Archives for May 2013

May 2013 - Page 6 of 20 - Money Morning - Only the News You Can Profit From

Is the United States the Next Argentina?

Drive the streets of Buenos Aires, and you will see regal architecture that rivals wealthy European enclaves in Monaco or London.

And along tree-lined walkways, you will witness monuments that speak of the legacy of Argentina's finest moments.

But all of it is just a façade-a reminder of what used to be.

Despite having one of the most educated and entrepreneurial populations in the world, an abundance of natural resources, and a dynamic agricultural sector, Argentina has been in steep decline now for eighty years.

And things are only getting worse.

Without a doubt there's a lesson here– even though I recognize U.S. businesses have it comparatively easy when it comes to government mismanagement.

Even still, after spending the week immersed in Argentina's business culture, it's hard to argue the U.S. isn't on the same unsustainable path.

With the U.S. debt and obligations reaching new heights, new arbitrary regulations making it increasingly harder to conduct business, and examples of ruthless big government gone array in the AP and IRS targeting scandals, the parallels are too great to ignore.

This is far different from the recent comparisons to Greece–and actually much worse.

The truth is the United States is in danger of becoming the next Argentina.

Here's why: It's about business, always business.

U.S. GDP: America is About to Look Richer - But Don't Be Fooled

America's about to become more wealthy – on paper, at least.

That's because the way the country's gross domestic product, or U.S. GDP, is measured will change significantly come July 31, enough to boost the closely watched economic barometer by 3%, or $400 billion.

That translates to the equivalent of about $1,500 more worth of goods and services per person in the United States.

The U.S. Commerce Department's Bureau of Economic Analysis claims the changes will allow for more consistent comparisons with data for the economies of other nations.

What the revised U.S. GDP, which will apply retroactively to 1929, will really do is make the country look healthier than it actually is.

What it speaks to in my mind is the oldest of all games: It's administrative whitewash, Money Morning Chief Investment Strategist Keith Fitz-Gerald said. If reality doesn't fit your statistics, you adjust your statistics and say, 'Let's make everybody feel good about what we're doing by readjusting the calculations.'

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High Taxes Mean It's Lights Out For California

Would the last person leaving California please turn out the lights…

Whether by coincidence or design there is a mass exodus of business and upper management from the golden state.

Here's a guess why: California is the highest taxed state in the nation.

Its top income tax rate is 13.3%, and its property tax per capita is $1,450. California also has the highest sales tax at 7.5% and is the proud bearer of the country's highest gas tax according to the Petroleum Institute.

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7 Reasons Not to Trust the Bernanke Testimony to Congress

As usual, the markets were hanging on every word of the Bernanke testimony to Congress today (Wednesday).

By now, everyone should know better.

In the years that U.S. Federal Reserve Chairman Ben Bernanke has been a member of the Fed – both as a member of the Board of Governors from 2002 to 2005, and in his two terms as chairman beginning in 2006 – he has been stupendously wrong time and time again.

Bernanke gave the markets what they wanted by hinting that his monetary easing policies won't change any time soon, pushing both the Dow Jones Industrial Average and the Standard & Poor's 500 Index up more than 0.5% in midday trading.

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Time to Buy This Top Ranked Dividend ETF - ETF News And Commentary

The low interest rate environment in the economy has many investors looking beyond the conventional sources of income for higher yielding avenues. Not only has this highlighted the desperation of the yield hungry investors, but it has also distorted the highly fragile risk return tradeoff of the typically conservative income seeking investors (read Cambria Launches […]

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How to Find the Best Cheap Stocks to Buy Now

If you want an investment priced at a bargain with huge growth potential, it's a great time to hunt for cheap stocks to buy now.

So far this year the stock market has put in a solid performance with the S&P 500 up a little more than 17% and the Dow Jones Industrial Average rising a bit more than 18%.

It has been a very broad advance with the aggressive U.S. Federal Reserve policy pushing money into a wide range of securities.

About 470 of the S&P 500 constituents have risen so far this year and 29 of 30 Dow issues are higher in 2013. There is a strong opinion among major market strategists that as long as the Federal Reserve keeps interest rates at or near zero, money will continue to flow into equities.

If this is the case, then the lagging issues may well be bargains with high profit potential.

The key to identifying to bargain issues is to apply some measure of valuation to identify those stocks that are mispriced by the market and may move higher.

Many of the stocks that are down including former tech darlings like Apple Inc. (Nasdaq: AAPL) and EMC Corp. (NYSE: EMC) are struggling to provide the type of earnings and sales that will get growth enthusiasts excited enough to begin buying the shares again.

Others like J.C. Penney Company Inc. (NYSE: JCP) are experiencing severe operational and financial issues that may preclude them from a strong price recovery anytime soon.

One measure of value used by many value investors is the price-to-book-value ratio. This is simply an accounting measure similar to a net worth statement. When companies fall out of favor and trade for less than book value they can be considered a bargain.

The shares may be out of favor for many reasons. It could be part of a sector that's going through the down portion of its economic cycle, but eventually the undervaluation attracts investors and invites takeover offers that more closely reflect the asset value.

Look for those underperforming S&P 500 stocks that trade for less than book value as potential bargain issues with strong recovery potential.

Is Jamie Dimon Too Big to Fire?

Jamie Dimon is the 57-year old banking mogul whose been running JPMorgan Chase (NYSE: JPM) since 2005, and he decisively won a shareholder vote yesterday to keep both his chairmanship and chief executive officer (CEO) titles at the nation's largest bank.

But don't celebrate yet.

Sure, only 32.2% of shareholders voted for a proposed resolution to split the company's two top jobs. And that may sound like great news (for him) but the winner wasn't Jamie Dimon, it was the Cult of the CEO.

The losers in the vote? You, me and the American public at large.

Why Oil Is the New "Gold Standard"

Something very interesting just happened at the 2013 MoneyShow in Las Vegas.

The purveyors of doom and gloom were all still hawking their services there. But the primary solution they offer – a cure-all elixir for everything that ails markets – was beginning to wear thin.

The usual conviction that this one asset is the remedy was gone. And the seats at these sessions were only half-filled.

Indeed, gold is beginning to lose its luster.

The erstwhile commodity fix has been under pressure of late as well. Yet, even while most eyes have been on declining commodities – especially gold, silver, and platinum – something else has been happening.

Crude oil is emerging as a new replacement to reflect stored market value.

That is good for folks like us who invest in the energy sector, because it will provide a floor to downward pressures in oil prices. It will not counter all forces reducing the price of oil, but it is likely to temper such movements, allowing us some leverage.

This Microsoft Invention Could Finally Destroy the Cable Company Monopoly

For too long we've been held hostage by our local cable companies. Their monopoly-like status has left us chained to spotty service, inexplicable rate hikes and laughable customer service.

But a new product is about to trigger a revolution – or, evolution – that could end the cable company reign.

Today (Tuesday), Microsoft Corp. (Nasdaq: MSFT) revealed its next-gen Xbox, called the Xbox One, a device which may prove capable of replacing your cable box.

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Apple Tax Strategy: Who's at Fault?

The Apple tax strategy is similar to many other major U.S. companies: shift billions of dollars to low-tax international jurisdictions to avoid paying taxes on that income.

But now Congress is accusing Apple of creating "a highly developed tax avoidance system" that cost the United States billions of dollars, economic growth and jobs. A Senate investigation found that Apple avoided paying taxes on $74 billion in overseas profits over four years.

Apple CEO Tim Cook will face Congress today to defend the Apple tax strategy, which Sen. John McCain, R-AZ, called "unpatriotic."

That's why Money Morning Chief Investment Strategist Keith Fitz-Gerald joined FOX Business' "Varney & Co." Tuesday morning to talk about the Apple tax strategy.

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