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Energy Investing

Here's the Cold Hard Truth About Solar Energy

Not long ago, I wrote about the German drive to replace nuclear energy with solar and wind power.

At the time, Berlin was touting this overture as the "next great push" into a new energy age.

Turns out, plans haven't gone as expected.

This winter has provided a good example of how things can go wrong. Solar has a major drawback in that all panels shut off at the same time. That requires massive reliance on other sources of energy.

Despite its avowed decision to relinquish nuclear power, Germany must now import nuclear-generated power from neighboring countries and resort to coal, despite an earlier move to the contrary, in the face of the highest energy costs in Europe. The government is even opening taboo fuel oil generators to make up the power slack.

A move against fracking has prevented the development of domestic unconventional gas, leaving the country dependent once again on importing volume, primarily from Russia. What had begun as a bold experiment in rebalancing energy sources has resulted in a developing pricing crisis.

The cost of German energy needs has begun stifling economic development. That is likely to become a more pressing issue moving forward. The solar energy industry in the country has been the recipient of massive subsidies, including what is known in the American market as "renewable energy portfolio standards."

These "standards" require utilities and distributors to purchase a certain percentage of their power from more expensive renewable energy sources, passing those added costs on to already besieged consumers.

Rates are now projected to go up as much as 60% in the wake of the nuclear shutdown.

And the problems for end users and renewable energy sources are going to get worse.

U.S. Economy

Five Reasons the Dow's New Highs Are "Bull-o-ney" and What to Do About It

While many investors want to celebrate the Dow hitting seven straight new all-time highs, things are not exactly as they appear.

Today I want to talk about why the hoopla surrounding the Dow is misplaced and what that means for your money. Then, I want to offer a few thoughts on what's next for the markets.

Let's start with the problems behind the Dow's numbers. There are a few things you should know:

  1. The Dow Jones Industrial Average is made up of just 30 stocks representing approximately 19.66% of the total market capitalization of the NYSE and Nasdaq, combined.

Despite the fanfare, this is hardly representative of the much larger picture, which is why I encourage investors to track the far broader and much more indicative S&P 500 instead.

  2. The Dow is not inflation adjusted, so comparing it to previous price levels is like comparing oranges to bananas at best.

In fact, the Dow remains approximately 10% below its all-time inflation-adjusted high and would need to top 15,731.54 to really qualify for the record books, according to CNBC.

  3. The Dow is price weighted, so big companies artificially distort the rise.

Take Microsoft Corporation (NasdaqGS: MSFT) and International Business Machines Corporation (NYSE: IBM), for example. The former is trading at $27.80, while the latter is trading at $209.14. According to the Dow methodology, this means that IBM has roughly 6.6 times the impact that MSFT does despite the fact that both companies share a market cap of approximately $233 billion.

  4. The movement in the Dow doesn't actually reflect consumers who feel poorer.

Average inflation-adjusted private sector earnings have been essentially flat for the last five years, and median U.S. household income continues to drop. It's off 3.6% in January alone. Unemployment remains chronically high and inflation is hardly under control, as Team Bernanke asserts.

The last time the Dow was at these levels, regular gas averaged $2.75 a gallon. Now it's $3.73. U.S. debt as a percentage of GDP was just under 40%. Now it's nearly 75%. Consumer confidence was 99.5. Today it's 69.6.

Further, 70% of Americans reported adjusting their spending plans to cope with the 2% payroll tax hike that came into effect January 1st, 2013.

  5. The Fed's meddling is creating artificially low interest rates and false liquidity.

Both are creating an updraft sustained by nothing more than an addiction to cheap money.

Speaking of which, the Fed is still pumping $85 billion a month into the economy on top of the $2 trillion it's already spent. There's a huge disconnect between the markets and the economy. The former is pulling ahead while the latter has more holes in it than Swiss cheese.

Ergo…despite being one of the most watched, commented upon and observed indexes in the world, the Dow is basically irrelevant.

Tech Investing

Stocks to Watch: 4 Ways to Ride the Nanotech Revolution

I know that for more than a few of you, as soon as you hear the word "nanotech" your eyes glaze over and you fumble for the mouse.

But don't touch that mouse. Nanotech has come a long way and is becoming one of the most incredible technology stories of the decade, if not the century.

For example, what if I were to tell you that there's a microbe that has been discovered that actually produces gold? Nuts, right?

Well thanks to our ability to see how microbes interact with their environment, stunning stories like this one from Nature Chemical Biology in New Scientist are showing up:

To continue reading, please click here...

Tech Investing

The Cybersecurity Investment Opportunity Everyone Is Missing

With cyber-attacks on U.S. corporations hitting more and more frequently, many investors have already realized that cybersecurity companies have a bright future. But cybersecurity isn't the only business experiencing growth as a result of the rise in cyber-attacks. As the attacks have increased, so have losses, creating an opportunity for insurance companies. The Betterly Report, […]

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IPOs

IPO Calendar 2013: Seven More Companies Coming to Market

Seven companies are on our IPO calendar next week.

Traders and investors who track the IPO marketplace will be watching carefully to see if there is enough demand to meet the wave of capacity anticipated. Most suspect that the demand is more than strong enough and companies making their trading debut will be healthy performers.

Let's take a look at the upcoming IPOs investors should watch.

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Commodities

What You Need to Know About Investing in Graphene

In my note on Wednesday, I remarked how many of you have lots of questions about investing in exotics, particularly the "miracle material" graphene.

Turns out you aren't the only ones who want to know more about this exciting new field. My good friend and colleague, William Patalon III, decided to interview me for his excellent advisory service, Private Briefing.

Since this is becoming such a popular topic for investors these days, I thought I would share the full interview with you today. It's a comprehensive look at the forces driving this sector.

And it contains some background material about me that you probably don't already know.

Here's the Private Briefing interview. I hope you enjoy it…

Income

Three Safe Stocks to Buy in a High-Flying Market

Even though the Dow Jones Industrial Average has reached record highs, investing hasn't got any easier. When the markets make a major move higher, investors always run the risk of buying at the top.

It's called chasing momentum and it can be damaging to your portfolio.

That's what happened to Apple (Nasdaq: AAPL) shareholders who jumped in at $700 only to watch as the price later dropped to less than $420/share. With little change in the company's outlook, Apple investors who bought near the peak managed to lose 40% in a bull market.

But the truth is you don't have to chase the market. There is a safer, and in the long run, more lucrative approach.

The stocks to buy are what I call "heirloom stocks."

These are stocks you buy, hold and watch them grow-steady earners you can rely on to fund a growing prosperity in retirement, or leave to your grandchildren knowing that the expenses of their lives will be safely covered.

Precious Metals

These Gold Stocks Are Poised to Rebound in 2013

With gold prices – which closed at a nearly two-week high Tuesday to $1,591.70 – rising year after year for much of the past decade, you might think all gold stocks have increased, too.

But they have not – not by a long shot.

In fact, gold mining companies' stocks specifically have lagged the performance of the precious metal for six years.

This sad tale can be seen by looking at the gold miners ETFs. The biggest fund in the sector is the Market Vectors Gold Miners ETF (NYSE: GDX). It holds 31 of the world's top gold mining companies including the likes of Barrick Gold Corp. (NYSE: ABX), Newmont Mining Corp. (NYSE: NEM) and Goldcorp Inc. (NYSE: GG).

It is down more than 20% in the last three months alone. That puts it at its lowest valuation versus bullion prices in over three years. Over the past year, GDX has fallen nearly 32%, which is roughly triple the decline of the largest gold bullion ETF, the SPDR Gold Trust (NYSE: GLD).

It's even worse for the junior miners. The Market Vectors Junior Miners ETF (NYSE: GDXJ) is down roughly 42% of the past 12 months. This ETF focuses on smaller mining companies such as Argonaut Gold and B2Gold and contains 79 stocks.

So what's behind these declines? And when can investors bet on a reversal?

Energy investing

Conference Delivers Good News for Investing in Energy Stocks

The U.S. role in the energy industry was a focal point last week at a major conference of senior global energy decision-makers in Houston – and what came out of it was good news for those investing in energy stocks.

The 32nd annual IHS CERAWeek featured some 300 speakers, including senior industry executives and government officials, who provided fresh insight into energy's future.

Energy analyst, Pulitzer Prize-winning author and vice chairman at energy research firm IHS CERA Daniel Yergin, who presided over the conference, told Politico, "We've got to be aware of rosy scenarios, and I think experienced people … are cautious about rosy scenarios. But I would say … it's a mood of tempered optimism and confidence that technology will help solve our problem – continue to help us meet these big energy needs and these big environmental needs that we have."

IHS CERAWeek included discussions of new technologies, shifts in worldwide demand, regulatory concerns, and supply and demand.

Optimistic conference participants agreed the energy industry is being transformed and said the industry offers plenty of good opportunities for investing in energy stocks.

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Washington

How the Richest Members of Congress Made Their Fortunes

Capitol Hill is brimming with millionaires, but if you think that most of the richest members of Congress got that way from working hard, guess again.

When you browse through the list of the richest members of Congress, one of the most common themes is that many of them married into wealth, regardless of gender.

The best-known beneficiary of spousal wealth is former Sen. John Kerry, D-MA, who recently left the Senate to serve as Secretary of State in the Obama administration.

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