Archives for May 2012

May 2012 - Page 11 of 15 - Money Morning - Only the News You Can Profit From

Investing in Biotech Stocks: The Latest Buyout Candidate

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The biotechnology buyout binge continued this week, driving profits for those investing in biotech stocks.

The sector's latest M&A news picks up a story that began in April, when Human Genome Sciences (Nasdaq: HGSI), the U.S. pioneer of gene-based drug discovery, rebuffed a $2.6 billion bid from Britain's GlaxoSmithKline (NYSE ADR: GSK).

Human Genome argued the unsolicited bid did not reflect the company's inherent value. GSK adamantly insisted its bid, an 81% premium when settled upon on April 18, is full and fair.

UK-based GSK is not taking the rejection sitting down...

How to Trade the VIX: Using the "Fear Gauge" to Hedge Down Markets

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If you don't know already, it's time to learn something all serious investors should know: how to trade the VIX Indicator (VIX).

While most investors are scrambling to figure out whether the market is headed up or down, savvy pros use the VIX both as means of protection and a source of profit.

In fact, Money Morning Capital Waves Strategist Shah Gilani last week alerted his Capital Wave Forecast subscribers to a VIX trade that would add some protection to their portfolios.

"Call me a Nervous Nellie, if you like," said Gilani, "but I'd rather lose out on a hedge than get killed because I didn't have one on when the proverbial shot hit its mark."

That's why knowing how to trade the VIX is so essential.

But before we get into how to trade the VIX, we need to understand what the VIX actually is.

What the VIX Indicator Measures

Most investors think of the VIX simply as a "fear gauge."

But contrary to what most people think, the VIX doesn't measure actual stock market volatility.

In fact, experts view the VIX as possibly one of the best contrarian indicators in the business.

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Mobile Wallet Technology Will Make You Rich

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Your future is calling on your mobile phone, and the ringtone sounds like a cash register.

The proliferation of affordable mobile phones has created a global paradigm shift that will give investors with vision innumerable investment opportunities.

As I discussed in an earlier article, you don't realize it but there's a fortune in your wallet right now. Mobile wallet technology will make you rich.

Let me explain.

Traditional wallets and purses are being replaced with smartphone "mobile wallets" that incorporate cameras, Internet connectivity, thousands of "apps" and increasingly, banking, credit and payment transaction technologies.

Knowing who the winners and losers will be in this world of tomorrow is the stuff investors' dreams are made of.

This report is the first in a series of four articles. Consider it your first reality check. Or better yet, your wake-up call.

From it you'll learn why the world is moving to mobile wallets, how we'll all get there, and when.

More importantly, you'll be primed for making investment decisions on hardware device makers, on network providers, and on what software solutions will be most in demand.

You'll be able to weigh the future of banks and banking, credit and debit card issuers, and their love-hate relationship with powerful non-bank commerce facilitators.

You'll be able to picture how some merchants will profit more than others, and what impact social media will have on commerce and payment schemes.

You'll understand what the singularly most important question is that hangs over our digital future: who will own, control and profit from the data that drives everything.

You will be able to glimpse what the big security issues will be and how to profit from them as well.

You will recognize who the giants are now, who are the up-and-coming giants, and who will be the likely giant killers.

You'll understand the importance of interoperability and what that means to creating economies of scale.

And you will be able to see how an evolving regulatory environment will change fortunes.

Above all, you will be tuned in and abreast of the changing dynamics and investment opportunities in this brave new world.

At its core, it is about change.
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Election 2012: How Ron Paul Plans to Get What He Really Wants

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Texas Rep. Ron Paul knows he can't win the 2012 Republican presidential nomination, but that was only part of his end game.

Sure, winning the nomination would have been a plus, but Ron Paul's strategy for years has been to bring his libertarian, anti-debt, anti-inflation views square into the mainstream of American politics.

In that light, the 2012 election is just a means to an end.

That's why Paul is determined to stay in the presidential primary race until the Republican national convention is held in August.

Rather than create a schism within the Republican Party or mount a third party challenge – a tactic that never works in American politics — Ron Paul wants to infuse his philosophy into the GOP by working within the existing system.

Toward that end, the Paul campaign has stepped up its delegate-collection efforts in recent weeks, taking advantage of often-arcane rules unique to each state's selection process.

Last weekend, Paul won 21 out of 24 delegates in Maine and 22 out of 25 in Nevada. A week earlier Paul won 20 out of the 24 delegates in Minnesota and 20 out of 40 in Missouri.

The sticking point is that convention delegates are bound by party rules to vote according to primary or caucus results on the first ballot. That means many of Paul's hard-won delegates will have to cast their first vote for former governor of Massachusetts Mitt Romney.

But it also means a lot more supporters at the convention than Paul would have had otherwise. And those delegates will be free to vote as they wish on other issues, such as the official party platform.

"We want to have a strong, respectful presence that says 'We are here, we are going to participate, and we are ready to talk about the party platform with you if you take our issues seriously," Ron Paul campaign chairman Jesse Benton recently told Business Insider. "We're going to send a message that the liberty wing of the Republican Party is strong, and that it isn't going anywhere."

The Romney campaign has begun to take notice, sending a top lawyer to the Maine GOP convention, though it did little to stop the Ron Paul juggernaut.

Romney, who still should easily surpass the 1,144 delegates he needs to secure the nomination, may be better served letting the national Republican Party try to rein Paul in while he tries to negotiate for the support of Paul's energized legions after the August convention.

In fact, some sort of deal between the two camps almost certainly is already in the works.

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More Reasons to Avoid Yahoo (Nasdaq: YHOO) Stock

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There's been no shortage of reasons for investors to avoid Yahoo! Inc. (Nasdaq: YHOO) stock this year.

Yahoo, once revered as a web pioneer, has been stunted and dwarfed by those who followed in its footsteps.

The storied Internet content company has been upset by an increasing number of competitors like search engine behemoth Google Inc. (Nasdaq: GOOG) and social networking giant Facebook Inc. (Nasdaq: FB), and been wounded by waning ad sales.

Yahoo also is very late to the game in the battle for the mobile space, currently the biggest area of growth for the industry.

And then there is the question of diminishing revenue, declining earnings and slumping stock price.

Revenue fell by more than a fifth last year. Yahoo's stock price has slipped 17% over the past year, and 50% over the past five.

"Yahoo just can't get its act together," Money Morning tech guru Michael A. Robinson warned in January, naming Yahoo a "tech stock to avoid" in 2012. "While key executives were napping, Google burst on the scene a decade ago and rewrote the rules of web search and advertising. Portals like Yahoo never regained their traction."

As Yahoo's struggles continued, CEO Carol Bartz was recently let go with a phone call in September. In January, former PayPal president Scott Thompson was brought in as Bartz's successor.

And now the latest replacement may soon be replaced himself.

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Romneynomics: What You Can Expect if Mitt Romney Wins the Election

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Yesterday I wrote about what to expect if President Obama wins a second term in office. Today it's Mitt Romney's turn.

I'd like to look at Romneynomics – the policies that are likely headed down the pike if the underdog Mitt Romney wins in November.

As for the horserace, I think it is President Obama's to lose.

But last Friday's weak employment report indicates again that the economy could slow enough to push Romney ahead.

As with an Obama victory, I think the election will be a close one even if Romney emerges the winner. That means the Republicans will not have an overwhelming majority in Congress.

On the other hand, the Republicans might just get the four seats they need to win the Senate; if Romney wins I assume they will accomplish this. That would give them theoretical control of both the presidency and Congress, but with only small majorities.

The Top Priorities of Romneynomics

As with an Obama win, the first order of business will be to sort out the "fiscal cliff" that comes along with expiration of the Bush tax cuts and the automatic expenditure cuts that will also occur at the end of the year.

With Romney set to inhabit the White House, I expect the solution to this to involve genuine spending cuts–perhaps along the lines of the budget presented by Rep. Paul Ryan (R.-WI).

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Asteroid Mining: The New Space Race Could be Worth Trillions

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Many people think the United States has turned its back on the Space Race.

And it certainly looks like our leaders have thrown in the towel…

Two years ago the Obama Administration cancelled plans for another manned moon shot. The thinking goes, it's not prudent to work on extraterrestrial exploration when we've got so many problems right here at home.

Just two weeks ago, the very symbol of our commitment to explore the heavens flew for the last time.

I'm sure I'm not the only person who felt sad watching the space shuttle Discovery take its last "flight" by piggy-backing on top of a Boeing 747.

Now, with history's most-flown spacecraft mothballed in the Smithsonian's National Air and Space Museum, that's the end of the story, right?

Not so fast…

What I call the New Space Race is about to "take off" in a big way.

Front and center in this race is asteroid mining. And you won't believe how much this stuff could be worth.

Here's the math that will blow your mind: A space rock the size of a museum gallery could contain resources worth $100 billion (according to the startup I'm about to tell you about).

And yes, I mean literally digging into asteroids to extract ores and other materials.

Asteroid Mining Could be a $15 Trillion Business

Not long ago, this was the stuff of sci-fi. (It smacks of the 1998 movie Armageddon, in which a team of roughnecks lands on an asteroid on a collision course with Earth in order to blow it out of the sky.)

Today, it's a reality, thanks to advances in three fields – low-cost computing, cheaper rockets, and advanced robotics.

Both private industry and the U.S. government want to extract a wide range of resources from asteroids. They are teeming with resources like iron and nickel. A rock the size of a football stadium contains more platinum than we have mined in all of world history.

Remember, space is a target-rich field.

To date we have discovered some 9,000 of these rocks that pass near Earth's orbit. Of those, about 1,500 are just as easy to get to as the surface of the Moon. Moreover, they have light gravity, meaning spacecraft can land and take off easily.

If we hit pay dirt on all the close asteroids, they would be worth a combined $150 trillion. Don't take my word for it. You can do the math yourself right here.

No doubt, many of those rocks will be dead ends. But if we could tap just 10%, that would total $15 trillion worth of resources. (And if we're being even more conservative, just a 1% return would still equal $1.5 trillion – nearly the value of Canada's entire economy.)

So who's pursuing all this untold wealth?

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Investing in Home Builder Stocks: What You Need to Know

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After years of tumbling share prices, investing in home builder stocks has been a profitable venture over the past few months.

Year to date, the exchange-traded fund for the home building industry, SPDR Home Builder (NYSE: XHB), is up by 26.1%.

It's the same story for individual home builder stocks, too.

Luxury home builder Toll Brothers (NYSE: TOL) has risen 25.9% since the first of the year. The largest home builder by market capitalization, Lennar Corp. (NYSE: LEN), has soared 43.6% in 2012.

So confident are home builders now that Lennar is expanding its corporate headquarters in Miami by 30,000 feet, an increase of one-third in square footage, according to an article in the South Florida Business Journal.

Home builder stocks, however, could be near the end of their steep rise. The housing market remains unstable and has triggered more skepticism in the sector.

Here's what you should consider before investing in home builder stocks.

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Oil Companies: The Search for Unconventional Sources Goes Into the Arctic

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The black gold rush on the roof of the world accelerated on Saturday.

Norway's Statoil ASA (NYSE ADR: STO) signed a massive deal with Russian behemoth Rosneft in a venture that may require more than $100 billion over the next few decades.

Specifically, the company aims to help Rosneft develop untapped oil resources in the Arctic, as Moscow struggles to gain a competitive advantage given declining oil production in Siberia.

It's the third recent oil partnership for Rosneft.

Reuters reports:

"The agreement, signed on Saturday, provided a showcase for president-elect Vladimir Putin, serving out his final days as prime minister before a May 7 inauguration, and Deputy Prime Minister Igor Sechin, in charge of energy and industrial policy.

As a legacy of their time in government, the three deals secure capital and expertise for a push into some of the world's potentially most energy-rich regions."

The deal highlights a number of key issues for both oil companies and Moscow moving forward.

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Facebook IPO Roadshow Continues without Retail Investors - and Zuckerberg

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Facebook Inc. (Nasdaq: FB) launched its roadshow Monday in New York, with planned stops at several prominent U.S. cities before the trip ends.

Spotted sporting his trademark hoodie, 27-year-old CEO and founder Mark Zuckerberg was present at the heavily attended event in NYC.

But on Tuesday, as hundreds herded into Boston's Four Seasons hotel, Zuckerberg was nowhere to be seen.

"It's too bad Zuckerberg wasn't there. It was kind of disappointing," H. Scott Smith, senior equity analyst at Game Greek Capital, told the Boston Herald.

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