Category

Stocks

Defense Investing

If This Stock Doubles, Thank North Korea

By , Executive Editor, Money Morning - • Print | Email

When I was growing up, my Dad used to tell me that "things never get as bad as you think they could."

But he also always counseled me to never take a risky situation for granted, and to always be prepared. 

With the flurry of menacing threats coming out of North Korea lately, I'd call that timely advice these days.

Of course, bellicose rhetoric from the Democratic People's Republic of North Korea (DPRK) is really nothing new. Pyongyang has repeatedly threatened to strike at "the heart" of the United States. And a propaganda poster that's popular in that country shows a shredded American flag and an exploding Capitol Hill dome being struck by additional North Korean missiles.

But I have to tell you, the threats all took on an entirely different tone last week as the U.N. Security Council pushed for brawny sanctions.  The hyper-militant North Korea actually threatened to launch a "pre-emptive" nuclear strike against the United States – and anyone else it views as an "aggressor."

In a statement carried by the Korean Central News Agency (KCNA), a North Korea foreign ministry spokesman said "now that the U.S. is set to light a fuse for a nuclear war, (our) revolutionary armed forces… will exercise the right to a pre-emptive nuclear attack to destroy the strongholds of the aggressors."

To top it all off, that spokesman also warned that a second Korean War was now "unavoidable."

Here's why you should be more than a little bit concerned…

The Fed

What You Absolutely Need to Know About Money (Part 4)

By , Chief Investment Strategist, Money Morning • @ShahGilani_TW - • Print | Email

Chapter Three ended with the rise of J.P. Morgan and how he used chronic boom and bust cycles to his own great advantage. That brings us to the Panic of 1907.

The Panic of 1907 was a seminal event in the history of banking. It spawned the Federal Reserve System – but not immediately. There would be a long cloak-and-dagger affair before the Federal Reserve Act was signed into law – while Americans were distracted – two days before Christmas, on December 23, 1913.

How Congress was duped by many of its own, and how the public was blindsided into believing their government was creating a safer banking system is a testament to the power of private banks to run and, for their own profit, ruin America.

Here's how it all happened.

Stock Market

Why this Ivy League Professor Sees Dow Hitting 18,000

By , Money Morning - • Print | Email

The bears predicting a stock market crash have it all wrong.

So says Jeremy Siegel, finance professor at the University of Pennsylvania's Wharton School and author of "Stocks for the Long Run." He predicts the Dow – which closed yesterday (Wednesday) at a new record high 14,455.28 – will continue the bull market run, ending this year in the 16,000 to 17,000 range.

For 2014, he says, the "best bet goal" is the Dow will climb to 18,000.

And the well-known bull has nearly 150 years of data to back up his bold prediction.

Here's why Siegel is so bullish.  

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U.S. Economy

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

By , Chief Investment Strategist, Money Map Report - • Print | Email

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.

IPOs

IPO Calendar 2013: Seven More Companies Coming to Market

By , Money Morning - • Print | Email

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.

To continue reading, please click here...

Commodities

What You Need to Know About Investing in Graphene

By , Defense + Tech Specialist, Money Morning • @Robinson_STI - • Print | Email

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.

Income

Three Safe Stocks to Buy in a High-Flying Market

By , Money Morning - • Print | Email

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.

Stock Market Today

Stock Market Today: Why Stocks Slipped After Seven-Day Rally

By , Contributing Writer, Money Morning - • Print | Email

After a seven-day rally that produced consecutive record highs for the Dow Jones Industrial Average, the stock market today (Tuesday) took a breather.

In early afternoon trading, the Dow Jones Industrial Average was down 16.66 or .12% at 14,430.63. The Standard & Poor's 500 Index was off 4.94, or .32% at 1,551.37. The Nasdaq was lower by 16.30, or .50% at 3,236.

"We've just been going up and up and up every day, and now a slight pullback. There is nothing surprising here, by any stretch of the imagination-it's natural to get a little pullback like this," Sean Kelly, managing director at Knight Capital told The Wall Street Journal.

Market participants continue to closely watch the S&P 500 Index. The broad-based market benchmark is close to its all-time closing high of 1,565.15 hit on Oct. 9, 2007.

But investors may be getting a bit concerned about the recent bull run. After falling to a six-year low on Monday, the VIX (the market's fear index), rose 7.8% Tuesday.

Also, the current bull market is aging. It turned 4 on Saturday. Only five of the past 11 bull markets have made it to their fifth birthday, according to data from S&P Capital. The average bull market since 1932 has endured for roughly four-and-a-half years.

Not helping stocks Tuesday was a read from the National Federation of Independent Business. While the report showed its small business optimism index rose in February, exceeding expectations, the federation's reading on expected business conditions remained in deep recession territory. Moreover, business owners reporting declining sales far surpassed those reporting increased sales.

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Income

These Dividend Stocks Will Continue to Shine in 2013

By , Money Morning - • Print | Email

It's been a great year for anyone interested in dividend stocks – and it looks like it'll get even better.

Corporations in the S&P 500 are expected to pay at least $300 billion in dividends in 2013, up from last year's $282 billion, according to S&P Dow Jones Indices.

And some of the dividend hikes represent a healthy payout boost.

For example, one of the latest in a string of companies to boost dividends, QUALCOMM Inc. (Nasdaq: QCOM), recently announced a 40% increase in its dividend.

Besides QUALCOMM, Hess Corp. (NYSE: HES) hiked its dividend 150%, HollyFrontier Corp. (NYSE: HFC) 50%, The Home Depot Inc. (NYSE: HD) 34%, The TJX Cos. Inc. (NYSE: TJX) 26% and Applied Materials Inc. (Nasdaq: AMAT) 11%, to name just a handful.

The good news: If you haven't yet joined the payout party, you can expect even more dividend increases in the weeks ahead.

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Commodities

Stocks to Buy: These Companies Will Profit from Higher Crop Prices

By , Contributing Writer, Money Morning - • Print | Email

Farm incomes are expected to climb to an all-time high this year, the U.S. Department of Agriculture predicts.

The expected increase – to a net farm income total of $128.3 billion, up from $112.8 billion in 2012 –
is good news not only for farmers but also for the fertilizer companies, making a few of them good stocks to buy now.

That's because the higher incomes will mean farmers invest more in their farms by expanding production to take advantage of higher prices they receive for grains.

And crop prices are expected to remain high enough this year to support increased fertilizer purchases by North American farmers. The United Nations Food and Agriculture Organization stated in January that food prices would stay at elevated levels due to tight grain stocks globally.

Its senior economist, Abdolreza Abbassian, told Reuters, "Prices are high and will remain high in 2013/2014."