Archives for February 2013

February 2013 - Page 16 of 17 - Money Morning - Only the News You Can Profit From

Is This a Recovery or a New Housing Bubble?

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Investors have taken comfort from the recent improvement in housing prices seen across the country.

Shares of homebuilders, including Toll Brothers (NYSE: TOL), Lennar Corporation (NYSE: LEN) and the SPDR S&P Homebuilders ETF (NYSE: XBH), had been bid up late in 2012 and into January.

But now the shares are rolling over. Could the relative underperformance of the homebuilders be telling us something?

David Stockman, former director of the Office of Management and Budget under President Ronald Reagan, thinks so.

In an interview with The Daily Ticker, Stockman said, "I would say we have a housing bubble again. I don't think we have a real, organic, sustainable recovery."

Stockman argues that "fast money" is moving into the local real estate markets that suffered the biggest declines in order to "speculate in buy-to-rent for a quick trade."

Stockman thinks that these speculators will be looking to sell out as soon as prices rise sufficiently to give them a specific rate of return and that "they will be gone as quickly as they came."

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Dividend Stocks to Buy Now: The Only New "Aristocrat" Worth a Bet

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Weary investors scouring the landscape to find decent dividend stocks to buy should take a hard look at the latest list of Dividend Aristocrats.

The S&P 500 Dividend Aristocrat Index measures the performance of companies in the S&P 500 Index with amarket value of at least $ 3 billion that have increased dividends for at least 25 consecutive years.

In 2013, only 54 companies, approximately 11% of companies in the S&P 500, made the cut.

Actually, it's no surprise this group of dividend stocks is tiny.

Think about it.

These companies have raised dividends for the last 25 years – a period of time that included the Great Recession, numerous oil price shocks, at least two major market meltdowns and wars in Iraq and Afghanistan.

If they can steadily raise their dividends in the face of that kind of adversity, you can be pretty confident they're going to be around for awhile.

They're the kind of companies that consistently deliver the goods, having outperformed the rest of the S&P 500 on a regular basis. The Aristocrats returned 4.59% annually over the last five years, while the group as a whole produced a negative 0.25% return for the period.

These are businesses with strong balance sheets, healthy earnings and cash flow generation that can help you protect your portfolio – regardless of the market's direction.

But not every Aristocrat is worthy of your hard earned dollars.

Some drop by the wayside. Others are increasing their dividend by draining capital from their business.

Here's what to look for when choosing the best dividend stocks to buy.

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The Best Energy Stocks to Buy According to Industry Insiders

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It is no secret to investors that energy stocks lagged the market in 2012 – but now in 2013 some are becoming the best stocks to buy as they head for huge gains.

The Energy Select Sector SPDR ETF (NYSE: XLE) has gained about 6.5% over the past year, below the 8% gain in the Dow Jones Industrial Average and the 11.5% rise in the Standard & Poor's 500 Index.

But just looking at 2013, you'll see XLE has risen 8.7%, compared to the Dow's 6% gains and the S&P's 5.13%.

And money is pouring into this sector from a key group of investors: corporate insiders.

As far back as 1968 legendary speculator Victor Niederhoffer and his mentor Professor James Lorie discovered that cluster buying of stock by corporate insiders offered substantial excess returns over the market. When three or more officers and directors of a company break out their checkbooks to buy their own stock there is a good chance that the stock price is headed higher.

This anomaly had been confirmed many times by academics and investors over the year and still holds true today.

The other metric with tracking when it comes to corporate insiders is buying by those two executive officers who are in the best position to evaluate the company's conditions and prospects – the chief executive officer and chief financial officer. If they are buying more shares in the open market chances are high they think the shares are cheap and good things are about to happen.

Best Stocks to Buy Now: What Energy Insiders Like

We are starting to see a substantial amount of insider activity in a few oil production and energy services names, like the following:

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Why Bill Gross Says You Should Be Investing in Gold

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Renowned bond investor Bill Gross, the manager of PIMCO's Total Return Fund, the world's largest bond fund, just shared his top investment picks with Barron's. Leading the savvy investor's short and selective list was gold.

Why is a bond bull keen on investing in gold?

It's because Gross sees gold as a stellar inflationary hedge as global central banks attempt to reflate their economies.

Gross explained that while it looks like loose monetary policies and the deluge of dollars will continue for a while, at some point both will have to stop and "when all this money printing by central banks ends, it won't be pretty."

Gross sees trouble brewing in the artificially-priced U.S. Treasury market.

"The Fed is buying 80% of the Treasury market today. It is remarkable to think that when the Treasury issues debt in the trillion-dollar-plus category, the Fed ends up buying most of it. The Treasury sells it to banks and primary dealers, who sell it back to the Fed at a higher bid," Gross explained.

"This is very different from the free-market capitalism we've come to know. And it will continue until inflation exceeds the upper end of the central bank's target of 2.5% or, by some miracle, we get real economic growth," Gross continued.

The artificially priced bonds leave investors to question if investing in them is worth the slender reward, given the paltry yields from a bevy of bonds except high-risk junk bonds.

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Four Ways to Play the "Cure" for the Flu

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We've all seen the headlines.

The flu has made its annual visit to the U.S., reacquainting itself with your kids, spouse, parents, friends and co-workers.

But this strain has been especially nasty, resulting in shortages of the very vaccines that might have moderated its effects.

One of my colleagues here – an editor with a young son – finally got his just last week – only because he stubbornly went to the same Rite-Aid every single morning for an entire week.

I'm sure you have similar stories you could share.

When you think about it, this year's flu season illustrates one of the great ironies of our time.

Although advances in medical technology have enabled us to create the vaccines that so far have kept the yearly viral visit in check, the reality is that those advances have been leapfrogged by global travel, an advancement that makes a pandemic more likely than ever before.

Fortunately, there is an answer – an innovation worthy of the Era of Radical Change, and one that savvy investors can play for windfall profits. I'm going to show you four ways to grab those profits for yourself.

But first we need to really understand the challenge at hand.

Let me show you what I mean.

Deal Making is About to Get White Hot

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Not only is the market rally on, but trigger-happy bankers and private equity wheeler-dealers are about to send it even higher.

The reason is simple: There are trillions of dollars of cash just sitting on the sidelines looking for a deal.

That means deal action-of all kinds-is about to get white hot.

In fact, the combination of positive capital flows and the pursuit of greater economies of scale has us at the beginnings of a multi-year deal-driven bull market.

Here's where we are, where we're going, and why deal making will propel stocks higher from here.

The Real Story Behind JPMorgan's Infamous "Whale" Trade

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Here's an insight for you – along with a trademark indictment, of course.

Take it with a grain of salt, because it's just an educated guess on my part.

It's about how the infamous London Whale may have been harpooned by spawn from his own pod.

For those who haven't heard, the London Whale is one of the latest traders to make the headlines. Bruno Iksil was the top trader at JPMorgan Chase's Chief Investment Office (CIO) in London.

He got the nickname "the London Whale" for the outsized bets he became known for.

But this is no fish story…

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How I Learned to Pick Tech Stock Winners From an $80 Million Software Disaster

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As an investor, even when your focus is technology, you can't forget the people factor.

That cardinal rule of high-tech stock picking is one that I never forget.

I learned it back in my journalism days, when I broke the biggest story of my career … a national news story about an $80 million debacle at Bank of America Corp. (NYSE: BAC).

The focus of that debacle was technology. But the catalyst was human.

Let me tell you the story and show you the big impact it has in the way I analyze winning tech stocks.

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Morocco OFPPT Picks Microsoft Suite - Analyst Blog

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Morocco’s Office of Vocational Training and Employment Promotion (OFPPT) has chosen the world’s largest software maker Microsoft Corp. (MSFT) for deploying vocational education across 35 fields of study through its 327 training institutes across the African nation. Morocco’s OFPPT opted for Microsoft Office 365 software to improve its education and vocational training offerings provided to […]

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