Archives for November 2012

November 2012 - Page 8 of 20 - Money Morning - Only the News You Can Profit From

Here It Is, The Jon Corzine Quote of the Week

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Here it is, the quote of the week!

"Choices made by Jon Corzine during his tenure as chairman and CEO sealed MF Global's fate."

No, sorry, that's not it. Here it is, the quote of the week!

"All of the firm's significant business decisions were subject to review, debate and approval by MF Global's board. At all times, Mr. Corzine acted in good faith and did what he believed was necessary to turn around MF Global."

The first quote is from written remarks penned by Rep. Randy Neugebauer, a Republican from Texas and the chairman of the oversight panel of the investigative subcommittee of the House Financial Services Committee, which just last week issued its 100-page "report" on what happened at MF Global over a year ago.

The latter quote is from some PR (that's public relations) hack representing Jon Corzine.

Now, look, I'm not going to waste time talking about what's really important here. Sure, you guys seem to care a lot about the facts, but I'm not going to muck up this opinion space with any.

Facts clearly aren't that important.

Because if they were, I would be talking about how the bankruptcy trustee overseeing the charred carcass of MF Global already said – back in his June report – that it was Mr. Corzine's aggressive trading strategy and a lack of internal oversight that led to MF Global's downfall.

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Five Ways to Turn the Fiscal Cliff Into an Outstanding Investment Opportunity

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Many investors believe that a fiscal cliff "dive" is inevitable.

Even with the prospect of a deal lifting the markets yesterday, I can't say I disagree.

The blame game has already started and it's highly unlikely that we'll see anything other than more foolishness out of Washington. And so far all they have done is kick the can down the road to date.

So what can you do about it? Believe it or not, crises like these can be an ideal time to buy stocks. And gold. And oil. And certain kinds of bonds. And more.

The death of financial markets is almost always highly overrated.

Adding insult to injury, fiscal cliff or not, trying to time the markets is an exceptionally bad idea – 85% of all buy/sell decisions are incorrect, according to Barron's. Further, Dalbar data shows that the return of an average investor trying to time the market is a pathetic 1.9% per year versus the S&P 500 return of 8.4% over the same time period.

Over 20 years, that's the financial equivalent of taking a 342% hit in lost performance.

With that in mind, here's a five-point plan for turning the fiscal cliff into an outstanding opportunity.

1) Get ready to go bargain hunting

With Europe entering another recession and some parts of the world flirting with a protracted slowdown that's going to be more like a managed depression, things couldn't be more uncertain.

While I don't personally like this reality any more than you do, from an investment perspective I'm very happy to pick through the oversold stocks and go bargain hunting.

Why?

Because history's rearview mirrors show that fear, panic, crisis and stress are all classic signs associated with opportunity — and profits.

This is particularly true for choices related to energy, resources and certain kinds of technology – all of which the world needs, as opposed to wants, and all of which are backed by billions of dollars flowing their way whether we go over the fiscal cliff or not.

2) Stress test yourself

Never mind the big banks or Wall Street's hooligans, take a good hard look in the mirror.

Many investors are completely unprepared for the psychological impact of our nation going over the edge. And you don't want to be one of them.

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These Special Dividends in 2012 Help Investors Beat the Fiscal Cliff

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If the fiscal cliff goes into effect and the president's healthcare bill is upheld, the dividend tax rate could triple next year – which is why companies are looking to help out investors in the way of special dividends in 2012.

Since the end of September to mid-November, 59 companies in the Russell 3000 stock index announced a one-time special dividend, up from about 15 in the same period last year.

And it's not just special dividends that are helping investors – regular dividends are being altered as well.

Wal-Mart Stores Inc. (NYSE: WMT) just announced its fourth-quarter dividend payout, originally scheduled for Jan. 2, will now be paid on Dec. 27.

"It's a foregone conclusion the rates are going up — it's just a matter of how high they go," Todd Lowenstein, a Los Angeles-based money manager with HighMark Capital Management Inc. told Bloomberg News. "When you know that 15% tax rate is going away and you have excess cash buildup, it makes sense to return some of it back to shareholders now."

As things currently stand, the top tax rate on dividends will go from 15% to 43.4% at the end of the year, causing companies to seriously consider offering a special dividend.

Special dividends offer investors a "twofer": Besides collecting a large dividend payout before it's taxed at a higher rate, investors will enjoy higher share prices as special dividend-paying stocks get a boost from the news.

So where can investors find these special dividends?

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Cybersecurity Act Could Survive with Executive Order

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The Senate shot down the Cybersecurity Act of 2012 (CSA2012) for a second time last Wednesday in a close 51-47 vote, leaving proponents to wonder if the bill is dead.

The Obama administration, however, is not quite ready to completely write off the act and looks ready to use whatever muscle it has to get the measure passed without full support. That's why the White House is likely to deliver an executive order to keep the act from disappearing.

"As tonight's vote in the Senate illustrates, the current prospects for a cybersecurity bill are limited. Congressional inaction in light of the risks to our nation may require the administration to issue an executive order as a precursor to the updated laws we need. We think the risk is too great for the Administration not to act," White House Cybersecurity Coordinator Michael Daniel said in a statement.

Daniel continued to state that the administration still believes "comprehensive legislation is needed to fully address the threat we face in cyberspace."

Defense Secretary Leon Panetta in a speech in New York last month said cyberattacks by extremist groups could deliver as much destruction as Sept. 11. He has called the resulting damage from cyberattacks comparable to a "digital Pearl Harbor."

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Washington Claims it Can Reach Fiscal Cliff Deal By Dec. 31

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Washington's tax talks began in earnest on Friday, as U.S. President Barack Obama and his team met with the GOP in a closed-door session in efforts to hammer out a fiscal cliff deal.

"We have the cornerstones of being able to work something out. This is not something we're going to wait until the last day of December to get done. We have a plan. We're going to move forward on it," Senate Majority Leader Harry Reid of Nevada told reporters as both parties emerged from the White House.

House Speaker Rep. John Boehner, R-OH, delivered an equally positive tone.

"To show our seriousness, we've put revenue on the table, as long as it's accompanied by significant spending cuts," said Boehner. "It's going to be incumbent on my colleagues to show the American people we're serious."

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Two Ways You Can Profit from the Fiscal Cliff

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We can't control the arguments in Washington, but we can control our money. That means it's time to learn how to profit from the fiscal cliff.

If the U.S. economy "falls off" the fiscal cliff, the stock market will be volatile. The Dow Jones Industrial Average is down about 500 points since the Nov. 6 election, the lowest level in over four months.

Fitch Ratings has already threatened to downgrade the United States if substantial progress is not made on addressing its economic woes, starting with the fiscal cliff. That is not an idle threat as Standard & Poor's did reduce thecreditrating of the United States in August 2011.

"It's not hard to make the case we are headed for a recession," warned Hugh Johnson, head of Hugh Johnson Advisors, a financial and economic advising firm.

But that doesn't mean you should shun all stocks, you just have to know which investments are prepared to weather the fiscal cliff storm.

Here are two of the best ways to profit from falling off the fiscal cliff.

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Pershing Gold Fast Tracking Redevelopment of Relief Canyon Mine - Analyst Blog

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Pershing Gold Fast Tracking Redevelopment of Relief Canyon Mine By Steven Ralston, CFA There are eight intriguing aspects to the multifaceted investment case for Pershing Gold (PGLC), but when one tries to assess their merits one by one, it tends to dilute the primary proposition that a) the company has acquired the past-producing Relief Canyon […]

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Valmont Industries (VMI) - Bull of the Day

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We are retaining our Outperform recommendation on Valmont Industries, Inc. (VMI). Third quarter earnings topped the Zacks Consensus Estimate while sales missed. Profit jumped nearly 35% year over year, boosted by a solid performance in the company's Utility Support Structures division. Moving ahead, the company expects healthy demand for irrigation equipment from farmers in the […]

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Do You Own This Carl Icahn Stock?

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Back in the 1980s, corporate raider Carl Icahn was routinely vilified by CEOs and worshipped (most of the time) by investors. The mere mention of his name in association with a specific company was usually good for a 15% or 20% pop in that company's stock price.

Thirty years have passed, and Icahn is now 76 years old. And he's apparently no longer a "corporate raider." In the careful, politically correct climate of the present, Icahn is now referred to as an "activist investor."

Call him what you want … but the bottom line is that the Icahn name still has a King Midas-like cachet.

And what happened last week proves it.

Indeed, shares of Private Briefing recommendation American Railcar Industries Inc. (Nasdaq: ARII) soared as much as 19% last Tuesday after investors speculated Icahn might be crafting a merger plan that involves the railroad-car manufacturer.

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2013 U.S. Economic Forecast: Even Without the Fiscal Cliff, A Recession Still Looms

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Everyone is worried about the damage the "fiscal cliff" might do to the U.S. economy in 2013, but the reality is that's only one of the potential problems in our 2013 U.S. Economic Forecast.

At present there appears to be four problems– aside from the fiscal cliff– that could throw the U.S. economy into recession in 2013.

These are international problems that include:

  • Brewing trouble in Japan: Japan faces an election next month. More importantly, its government debt is currently 230% of GDP, with that ratio rising by about 10% a year. The current government has increased sales tax in 2014, which may cause a recession and will likely push its debt to GDP ratio even higher.

    The problem is no country has ever survived a debt/GDP ratio above about 250% without defaulting. Britain did succeed with this in 1815 and 1945, but on the second occasion it relied on exchange controls, inflation, and dozy domestic investors, while on the first occasion it had a government under Lord Liverpool far more capable than anything we have seen in the last 185 years.

    The point is, if Japan gets a weak coalition after its election, the market may panic and cause a Japanese government default.


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