Archives for June 2012

June 2012 - Page 15 of 16 - Money Morning - Only the News You Can Profit From

Why to Buy Dividend Stocks Now

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Before the financial crisis, prudent investors counted on CDs, U.S. Treasuries and savings accounts to provide them with decent interest income for their retirement.

But thanks to Federal Reserve Chairman Ben Bernanke's zero interest rate policy, prudence has become a tough way to fund your golden years.

With few places to find refuge and income, these cautious investors have been forced to look elsewhere-namely at dividend stocks.

Dividends, long used to pad portfolios with income, are no longer a risk-on or a boring way to invest.

Not only do dividends add value, but with a careful selection across several sectors, an investor can build a nice portfolio covering a broad range of industries.

What's more, dividend-paying stocks provide reliable returns at regular intervals, offer growth potential, and are not typically as economically sensitive as other high-beta and volatile companies.

Another bonus is that when the economy wanes and stock markets fall, dividend stocks pay investors to wait it out until things improve.

And since cash dividends are paid from a corporation's current earnings and profits, dividend investors have the added prospect that they may see their dividend payments raised as things improve.

That's why dividend stocks have been a long-term bright spot with investors clamoring for higher yields.

Nick Lawson, head of synthetics, macro and cross-selling for Deutsche Bank, told the Financial Times, "We've had a lot of people from fixed income coming into equities. I think it is straight yield. We have all been forced up the yield curve."

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Dow Jones Erases 2012 Gains - What's Next?

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The "sell in May and go away" approach panned out this year as the month was not merry for markets.

U.S. equities experienced a steep drop during May, enduring the worst monthly declines in two years. The Dow Jones Industrial Average fell 6.2%.

A good part of May's decline was blamed on the ongoing European sovereign debt crisis that has swelled of late and shattered investors' confidence. But things on the home front are far from ideal.

The flight from stocks flowed into the first day of June. The Dow plunged 274 points Friday, erasing all of the year's gains. Fueling Friday's fall was May's dreadful U.S. jobs report, which showed employers added just a trifling 69,000 in payrolls, less than half the expected 150,000.

The Standard & Poor's 500 Index and Nasdaq both plummeted more than 2%. The Nasdaq has given back more than 10% since its late-March peak.

Traders consider a 10% drop to be a market correction. Meanwhile, the S&P 500 is just a mere point above correction territory.

Just 17 of the 500 companies in the S&P index ended higher on Friday.

"The big worry now is that this economic slowdown is widening and accelerating," Sam Stovall, chief equity strategist at market research firm S&P Capital IQ, told the Associated Press.

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Apple's (Nasdaq: AAPL) Patent Wars: This Little-Known Swedish Company is the Key

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In a single stroke, Apple Inc. (Nasdaq: AAPL) could gain the upper hand in its seemingly endless patent wars with Samsung Electronics (PINK: SSNLF) and others.

Or the tech giant could blow its chance and wind up paying billions of dollars in licensing fees.

The outcome hinges on how Apple deals with a little-known company based in Sweden.

This micro-cap just happened to file a patent for the "swipe-to-unlock" touchscreen gesture in 2002 – three years before Apple filed its patent.

The company, Neonode (Nasdaq: NEON), received its U.S. patent in January.

Neonode holds a number of touchscreen-related patents that could become decisive in several of Apple's mobile computing patent cases.

Already the "swipe-to-unlock" patent helped Samsung defeat Apple in a recent patent case in the Netherlands. Samsung said the patent, as well as a phone Neonode released in 2005, represented "prior art."

"Apple just shot itself in the foot and all the blood is going to go to NEON," Jim Altucher, managing director of Formula Capital and well-known investor, wrote in a blog post Tuesday evening.

Insiders told The Wall Street Journal in April that Samsung plans to use the Neonode patent in a similar but much more crucial case in San Jose, CA, scheduled for a July trial.

And Altucher added a scarier prospect for Apple.

If Neonode does indeed hold the patent trump card for "swipe-to-unlock," it could gun for a cut of Apple's profits by filing its own patent case.

Should Apple be forced to fork over licensing fees to Neonode, it could cost the Cupertino, CA, company billions of dollars a year.

So far all this sounds like a big mess for AAPL and a big opportunity for its patent war rivals. Not just Samsung, but also for such titans as Google Inc. (Nasdaq: GOOG) and Microsoft Corp. (Nasdaq: MSFT).

Yet if Apple acts boldly, it could gain a crucial advantage on its mobile computing competitors.

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The Tragic Investing Tale of "Big Al" Clifton

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One of our core messages here at Money Morning – and one that we tend to repeat over and over – is that it is crucial for you to take control of your own financial destiny.

To underscore just how important this is, allow me to share a personal story I guarantee will drive this point home.

I've massaged the biographical details on this one a bit to protect the folks who are involved. But the rest of the facts are true.

This is the story of Alvin "Big Al" Clifton, the much-loved stepfather of a boyhood friend of mine. Big Al (who I always addressed as "sir") was the longtime manager of a highly successful paint-and-body shop in my hometown.

He knew everybody, and everybody knew "Big Al."

He was boisterous and colorful – an acquired taste for some, I guess. But he also had a heart of gold – as I well knew.

In the mid-1980s, just after I started my newspaper career at a small weekly (and was very poor), I stopped in to see Mr. Clifton after I'd banged up my Chevette – my daily transportation, and the only vehicle I had.

Although Mr. Clifton was in business to make money from precisely this kind of situation, I watched as he picked up his phone, dialed a buddy and within five minutes had arranged for me to get the hood, radiator-core support, grill and bumper that I needed – all for free.

Some years later, when the body shop was sold to a new owner from out of town, Mr. Clifton was unceremoniously dumped from the only place he'd ever worked.

They gave him a lump-sum distribution – a pension and severance – that amounted to about $140,000.

That wasn't even close to being enough for a guy who was only 59, and had enough health problems to keep him from starting a second "career."

And Mr. Clifton knew it.

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SpaceX and the Six Billionaires Behind the "New Gilded Age"

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Commercial space travel was long confined to the realm of science fiction.

But no more.

With SpaceX's successful rocket launch on May 22, commercial space travel is now a concrete, viable reality… and one that will yield lots of investment opportunities in the very near future.

After a three-day delay, the well-funded startup's private space ship – a gumdrop-shaped capsule called Dragon – rocketed into outer space.

It then docked with the International Space Station on the very first try. SpaceX made history. It was the first time a private firm has flown such a mission.

In an article a few weeks ago entitled: "SpaceX Picks Up Where NASA Left Off"- I predicted the venture would succeed.

Now that it has, I believe this event will serve as the tipping point for the whole commercial space sector.

And to think, we have a small group of billionaire investors to thank for it all…

SpaceX Opens the Door to a New Age

A handful of visionary leaders, drawn mostly from the high-tech sector, make up what I have come to call the "New Gilded Age."

For those of you who may not recall from your school days and history classes, the first Gilded Age happened in late 1800s America.

Back then, a select few wealthy men made enormous fortunes for themselves in oil, steel, and the like, and used part of that money to help build the nation.

They built the railroads and the telegraph system. They also donated huge sums to U.S. colleges to vault those institutions of learning well ahead of those in Europe. All of which set the stage for the huge economic boom that helped launch America as a global power.

I contend that the same thing is happening again.

Before I explain, I want to point out something about the first "Gilded Age."

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Is Microsoft (Nasdaq: MSFT) About to Get Left in the Dust?

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Boy, Microsoft should have paid more attention to all those bright young hackers. A lot more.

Back in November 2010, when Microsoft Corp. (NASDAQ:MSFT) unveiled its Kinect product to the public.

Kinect is a motion-sensing input device that responds to full body movements – no remote required – as well as gestures and vocal commands.

It made a great add-on to the firm's popular Xbox 360 game unit. Indeed, it turned the gaming world upside down two years ago, immediately expanding the appeal of gaming to dancers, athletes, and even the elderly. (Kinect is a verifiable nursing home hit.)

Yet it soon became clear that it was to become much, much more than that.

The motion-sensing technology behind Kinect is breakthrough high tech. I predict it will have hundreds of applications that could be worth billions to investors.

Just imagine…

Musicians could put on live concerts with a virtual "band" backing them up. Kids could learn to mimic the exact movements of their favorite sports stars.

Online shoppers could use a personal avatar that lets them virtually "try on" clothes before buying them. Stroke victims could receive physical therapy through their home PCs or their smart TVs.

With the gesture controls, surgeons could even access patient files, send alerts to other doctors, even pull down facts from the Web if needed – all without leaving the confines of a sterile environment.

As I see it, motion sensors will change the future of gaming, architecture, design, medicine, and much more…

No wonder hackers jumped on board in droves.

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What a Few Thousand Dollars Will Buy You in D.C.

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Let's talk today about the cheap cost of buying favorable legislation in the House, and about how bills are titled to deceive us, even when there's no good reason to lie to our faces.

But first, I have to give a giant shout-out to Kevin Wack, the Capitol Hill reporter for the American Banker, which I read every day, and you should, too.

Kevin just made front and center something that I hadn't seen nor heard about and can't find anywhere else in print.

But, it's right up our alley here. So, give Kevin all the credit for this little tale.

Here we go…

Once upon a time, in a Congress full of proud and proper, true, honest, and transparent representatives of the American people, something resembling gangrene found its way into the illustrious body and backbone of some (probably all) of that elite club's members.

The infection, green like the color of money, was most recently seen oozing out of a few House members' back pockets.

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Gold News: Why the Yellow Metal is Glistening

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Comex gold futures surged Friday and soared to a bright three-week high following a very dismal U.S. jobs report.

The rally in gold came after the Labor Department reported employers added just 69,000 jobs in May, well below the anticipated 150,000. The data also pushed the unemployment level up a tick to 8.2% from 8.1%, stoking worries that the U.S. economy is still ailing and a recovery is far from certain.

The lackluster jobs report ignited hopes that a fresh round of quantitative easing may be in the near future. Gold prices climbed on the prospect.

Market participants returned to gold pushing the front month contract up some $59, nearly 3%, in early afternoon trading to $1,619.10 a troy ounce.

Silver rose in concert, gaining 96 cents to $28.67.

Trading was heavy and volatile in precious metals Friday, as traders moved quickly to cover short positions.

To date in 2012, gold has been experiencing its worst showing since the 2008 financial crisis. But the catalysts may be aligning to turn the trend upward.

"It's very likely that the economic data today and what's come out of Europe has convinced the market that there will be further government monetary stimulus," Robert Lutts, chief investment officer of Cabot Money Management, told Reuters. "Larger institutions will commit money to gold in ways they never had before."

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Natural Gas Companies: Exporters Stymied by Permit Delays

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Just days after Forbesexplained how American natural gas exports will positively change the world, the U.S. Energy Department released news that could delay natural gas companies seeking to export the fuel.

The DOE announced it will temporarily halt granting new licenses for companies to export liquefied natural gas (LNG) until an economic study is completed later this fall.

Despite finishing in January the first part of a critical study on the impact of LNG exports on U.S. energy production, prices, and consumption, the rest remains incomplete. Until this section is finished and evaluated by members of Congress and executive officials, the DOE will also suspend assessments of proposed export sites.

"The second part of the study, which will assess the broader economic effects of increased natural gas exports, is ongoing," Energy Department spokesman William Gibbons wrote in a release Wednesday. "We expect to be able to release the comprehensive study results late this summer."

The DOE has delayed permits and assessments of proposed sites mainly due to worries from Congressional members. Congress remains concerned about the long-term U.S. energy security and the potential that natural gas prices could increase dramatically as exports begin.

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