Archives for March 2012

March 2012 - Page 9 of 12 - Money Morning - Only the News You Can Profit From

Buy, Sell or Hold: The Real Winner in the Yahoo (YHOO) vs Facebook Fight Could Be Augme Technologies (AUGT)

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I love to find asymmetric risk/reward scenarios in the market.

You can do that with a small company which has the ability to unlock a large payday – and I believe I have found one with Augme Technologies Inc. (OTC: AUGT ).

To understand the value of mobile marketing company Augme, first we have to look at what Yahoo! Inc. (Nasdaq: YHOO) has done to Facebook.

Ripples shot through the technology space last week when Yahoo launched an all-out patent assault against Facebook.

Yahoo is demanding billions in licensing fees for the use of its technologies.

Yahoo has asserted claims on patents that include the technical mechanisms in Facebook's ads, privacy controls, newsfeed and messaging service.

In simple terms, Yahoo is getting ready to try and bring Facebook to its knees through legal means.

"Yahoo has a responsibility to its shareholders, employees and other stakeholders to protect its intellectual property," a Yahoo spokesman said in an e-mailed statement. "We must insist that Facebook either enter into a licensing agreement or we will be compelled to move forward unilaterally to protect our rights."

Should Yahoo sue Facebook, it would mark the first major legal battle among technology giants in the social media sphere.

It would indicate a major escalation of patent litigation that has already swept up the smartphone and tablet sectors and high-tech stalwarts such as Apple, Microsoft and Motorola.

Yahoo's patent claims come hot on the heels of Facebook's IPO announcement to raise money that would roughly give them a $100 billion valuation.

This lawsuit threat can only have Facebook's management, its bankers and lawyers rushing to secure some sort of defensive arsenal to fight off this and other pending attacks.

While this battle has captured everyone's attention, what I find more interesting is Yahoo's seemingly blatant hypocrisy.

Yahoo appears to be throwing rocks from its glass house at the neighbors by wanting to make others pay for the unauthorized use of its patented technology.

What Yahoo is seemingly trying to ignore is that it, too, has been accused of the same type of intellectual property theft – and the accuser is Augme Technologies.

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Should Iceland's Next Currency Be the Canadian Loonie or Gold?

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My eyes nearly popped out of my head when I read this headline: "Iceland Considers Adopting Canadian Loonie."

The loonie is otherwise known as the Canadian dollar.

Of course, gold would be a much a better choice as I'll explain later.

But the simple fact that this tiny nation of 330,000 is even thinking about using the Canadian dollar as its currency would have been unheard of just five short years ago.

After all, we live in a world that is literally littered with fiat money. In this world the U.S. dollar has been at the top of the heap.

That the loonie may be Iceland's top choice is just stunning.

But the fallout from the 2008 financial crisis has caused increasing doubt about the long-term health of the greenback.

And with trillions of fresh new Federal Reserve Notes issued since then, it would be hard to call the Fed a friend of the U.S. dollar.

Even the euro has taken its hits. The European banking crisis caused scores of former "euro fans" to bail from that major currency, too.

And it's no wonder.

The massive debt held by the "PIIGS" has compelled the European Central Bank (ECB) and the International Monetary Fund (IMF) to bail out these countries and scores of banks with trillions of euros.

Still, all of this printing is far from over…

Greece vs. Iceland: A Tale of Two Paths

The latest installment in Europe's pathetic financial soap opera was Greece's second bailout (of which there was never really any doubt). This latest rescue totals $170 billion from the European Union, ECB, and the IMF.

The result? Financial repression and riots in Athens that lead to some deaths.

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GOP Candidates 2012: An Investor's Guide

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This year the Republican field is as competitive as I've ever seen. You can make a case for multiple candidates winning the caucuses, and any candidate could be boosted into the thick of the race by a strong finish.

For investors, there are two criteria when looking at presidential candidates: First, how well will a candidate's ideas and personality play in the market and in the U.S. economy? And second, how likely is the candidate to beat President Obama in November?

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Don't Let Mary Schapiro Tread on Your Money Market Funds!

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SEC chairman Mary Schapiro announced last week that she has set her sights on your money market funds.

I'm sorry, but that makes no sense at all.

Losses on money market fund investments have been trivial in the almost 40 years they have existed.

What's more, they haven't added to the tottering instability of global finance. Not one wit.

Her attempt to come down on money market funds is nothing more than crony capitalism at its most unpleasant.

The regulators, who under the Obama administration simply like regulating, are just in cahoots with the big banks, seeking to eliminate their competition.

In this case, what the banks would like to do is simply turn back the clock.

After all, in the 1960s, banks had a very easy life, because interest rates were regulated.

The old adage was "3-6-3" banking – borrow at 3%, lend at 6% and be on the golf course by 3 p.m.!

It was a good deal for the bankers but not such a good deal for those forced to lend to the banks at 3%–especially as inflation rose in the late 1960s to 4%, 5% and higher.

In fact, it was no wonder that when I first opened a U.S. bank account in 1971 that I was rewarded with a full set of bone china! Attracting savings was THAT profitable!

But all of this changed with the establishment of money market funds.

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3D Printing: How "Desktop Factories" Will Create the Next $1 Trillion Industry

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Don't worry if you've never heard of 3D printing. It's so new it's not on many radar screens yet.

But soon everyone will know about it.

Still in its very early stages, 3D printing is destined to have a huge impact on the entire world economy.

These "desktop factories" will one day become a $1 trillion industry-completely changing the traditional factory model forever.

It's what's known as a "disruptive technology."

Here's why…

By the end of this decade, everyone from consumers to big businesses to solo inventors will be able to make their own unique products in just a couple of hours.

Need a special tool?… Or a new spare part?

Soon you will be able to fire up the 3D printer and make one from composite materials.

Indeed, I recently watched a YouTube video of Z Corp. making an adjustable wrench from high-tech compounds. It was a copy made from metal.

Though it weighed less than the original, the "printed" wrench worked just as well and looked every bit as strong.

And let's not gloss over the medical products that can be created by these revolutionary printers. An 83-year-old woman in Europe recently received a new jaw doctors printed with titanium powder.

Medical team members said they made the implant in just a few hours compared with the several days usually required with existing methods.

That's why I say this technology symbolizes the Era of Radical Change. Now, anyone who knows computer basics can make or invent products on the fly.

3D Printing: A New Wave of Innovation

Technically, you don't really "print" a new product, though the process is similar. Rather than putting ink on paper, the system creates the product by adding thin layers of special polymers and some metals.

This is literally "cutting edge" high tech that is destined to become big business.

I believe it is the 21st century equivalent of the laser printer and the dawn of desktop publishing in the 1980s that changed the entire print industry.

But don't take my word for it…

Let's hear from Hewlett-Packard (NYSE: HPQ), the high-tech giant that knows both types of printers extremely well.

The Silicon Valley leader now offers a high-end unit made for professional use. Its DesignJet Color 3D printer reportedly sells for $20,000.

But consider this: 3D printing will soon come to the masses at prices they can afford.

Today, MakerBot sells its Replicator for $1,749. Its users can download free modeling software such as TinkerCAD or Sketchup from Google Inc. (NASDAQ: GOOG) to print their own products.

Small-cap leader 3D Systems (NYSE: DDD) also recently launched the Cube, a competing device that lists for $1,299. A related website, Cubify.com, combines the simplicity of a coloring book with robust digital resources.

The firm's CEO, Abraham N. Reichental, told BBC news that 3D Systems already has 1,000 workers — and nearly as many patents.

Now just think of what will happen when the price of these machines drops to $500….

We're talking mass customization of a wide range of goods, from forks to jewelry to high-tech ski helmets.

When this happens, 3D printing will undoubtedly unleash a whole new wave of innovation.

And for a very simple reason…

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Five Minutes with Fitz: Should You Buy This Stock Market Dip?

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The market's recent 45-day rocket ride was the longest uninterrupted climb without a triple digit decline since 2006 – until Tuesday when the Dow lost 203 points.

The sell-off begs the question: Should you buy the stock market dip?

First things first. The sky isn't falling even though there are a lot of investors who believe the worst after two tough days on Monday and Tuesday.

In fact, if you remember your recent history, we used to eat declines like these for breakfast. Two-hundred-point days were not uncommon. For that matter, neither were 400-point swings only a few years ago.

What investors need to realize is this: The stock market has come a long way in a hurry since establishing panic-driven lows on March 6, 2009.

The S&P 500, for example, has tacked more than 100%. Compared to those gains, Monday and Tuesday's losses are just rounding errors in the big scheme of things.

This means a portfolio worth $500,000 would be worth $1,000,000 today if it had been invested in something as plain vanilla as an S&P 500 Index fund only three years ago.

On that basis alone, I could make the case this is the pullback everybody has been waiting for.

But that's the problem…everybody is waiting on the same thing.

Waiting for a Stock Market Dip

According to various reports, most investors remain on the sidelines for reasons that are as obvious as they are self-evident – worries about debt, politics, jobs and the future dominate nearly every poll.

You can see that if you look at stock market volume.

It's down 50% since the financial crisis began. According to CNBC data, last Friday a mere 3.2 billion shares traded hands on the NYSE. Three years ago, that figure was 7.5 billion on an average day.

This complicates technical analysis because it limits the statistical validity of many analytics that might otherwise be functioning normally.

So what's a technical trader to do?…

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Steak, Hamburger and Dog Food: How the Government Lies About the Real Inflation Rate

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More experts are saying what most Americans have suspected for years – the real inflation rate is much higher than the government is willing to admit.

Officially, the U.S. Bureau of Labor Statistics (BLS) says the inflation rate, or Consumer Price Index (CPI), for 2011 was 3%.

But a report issued last week by the non-profit group American Institute for Economic Research (AIER) says the U.S. inflation rate for 2011 is far higher – 8%.

AIER used criteria based only on common daily expenditures to more accurately reflect how inflation affects consumers. Their index excluded less-frequently purchased items, like automobiles.

Economic consultant John Williams, an outspoken critic of the government's economic statistics, contends things are even worse.

Using the government's old methodology from 1980 – before politicians started to monkey with the formula – he calculates the real inflation rate is north of 10%.

That's more than triple the government's figure.

Among the few in government who see this as a problem is Republican presidential candidate Rep. Ron Paul, R-TX.

"You know this argument that the prices are going up about 2%, nobody believes it," Paul bluntly told U.S. Federal Reserve Chairman Ben Bernanke during a hearing last week. "People on fixed incomes – they're really hurting, the middle class is really hurting because their inflation rate is very much higher than the government tries to tell them and that's why they lose trust in government."

Changes to the Real Inflation Rate

Over the years, the government has made a series of adjustments to how it calculates the CPI, ostensibly to make it more accurate.

However, critics like Williams say the inflation rate formula has been changed to serve political ends.

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How Apple Investors Can Profit from the New iPad

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Apple Inc. (Nasdaq: AAPL) shoveled more coal into its money-making locomotive today (Wednesday) with the official launch of the New iPad.

If the third version of Apple's trend-setting tablet is as big a success as most expect, then owning the company's stock isn't the only way that Apple investors can profit. Many of Apple's suppliers will also reap reward from the New iPad.

The New iPad's marquee features, such as support for 4G LTE networks and the ultra-high resolution Retina display, should help Apple maintain its dominance in the tablet market at least through the end of the year. And if rumors of a 7-inch iPad Mini eventually pan out, Apple will have a cheaper tablet option to appeal to consumers now buying Amazon.com's (Nasdaq: AMZN) $199 Kindle Fire.

A Forrester Research report published yesterday (Tuesday) put the iPad's share of the tablet market at 73%, with no other rival having more than 5%.

Analyst estimates for 2012 iPad sales range from 55 million to 60 million. Apple has sold 55 million iPads since the product's debut in April 2010, winning over not just consumers but multiple markets.

"It's astonishing how fast the product has spread through business, education and health care," Needham & Co. analyst Charles Wolf told USA Today.

Sales of the iPad, along with the iPhone, have pleased Apple investors by pushing stock past $500 a share this year.

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A New Way to Play Apple Stock

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Money Morning's Chief Investment Strategist Keith Fitz-Gerald joined Fox Business' "Varney & Co." to talk about the usual market pattern that follows Apple Inc.'s (Nasdaq: AAPL) product release. With the tech giant expected to release the latest iPad today, watch this clip to hear how Fitz-Gerald would play Apple… Loading the player …

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A Flash Crash, Fat Fingers, and Positioning for a Correction

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Speculation is running rampant about what really happened to the markets last week.

In case you missed it, as Fed Chairman Ben Bernanke was chatting up Congressional clowns last Wednesday morning, Treasury bond prices collapsed in one minute flat, and gold dropped 3.73% in less than an hour, ending $90 an ounce (or 6%) lower.

Was it a "ghost in the machine" flash crash?

Was it a "fat finger" error?

What happened?

Starting at 10:40 a.m. on Wednesday morning, sell orders began cascading into the 10-year Treasury bond pit at the Chicago Merc. The heaviest selling occurred between 10:43 and 10:44, but continued until 10:54.

A massive 80,000 contracts for June delivery were dumped in the pit, followed by another 47,000 contracts. While another 52,000 contracts of five-year note futures were simultaneously dumped.

The price action was so heavy, the 10-year yield rose from 1.94% to 2.01% in a flash.

Over at the gold pit, some 31 tons of gold was sold, rather quickly.

Turns out, it wasn't a fat finger. You know, a fat finger – when someone accidentally types a mistake into a trading computer. Like, maybe they were supposed to type in a sell order for 8,000 contracts, and they hit the zero key one time too many, and they sell 80,000 contracts.

Well, according the Merc, it wasn't a fat finger error. They were all proper trades.

So if it wasn't a fat finger, was it a flash crash caused by some computer programs doing their algo thing and unloading both barrels?

No, that's not likely, either.

The truth is, we still don't know exactly why it happened.

But I'm going to tell you what I think it was…

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