Archives for June 2013

June 2013 - Page 13 of 16 - Money Morning - Only the News You Can Profit From

Stocks to Buy Now: Two Companies with Strong Insider Buying

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Tracking insider buying and selling activity has been proven to be a very effective method of finding good stocks to buy.

Insiders usually buy when the stock price is down, since they are usually long-term investors by nature and are fond of bargain prices.

When they are buying into shares on the rise – especially when they're hitting 52-week highs – it demonstrates a high amount of confidence in the direction of the company they oversee and operate.

All insider activity is filed with the U.S. Securities and Exchange Commission, so interested investors can easily find out which stocks insiders love – and which ones they're dumping.

Tracking activity can be done using a stock screener like finviz.com, that lists the stock, the buyer's name, relationship to the company, date of sale, number of shares and total value.

A couple weeks ago we noted that Walter Energy Inc. (NYSE: WLT), Key Energy Services Inc. (NYSE: KEG) and JPMorgan Chase & Co. (NYSE: JPM) all showed signs of high insider buying this year.

This week we have a couple more stocks hitting our radar with high insider buying, making good stocks to buy now if you like to invest where the key officers put their money. Take a look.

The Opportunity in "Stealth Small Cap Stocks" is Staggering

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Most folks believe that the only way to pull down the really big profits in tech is to find an undiscovered small-cap stock and ride the high-risk pick for all its worth.

But I'm going to let you in on a secret of mine: Big-cap stocks – if you catch them at just the right point – can deliver even bigger returns than their small-cap counterparts … and often with less risk.

I sometimes jokingly refer to these lucrative tech plays as "stealth small caps."

They are one of my favorite profit opportunities to uncover. And when you can tie one of these stocks to a big trend or some other similarly powerful catalyst, the profit opportunity can be staggering.

In fact, I'm going to tell you about one such profit play today …

Last week, I told you that cloud computing will generate the kind of windfall profit opportunities that investors can usually only dream about. This push to store everything from your company's software and corporate records to your family photos out on the Web instead of on your desktop hard drive is creating a business opportunity that researchers say will explode by nearly 500% in a decade.

The fact is that cloud computing is one of those technology advances that is reshaping the business landscape. That means there will be a plethora of fast-growing, small-cap profit plays in areas like hosted data centers, computer memory systems, network security and data storage.

But a paradigm-shifting invention like cloud computing that's powerful enough to give birth to lots of new little companies like that also has the power to give new life to some longstanding high-tech stalwarts – energizing their profit growth and causing their stock prices to rocket.

It's like they've been given a dose of "digital Viagra."

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Shah Gilani: "You've Got To Be In It To Win It"

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Appearing on Fox Business, Capital Wave Strategist Shah Gilani engaged in the age old debate: Bullish or bearish?

Shah made the bullish case, saying the stock market's rising and investors may want to jump in.

"I think you got to be in it to win it," Gilani said. "You got to stay in the market as long as the trend is up."

On the other side was Dan Shaffer of Shaffer Asset Management. He had a decidedly bearish view, warning of a "deflationary depression"

Check out the lively debate between Gilani and Shaffer in the accompanying video.

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How to Invest in Currencies in 2013

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Even if you think you don’t know how to invest in currencies, you are probably already doing so indirectly.  

For example, if you own any large mutual or exchange-traded funds (ETF) that invest in U.S.-based blue-chips, you already own international juggernauts like McDonald’s Corp. (NYSE: MCD) or Procter & Gamble Co. (NYSE: PG). That means your returns fluctuate on the strength of foreign currencies where these companies do business.

When the dollar is weak, international stocks and bonds are worth more in dollars.

And when the greenback gains, returns shrink.

So whether you know a rupee from a ruble doesn’t matter – you’re playing the currency game.

But knowing how to invest directly in foreign currencies can provide a valuable edge against the eroding purchasing power of the dollar.

Here’s how to invest in today’s currency markets and gain a valuable hedge against your dollar holdings.

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The 7 Critical Economic Indicators You Need To Check Every Morning

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Everyone has a different opinion on how best to take the measure of the markets and the economy at large.

Hairs standing up on end, a knee that aches with the weather, tea leaves, earnings estimates, the Hindenburg Omen – it seems like all of these are significant in some way at one time or another.

Here at Money Morning, it's no different. We have an editorial meeting each and every morning – rain or shine – where the editors and writers huddle to pitch the stories and reporting we bring you every day. The meeting covers a huge range of financial and policy topics, and ideas of all stripes are kicked around and discussed until a solid story emerges.

A few days ago, we talked about important financial and economic indicators, where each of us turn to get some idea of the health of the markets and economy. Someone asked, "What's the number you look at first ever day?" We all answered in turn, and a really interesting collection of ideas began to emerge – as it always does.

Here are the numbers we think you should be looking at every day – before breakfast, after coffee – if you want to get an idea of the big picture.

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Today's May Jobs Report: When Bad News is Good News

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When bad news is good news for stock markets you know just how convoluted the current economic environment is.

According to the May jobs report out today (Friday), the U.S. unemployment rate ticked up to 7.6% in May from 7.5% in April, the first increase since the start of 2013. And, markets rallied on the news. The Dow Jones soared more than 200 points by mid-day.

Some will say the May jobs report was good news – thousands of out-of-work people returned to the work force, and the 175,000 jobs added beat expectations.

The reality is we're just treading water. And the labor force participation rate is still at 30-year lows.

But the real good news is the jobs report means more U.S. Federal Reserve support, which will fuel markets already hitting record highs.  

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Best Investments 2013: Beat Bernanke by Embracing the Free Market

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For the last four years, ordinary Americans have struggled to rebuild their wealth in the wake of the Great Financial Crisis. Last week, the Federal Reserve Bank of St. Louis reported that the average U.S. household has recovered only 45% of its wealth lost during the recession. Of course, the Federal Reserve won't acknowledge that […]

The Painful Price of Subsidized Money

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Bond yields have been generally declining, and the market as a whole is set up for them to continue the trend.

Not bad, right?

Wrong.

It's extremely dangerous – to all investors – because it can't go on forever. It's not a question of if this might happen, it's a question of when.

Fortunately, there's one antidote to this poisonous path. But first, you need to see the path we're on and its dire consequences.

Bonds are integral to the entire financial system and the economy as a whole. At some point sooner rather than later, bond yields will start rapidly increasing – and the bond market will become a Death Star, devastating the global economy.

Since 2008, and to a large extent since 1995, the bond market has been subsidized by the Federal Reserve, which has consistently printed more money than the economy demands – with broad money supply rising by over 8% a year since 1995, compared to a nominal GDP rise of less than 5%.

That subsidy has been hugely increased since last September, with the Fed buying $85 billion monthly of long-term Treasury and mortgage agency bonds.

This Tech Sector Slice is 58% Hotter Than the Rest of the Market

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Noted tech researcher IDC says that global PC shipments plunged 14% in the first quarter.

That was almost double the 7.7% decline IDC had been expecting, and was also the biggest year-over-year free-fall since the market-intelligence firm started tracking PC shipments 20 years ago.

This wasn't a one-time event, either: It marked the fourth straight quarter that worldwide PC shipments had fallen.

No wonder the pundits are talking about the "Death of the PC."

After reading one of these high-tech eulogies, I'm betting that the last thing you want to do is to invest some of your carefully saved capital into any part of the semiconductor sector.

After all, those complex microchips are the "brains" of a computer: So if the PC sector is getting battered, it stands to reason that the chip sector would be getting thrashed, as well – meaning the best move is to stand clear of both.

Don't make that mistake.

While PC stocks should be relegated to the tech-investor's version of an isolation ward, semiconductor shares have been on a roll since the start of the year and will continue to be one of the best ways to generate big profits for some time to come.

If you buy the right ones, that is.

Why You Can't Afford to Ignore the Hindenburg Omen

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The Hindenburg Omen-a harbinger of stock market crashes-eerily appeared again last week…and the Dow Jones promptly dropped 205 points. But its appearance brought mostly scorn from the mainstream financial media.

Here are just a few of the headlines from the past week:

  • "Hindenburg Omen is Just Hot Air"
  • "Why 'Hindenburg Omen' Is Just a Superstition"

And our personal favorite:

  • "Hindenburg Omen is idiotic, and if you believe in it, you should lose your right to own stocks-or anything"

Several Wall Street analysts reacted as if even being asked about the Hindenburg Omen offended them.

"Let's not mince words on this subject: This is an example of the worst kind of 'technical analysis' – a market signal essentially designated for media sound bites," Adam Grimes, chief investment officer at Waverly Advisors., told The Wall Street Journal. "The markets may well decline from this point, but they will not do so because of some cleverly named signal. The Hindenburg Omen, we have to say, is mostly hot air."

Nonbelievers in the Hindenburg Omen say it correctly predicts a stock market crash only 25% of the time, and point out the last time it appeared, in 2010, the markets just kept on rising.

"In 2010 the accuracy of the 'Hindenburg Omen' indicator went up in flames and the current situation suggests the same result in 2013," huffed Daryl Guppy on the CNBC Web site.

Yet an appearance by the Hindenburg Omen has preceded every stock market crash but one since 1985, and if you look closely at the numbers this indicator's track record is remarkably accurate.

Maybe the doubters don't know as much as they think they do.

"They call it bogus because they don't understand it," said Money Morning Chief Investment Strategist Keith Fitz-Gerald, who called the Hindenburg Omen one of his favorite indicators.

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