Archives for March 2012

March 2012 - Page 11 of 12 - Money Morning - Only the News You Can Profit From

Cracking Open the Doors of Perception

by

We're almost there.

Markets are knocking on the doors of some important milestones. The Dow is flirting with 13,000. The Nasdaq Composite is flirting with 3,000. And the S&P 500 is flirting with 1375, a technically important resistance level.

Getting through those doors are important in terms of investor and consumer perception.

Aldous Huxley wrote, "There are things known and things unknown, and in between are the doors of perception."

If you're a fan of Jim Morrison and The Doors, you know Huxley's famous line. It's where The Doors got their name.

If you play in the markets, you know there are knowns and unknowns, and that perception is what drives most investment decisions.

Perception is critical in the trading game because investors want a leg up. They don't want to get in after the facts have moved markets. They want to get in before big moves.

We'd all like to be extraordinarily perceptive and correctly interpret and synthesize all the knowns and the unknowns in our world, and to make prescient calls on every tradable vehicle in existence.

To continue reading, please click here...

Yelp Inc.: (NYSE: YELP) Soars in Early Trading - But Is it a "Buy"?

by

Online review site Yelp Inc. (NYSE: YELP) joined the Internet IPO craze when it started trading today (Friday) – and soared more than 60% in its first hour of trading.

Yelp is one of the largest business search/rating sites. It allows users to search for local businesses and read reviews and opinions written by contributors.

Yelp priced its IPO late Thursday at $15 a share, above analyst expectations of $12 to $14. That gives the U.S. consumer rating site a $900 million value. The company offered 7.1 million shares, raising $106.5 million.

Yelp could be the last Internet IPO until Facebook's long awaited debut later this year. It faces the same concerns as its predecessors – can it live up to its valuation and turn a profit for investors?

To continue reading, please click here...

Technology Stocks: Five Tech Stocks to Avoid This Year

by

After a rocky 2011, tech stocks have gotten a nice bounce this year.

The Nasdaq 100 index is up well above the rise in the Standard & Poor's 500 index.

Strong earnings from Intel Corp. (Nasdaq: INTC), Microsoft Corp. (Nasdaq: MSFT) and International Business Machines Corp. (NYSE: IBM) have drawn attention to tech stocks.

And Apple, Inc (Nasdaq: AAPL) blew past all expectations, making a record $13.06 billion in profits for the quarter.

But while tech stocks may look tempting right now, knowing which tech stocks to avoid will prevent a lot of pain to your portfolio in 2012.

.

So here are five tech stocks you should avoid, at least for now

Buy, Sell or Hold: Buy the Dips in Gold (NYSE: GLD)

by

SPDR Gold Trust (NYSE: GLD) experienced a major pullback on Leap Day this week, dropping almost exactly 100 points on the day.

This happened while the European Central Bank (ECB) offered its second tranche of three-year Long Term Recapitalization Operations (LTRO).

The sell-off in gold on Wednesday is a related sign that liquidity is currently in demand.

But you only have to look at gold's big move up since the start of 2012 to know this stage of the move was unsustainable short-term.

It's why investors shouldn't be surprised by the pullback, and should use this latest move down to increase their long-term exposure to gold.

This dip is a buying event and nothing more.

The pullback in the price of gold also hit equities along with bonds and some other commodities.

Even so, it appears that the ECB has provided enough liquidity to fight off the near-term fears.

Once these funds begin to work their way through the system, I believe they will be bullish for commodity prices.

Over time, banks will eventually put that capital to work, with an eye toward generating a positive rate of return on it. One of those avenues will undoubtedly be gold.

Here's why, along with a bit of background.

To continue to reading, please click here...

The Greek Bailout, the CDS Market, and the End of the World

by

A not-so-funny thing happened on the way to the latest Greek bailout.

The terms and conditions of the bond swap Greece agreed to before getting another handout constitutes a theoretical default – but not a technical default.

That's not funny to CDS holders.

Greece hasn't defaulted (so far), but some of the buyers of credit default swaps, basically insurance policies that pay off if there is a default, claim the terms and conditions of the bond swap constitutes a "credit event" or default.

If it is, they want to get paid.

While on the surface this looks like a fight over the definition of a default, underneath the technicalities, the future of credit default swaps and credit markets is at stake.

In other words, the ongoing Greek tragedy is really becoming a global tragedy of epic proportions.

The Next Act in the Greek Bailout?

Here's the long and short of it.

To continue reading, please click here...

IWM, VB, FYX: Three Ways to Ride the Rally in Small Cap Stocks

by

A recent surge in small cap stocks – companies with a market capitalization of under $1 billion – means individual investors should be placing at least a few of their chips in the small-cap arena.

In fact, the rally has pushed the Russell 2000, an index of 2,000 small cap stocks, to within shouting distance of record highs.

The benchmark has climbed a whopping 34% since its lows in early October and is within 5.8% of its closing high of 865.29 set back in April.

By comparison, the Dow Jones Industrial Average, which earlier this month hit 13,000 for the first time since 2008, is still 7.9% from its record high in October 2007.

Yet many investors haven't been around to enjoy the ride.
Since the end of April 2011, small-cap mutual funds have seen $15.9 billion in outflows, and small-cap exchange-traded funds (ETFs) have seen $4.4 billion withdrawn.

That's probably because large-cap stocks outperformed their smaller brethren posting an 8.5% premium over them from April through September.

According to CBS News, investors have been voting with their feet, yanking money out of small-cap mutual funds in 37 of the 40 weeks since May.

But so far in 2012, that trend has begun to change.

To continue reading, please click here...

Bernanke Testimony to Congress: The World According to the Federal Reserve

by

The U.S. Federal Reserve Chairman Ben Bernanke testimony to Congress ended ahead of schedule today (Thursday) in the Senate, reiterating the same tame message he communicated to the House yesterday: The Fed thinks the economy will grow modestly.

"We don't see at this point that the very severe recession has permanently affected the growth potential of the U.S. economy," Bernanke told the Senate Banking Committee in his twice annual economic testimony to Congress.

Here's a look at what Team Bernanke does see in the economy:

Bernanke Testimony to Congress

No Additional Stimulus

Bernanke said elevated unemployment and subdued inflationary pressures support low interest rates into 2014, but did not give a hint of any additional stimulus measures.

Bernanke also defended previous stimulus measures, which have drawn criticism for not being worth their hefty price tags.

"If you look back at Quantitative Easing 2, so called, in November 2010, concerns at the time were that it would be a high inflationary environment, it would hurt the dollar, it would not have much effect on growth, etcetera," said Bernanke. "But since November 2010, we have had since then the QE2 and the so-called Operation Twist, we have had about 2-1/2 million jobs created, we have seen big gains in stock prices, we have seen big improvements in credit markets, the dollar is about flat, commodity prices excluding oil are not much changed, inflation is doing well in the sense that we are looking for about a 2 percent inflation rate this year."

To continue reading, please click here...

PIMCO Total Return ETF (TRXT): Is Bill Gross a Game Changer for Actively Managed ETFs?

by

Today Bill Gross launched his PIMCO Total Return ETF (NYSE Arca: TRXT), hoping his move into actively managed ETFs will be a "game changer" for a market that's failed to flourish.

Gross manages the world's largest mutual fund at $250 billion. His Total Return Bond Fund has averaged a 6.3% annualized return over the past 10 years. Now he wants to expose more investors to his fund through an actively managed ETF version.

Gross also hopes his TRXT launch will jumpstart actively managed ETFs, which so far have been a largely ignored market.

ETFs typically hold baskets of stocks while trading throughout the day. Active versions combine the skill of selecting securities with the lower fees, market trading and tax advantages of ETFs.

"Small investors don't always have access to active management with a higher yield and a higher total return," said Gross, who is co-chief investment officer at PIMCO. "We are hoping "mom and pop' can do a little bit better than the bond market at a time of historically low yields."

Can Gross and TRXT deliver on the hype?

The PIMCO Total Return ETF (TRXT)

Bill Gross' ETF will have the same investment goals as the mutual fund, but aims to attract smaller investors through some key differences.

First, it's cheaper.

PIMCO will charge 0.55 basis points for the ETF, compared to the 0.9 basis points fee for the mutual fund. That's $5.50 a year for every $1,000 invested.

Not only will it give investors a break in fees, it'll allow them to be exposed to all-star investment performance they normally couldn't afford.

To continue reading, please click here...

"Microchip Medicine" Will Save Millions of Lives

by

A new generation of medical devices is set to have a profound impact on American health – and wealth.

You see, I know from detailed research and analysis that more than 100,000 people in the U.S. die each year from bad reactions to drugs.

That's more than three times as many as those who die from all street drugs, including heroin.

Fortunately, a better way is just on the horizon.

Indeed, new "microchip medicine" technology by itself could save as many as 1 million American lives roughly every decade.

It's proof that you should never throw a good idea away. The two researchers behind this new breakthrough device first thought of it more than 15 years ago.

Now, their tiny product appears headed to produce some big results.

Microchip Medicine Breakthroughs

To reach this breakthrough, the two Massachusetts Institute of Technology (MIT) researchers teamed up with their colleagues at a small biotech firm called MicroCHIPS. The firm is privately held.

But if it ever goes public, you'll want to keep an eye on MicroCHIPS as a potentially winning investment – one that also will benefit millions.

Here's why: A new study showed that doctors can safely implant a small semiconductor into a patient's body.

In turn, doctors can program the microchip to deliver the correct doses of medicine at precisely the right times.

The chips operate wirelessly and can be programmed as needed to change doses. How cool is this?

This particular study involved providing drugs to women who suffer from osteoporosis. But I believe it could be used with dozens of diseases treated with prescription drugs.

But don't take my word for it. Here is what MIT professor Robert Langer had to say.

To continue reading, please click here...