the disaster has been, Carnival Corp. will survive.

According to a Carnival Corp. release, "the impact to 2012 earnings for loss of use is expected to be approximately $85-$95 million or $0.11-$0.12 per share."

The larger concern, as management admits in the very next sentence of the release, is that "the company anticipates other costs to the business that are not possible to determine at this time." (Full release)

So our problem here in deciding whether to buy, sell, or hold CLL are the after-effects of the accident, such as whether or not people will decide to book vacations on any of Carnival's brands.

More importantly, we won't be able to measure year-over-year comparisons for first quarter bookings until quarter end, and we won't be able to tease the bookings data for quarters two, three, and four for almost a year, when full data will be available.

However, while the company is probably going to be looking at a slower-than-expected year, I believe insurance and the diversity of assets make the Costa Concordia disaster a unique one-off event.

As a result, it's time to "Hold" Carnival Corp. (**).

To continue reading, please click here...