Month: August 2013

By WallStreetDaily.com

From time to time, we reach into our WSD Mailbag to address key concerns from our loyal readers. Well, it’s that time again!

I plan to cut right to the chase with my answers, too. I’m even recruiting some visuals to help convey the most important information.

My goal is for my answers to be informative, instructive and, of course, profitable.

Let me know if I succeed by dropping me a line at [email protected].

While you’re at it, send us some fodder for a future WSD Mailbag column. Any and all comments, questions and biting criticisms are welcome. So cue up the Pat Benatar and hit us with your best shot!

~ Question #1: Do you really think coal is going to rebound? If so, you must be smoking crack.

Nope, my name isn’t Lamar Odom. It’s Louis Basenese. And I hate to break it to you, but I’m no longer the lone contrarian on coal.

This comes straight from the latest issue of Barron’s: “As coal’s supply-and-demand equation improves, the future is glowing brighter for the industry, particularly for the largest private-sector miner of the fuel.”

Barron’s is, of course, talking about Peabody Energy (BTU). And I agree, it “could energize the portfolios of patient investors.”

So be a contrarian and step up to buy shares before the trade suddenly becomes popular, at which point it’ll be too late.

~ Question #2: What are your thoughts about the Hindenburg Omen being triggered again? Is it time to bail completely on stocks?

The words of Barry Ritholtz of The Big Picture blog on this topic are too priceless to not share again. (To relive the first time, go here.)

He says that the Hindenburg Omen is “a common pick-up line at permabear cocktail parties, good for attracting sexual partners but of little use for anything else.”

He’s so right. And this chart proves it.

“If you shorted the market on every [Hindenburg] signal, your portfolio would have gone down like a Led Zeppelin,” says Blaine Rollins of 361 Capital.

In the face of such evidence, how could I possibly be concerned about the Hindenburg Omen being triggered again? Unless you think it’s going to be different this time, which it never is.

~ Question #3: What other evidence do you have besides the Gallup unemployment data to support the “Fed taper” not starting in September?

How about gold prices? No taper means more inflationary pressures, which manifests in higher gold prices. And guess what? Gold broke above $1,400 per ounce this week, officially entering bull market territory again.

Granted, some of the rebound can be attributed to the escalation of tensions in Syria and rising demand for physical gold. But not all of it.

As the Financial Times points out, the recent reversal comes on the heels of “witnessing a 26.3% plunge in the first half of the year, as investors began to anticipate the move to taper.”

In other words, gold is sensitive to expectations about the Fed. And right now, the strength in the gold market points to more money printing ahead.

Or as Art Cashin, Director of Floor Operations at UBS Financial Services (UBS), says, “Unless [Bernanke] gets a miracle with the non-farm payrolls, I think it’s going to be tough to justify tapering.”

Forget “tough.” Try “impossible,” Art.

~ Question #4: You normally update us on overall earnings season stats throughout the reporting period. Yet you’ve been mum lately. Were they so terrible that you can’t bear to tell us?

You got me… Psych!

Earnings actually came in ahead of expectations. Or as Bespoke Investment Group said, “Overall, it was a pretty good earnings season.” Indeed!

S&P 500 companies reported profit growth of 2.1%. Mind you, at the start of the reporting season, analysts only expected growth of 0.6%. (Swing and a miss… again.)

In terms of the earnings beat rate, it checked in at 62.2%, the highest level since the fourth quarter of 2010, according to Bespoke.

Meanwhile, the revenue beat rate checked in at 56.6%. That’s stronger than three out of the last four quarters.

If you’re looking to put new money to work in the most fundamentally solid companies – ones that beat earnings and revenue expectations, and raised guidance – look no further.

NQ Mobile (NQ), Sapient Corp. (SAPE) and Movado Group (MOV) all earned the rare “triple-play” distinction and warrant your consideration. Yes, they’re all small caps. And there’s a good reason for it (see here).

~ Question #5: I couldn’t bring myself to jump into cheap Japanese stocks when you recommended doing so. Ditto for Europe. Now I’m kicking myself for not following your contrarian advice. Do you have another big contrarian trade lined up?

If I did, you’d probably be too chicken to act on it. You’re in luck, though.

There actually is another big contrarian trade setting up in the markets. And I’ve found a way to profit from it with zero downside risk. (That’s not a typo.) And no, it’s not too good to be true.

I plan to share all the details next week. So stay tuned.

Ahead of the tape,

Louis Basenese

The post Five Urgent Questions, Five Succinct Answers appeared first on Wall Street Daily.

Article By WallStreetDaily.com

Original Article: Five Urgent Questions, Five Succinct Answers

By MoneyMorning.com.au

And there was the mainstream thinking that gold was dead.

They had it written off.

Yet there it is. It’s back from the dead.

Not only that, but it’s thriving. It’s as though it has a new lease on life.

So what’s next? Is this the end of the rally? Or will it fall in a heap again…just like it did in June?

Here’s our take…

We’ll be straight up with you.

This latest gold rally has taken your editor completely by surprise.

We admitted as much yesterday to our old pal, Sound Money, Sound Investments editor Greg Canavan. Greg says it’s great to see that gold is doing what it’s supposed to do – move in the opposite direction to the stock market.

That fits in with Greg’s view of the market right now, which is that stocks are on the verge of a big drop.

This ‘gold up and stocks down’ relationship isn’t necessarily what happened for much of the previous five years. For much of the time stocks and gold rose and fell in unison.

But now the real reason for owning gold has returned. It’s not about trading gold like a share, it’s about the safety of owning gold while world leaders crank up the volume on war…

Gold Doing What it Does Best

You have to remember a key reason why gold rises during war times. It’s not just because people are worried that all the bank notes and coins will disappear.

It’s because historically governments tend to ramp up the printing presses during a war in order to pay for the war. Doing so naturally devalues the currency already in circulation. And that should mean a higher gold price.

So in a way, it’s good to see the gold price rallying so strongly in recent weeks. Contrary to the idea that gold was dead and buried, it’s doing exactly what it’s supposed to do. That’s good news.

Source: Goldprice.org

It’s why we recommend investors own a significant amount of gold. It’s to protect your wealth and investments against the war talk and printing presses of war mongering governments (US, UK, France and Australia).

But the mainstream didn’t just prematurely consign gold to the rubbish bin. Most folks had figured resource stocks would never recover either…especially gold stocks.

Gold Stocks Beat Gold

If you think gold has done well, climbing $150 (about 10%) in just a couple of weeks, gold stocks have done even better.

As you can see on the following chart, the Market Vectors Gold Miners ETF [NYSE: GDX] has gained 21.1% during the same time – twice the performance of physical gold.

And if you think that’s good, the Market Vectors Junior Gold Miners ETF [NYSE: GDXJ] has added 34% – three times the performance of physical gold:

Gold ETF – red line; Gold Miners ETF – blue line;
Junior Gold Miners EFT – yellow line
Source: Google Finance

However, we need to make one thing clear. Buying physical gold and gold mining stocks isn’t the same thing.

In fact, they’re at the polar opposites of investing. Physical gold isn’t about getting rich. Physical gold is about protecting your wealth from government meddling. You should own physical gold.

You may have 10%, 20% or 30% of your wealth in gold…or perhaps more.

Gold stocks (or any mining stocks) are about speculating and growing your wealth. They’re about placing small bets on the off-chance you could bag a big triple-digit percentage gain.

For gold stocks I doubt if you would have more than 10% of your share portfolio in a number of stocks. An individual gold stock may account for no more than 1-2% of your total wealth.

The thing is, you don’t need a big exposure to gold stocks because of the potential to make super-sized gains.

Of course, the other reason you shouldn’t have a lot of your money in gold stocks is that you can lose money too. The Market Vectors Junior Gold Miners ETF has fallen 43.5% over the past year, and was down as much as 62.5% in June.

Don’t be a Fool

Look, as we wrote in Monday’s Money Morning, the recent resource stock rout has similarities to the dotcom boom and bust in the early 2000s, and the recent tech stock recovery.

When stock markets boom, investors make a lot of bad investments. They don’t buy a stock because it’s a good stock, they buy it because other stocks have gone up and they believe their stock will go up too.

But when the boom ends, they soon sort out the good stocks from the bad stocks.

That clear-out has happened to resource stocks in recent months. The market has punished those companies that had little substance to them.

And this won’t be the end of it either. Investors will be more cautious about where they put their money. That will be bad news for the stocks with little to no genuine prospects. But it will be great news for the genuine explorers and producers.

Just as investors shifted towards the quality tech stocks in recent years, so they’ll shift towards the quality resource stocks in the coming months.

That’s already started to happen. Just as those who thought 2001 was the end of the tech boom look foolish today, those who say this is the end of the resource boom will look just as foolish 10 years from now.

Cheers,
Kris+

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From the Port Phillip Publishing Library

Special Report: Panic of 2013

Daily Reckoning: Dodgy Market and Dodgy Federal Reserve Chairman Candidate!

Money Morning:  The Bull in the China Shop

Pursuit of Happiness: Have You Put Your Portfolio on War Alert?

Australian Small-Cap Investigator:
How to Make Big Money from Small-Cap Stocks

By MoneyMorning.com.au

Detroit’s fate is best summed up by the phrase, ‘Demographics is destiny.’

Take a look at the following chart on Detroit’s population growth since 1840. The golden age of the US car manufacturing industry (between 1930 to 1980) maintained Detroit’s population consistently above 1.5 million.

Fifty years is more than enough time for at least two generations to become conditioned to expect certain outcomes based on past experiences. The social mood is one of, ‘That’s the way it has been and that’s the way it will stay.’

However the world is not a still photo, trapped in time forever. It is a moving picture and continually changing.

Over a fifty-year period there were a number of significant changes – higher oil prices, higher wage demands, increased competition from Japan and growing demand for smaller, fuel-efficient cars.

As these factors began to bite from 1980 onwards, Detroit’s population went into decline.

It has taken thirty years for this exodus to eventually bankrupt the city.

Government largesse (promises of private pensions etc.) reign supreme during the good times. Everyone wants a share of the spoils. The promises can be made and kept provided the pyramid of society a) remains roughly the same size and b) remains a pyramid — larger base, smaller apex.

This is Detroit’s problem — the promises made in the boom times cannot be funded in the bust. There are simply not enough people left to extract sufficient tax revenues from.

Detroit is a slightly extreme example of the demographic issues confronting the rest of the developed world.

For the past sixty years — again a sufficiently long enough time for two or more generations to become conditioned to thinking it will always be this way — the baby boom generation has been making its imprint on the global economy.

Rob Arnott from Research Affiliates estimates that over this six decade period the global economy ‘enjoyed a demographic tailwind which we can quantify. It was worth about 1% per year, meaning that, if we think of 3% growth as normal, it’s really 2% growth plus a demographic tailwind of 1%.’

One third of past economic growth is directly attributable to the spending habits of a never to be repeated generation — the baby boomers.

Yet, sixty years of conditioning has governments (erroneously) predicating their spending commitments (namely welfare entitlements) based on the resumption of 3% growth.

Guess what happens when a tailwind turns around? You guessed it — a headwind.

According to the paper released by Rob Arnott and Denis Chaves titled ‘Mind the (Expectations) Gap: Demographic Trends and GDP’ the economic headwind created by retiring baby boomers will detract 1% per annum growth from the economy.

So if 2% is really the norm for economic growth, subtract 1% for the coming headwind and the ‘new normal’ is going to be 1% economic growth.

This is certain to blow a huge hole in government budgets. Our very own treasury has shown in recent years how bad the actual deficit numbers are compared to their rose-coloured projections.

At present we have central bankers desperately trying to stoke the economic fires to generate the bygone days of 3% growth. Memo to Bernanke: Not going to happen Ben.

The following chart from Arnott and Chaves paper forecasts a steady decline in GDP growth for the next 30–40 years.

The baby boom generation is an abnormality. It was the by-product of halcyon days — not that we knew it at the time.

But as we have seen in Detroit, when demographics shift from production to pension there is trouble ahead.

Low birth rates combined with a plethora of maturing adults on the cusp of retirement turns the pyramid of society on its head.

Wave after wave of boomers shifting from productive tax paying employment to pension receiving retirement is only part of the equation (problem). The second part is increased life expectancies meaning baby boomer retirees are going to tap the public purse for much longer and in greater numbers than any previous generation.

Lower growth in itself is not a bad thing. We are still moving forward.

The problem is certain promises (welfare and health commitments) have been made that cannot be kept if growth does not return to around the 3% mark.

The squeeze is already on. Hardly a day goes by when there isn’t a story about lengthening hospital waiting lists or a new drug needing to be placed on the Pharmaceutical Benefits Scheme (PBS).

 Don’t get me wrong; these stories are about genuine people with real health concerns. The point I am making is what Arnott and Chaves call ‘the expectation gap’. Due to the shifting tectonic plates of demography, the gap between what the public expects and what governments can deliver is destined to become wider.

Immediately after the Second World War, the Great Depression generation had very limited expectations. Their basic creed was, ‘A fair day’s pay for a fair day’s work.’

Sixty years of continued prosperity has certainly altered society’s expectations. Putting this genie back in the bottle is going to be a political nightmare.

Initially the political class (as we have seen) will continue spending in the vain hope of a return to the good old days. This pretend and extend charade can only last for so long before the structural issues of over-promising and under-funding are addressed.

Unfortunately the political class (as we have seen in Greece, Ireland et al) only acts once the bleeding obvious stares them in the face.

In the interim politicians will continue to keep their heads in the sand and debt funded entitlement spending will be the order of the day.

Sadly higher deficits and public debt levels means higher taxes on the next generation (my children). Gen X&Y can only be whipped for so long before they decide enough is enough. And then the principle of ‘if something cannot continue, then it will not continue’ will apply.

It is incumbent upon those nearing or in retirement to recognise this demographic time bomb before it is too late.

A popular acronym among retirees is SKI — ‘spend kids inheritance’. My advice for those taking this message to heart is to be careful because you may live long enough to end up on SKId road.

Protect yourself now with prudent asset management and a carefully considered investment strategy based on conservative projections.

Detroit is an example of what happens when the time bomb of demographics and debt detonate.

Regards,

Vern Gowdie
for The Daily Reckoning Australia

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From the Archives…

Why Risky Stocks are Best in Risky Markets
23-08-2013 –  Kris Sayce

Why Al Gore Won’t Like Big Data
22-08-2013 –  Kris Sayce

Debt and the the Patient Investor
21-08-2013 – Vern Gowdie

How to Apply Reynold’s Law to Your Retirement Savings
20-08-2013 – Nick Hubble

Holding Cash is an Investment Strategy Too
19-08-2013 – Vern Gowdie

GBPUSD’s downward movement from 1.5717 extends to as low as 1.5429. Deeper decline is still possible, and the target would be at the lower line of the price channel on 4-hour chart. As long as the channel support holds, the fall from 1.5717 could be treated as consolidation of the uptrend from 1.4813 (Jul 9 low), one more rise towards 1.6000 is still possible after consolidation. On the other side, a clear break below the channel support will indicate that the uptrend from 1.4813 had completed at 1.5717 already, then the following downward movement could bring price to 1.5000 zone.

Provided by ForexCycle.com

By the GoldandOilGuy.com – Get our FREE BOOK – Controlling Your Trades, Money & Emotions

By www.CentralBankNews.info     Brazil’s central bank raised its benchmark Selic rate by 50 basis points to 9.0 percent, as expected, saying in a brief statement that it expects this move to contribute to lower inflation and ensure that this trend will continue next year.
   The Central Bank of Brazil said the decision by its policy committee, known as Copom, was unanimous and no future bias was indicated.
    It is the fourth consecutive rate by the central bank, which has now raised rates by 175 basis points this year to contain inflation. In 2012 the central bank cut rates by 375 basis points to counter slowing growth.
    Brazil’s Gross Domestic Product expanded by 0.6 percent in the first quarter from the previous quarter for annual growth of 1.9 percent, the third quarter of stronger growth since growth bottomed out at only 0.5 percent in the second quarter of last year.
    Inflation eased to 6.27 percent in July from 6.7 percent in June, the highest rate since October 2011. The central bank targets inflation of 4.5 percent, plus/minus 2 percentage points.

    www.CentralBankNews.info

By Chris Vermeulen – www.GoldAndOilGuy.com

It has been a bumpy ride for precious metal investors over the past couple of years and it unfortunately I do not think its over just yet.

The good news is that the bottom has likely been put in for gold, silver and gold miners BUT the recent rally in these metals and miner looks to be coming to an end. While we could see another pop in price over the next week or so the price, volume and momentum see to be stalling out.

What does this mean? It means we should expect short term weakness and lower prices over the next month or two.

Below are three charts I posted several months ago on my free stockcharts list. These forecast were based off simple technical analysis using cycles, Fibonacci and price patterns. As you can see we are not trading at my key pivot level which I expect selling pressure to start to increase and eventually overpower the buyers sending the prices lower.

Gold Trading Weekly Chart:

Here you can see that gold is technically in a bear market when viewing it on the weekly chart. If you were to pull up a daily chart you would likely notice how the price of gold is trading at a key resistance level on the chart and has reached its full flag measured move.

What does this mean? It means the odds are pointing to lower prices for gold in the next few weeks. Keep in mind though I do feel as though a major bottom has been put in place for the precious metals sector. So buyers are likely to step back in around the $1300 area.

Silver Trading Weekly Chart:

Silver has a little bit different looking chart but the same analysis applies here as it did in gold.

Gold Miners Trading Monthly Chart:

Gold miners may have bottomed on this monthly investing timeframe chart but the daily chart which you will see next clearly shows short term weakness has started.

Gold Miners Trading Daily Chart:

This daily chart really shows my thinking for miners and the overall precious metals sector as a whole. The recent weakness in gold miners to the down side point to distribution of shares. This is very negative for the price of physical gold and silver as gold mining stocks tend to lead physical metals.

The yellow box shows a possible major stage 1 basing pattern forming. If this is the case, then we will have a great opportunity in the coming months when the precious metals down trend completes a reversal and start heading higher.

How to Trade Precious Metals & Gold Miners Conclusion:

In short, I think that staying in cash or shorting metals is the play for the next couple weeks. After that anything can happen and until price breaks down or finally completes the basing pattern and confirms a market bottom I would be very cautious trading here.

In the last week members of my trading newsletter took profits on our short SP500 trade and we closed a long trade in natural gas for a quick 6.5% gain. Join our community of traders and have your money on the right side of the market!

Chris Vermeulen
www.GoldAndOilGuy.com

By WallStreetDaily.com

There are tons of reasons to believe that companies in the business of electronic medical records (EMR) may experience a boom in the next 18 months – and an even bigger one down the road.

The biggest reason? Hospitals that switch to EMR systems by 2014 can expect to receive $5 million to $7 million in incentives from Obama’s HITECH Act. Oh, and missing the deadline could cost each facility $1 million in penalties.

Many hospitals are already making the leap…

Indeed, the EMR market hit $20.7 billion in 2012, a 15% boost over 2011. Take a look…

Despite such rampant growth, however, 56% of hospitals in the United States (or 2,800 facilities) still don’t have at least a basic EMR system. So growth is expected to jump 7.85% a year until 2015.

And the largest EMR system providers may be the biggest beneficiaries from last-minute adopters.

I’ll let the numbers speak for themselves…

Allscripts Healthcare Solutions (MDRX) must be very fond of Obamacare. In the second quarter, the company reported its first year-over-year increase in bookings in the past six quarters: $194 million to $200 million. The Chicago-based company also has a $3-billion backlog. Annual sales doubled from $548 million in 2009 to $1.44 billion in 2012. The stock was recently up 61.5% year-to-date.

Cerner Corporation (CERN) sells another popular EHR system that increased revenue from $1.67 billion in 2009 to over $2.66 billion last year. Adjusted net earnings for the second quarter of 2013 were $119.6 million, an increase of 16% from a year ago. The $16.3-billion company is rolling in a free cash flow of $47.4 million. And it’s sitting on a backlog of $8 billion, a 23% annual increase. Shares have jumped 18.41% year-to-date.

Quality Systems, Inc. (QSII) saw its annual revenue climb from $245 million in mid-2009 to over $460 million in 2012. Lead generation has grown 172% year-over-year. Its sales pipeline jumped to $150.1 million, a 6% improvement – and its first boost in several quarters. Looks like restructuring efforts in late 2012 are starting to pay off. Quality Systems recently announced a partnership with Humana Inc. (HUM) to help spread the word about adoption of EMR to healthcare providers. The company’s shares are up 17.47% year-to-date, and they pay a 3.3% yield.

Athenahealth (ATHN), a cloud-based software company, has seen sales increase over 200% since early 2009. Second-quarter revenue totaled $146.3 million, compared to $103.5 million in the same period last year, an increase of 41%. ATHN also reports cash and cash equivalents of $33.6 million. And shares have jumped 46.1% year-to-date.

Bottom line: All signs point to hospitals jumping on the EMR bandwagon over the next year or so, making now the perfect time to consider investing in the trend.

Ahead of the tape,

Karen Canella

The post 2,800 Reasons to Bet on EMR appeared first on Wall Street Daily.

Article By WallStreetDaily.com

Original Article: 2,800 Reasons to Bet on EMR

Article by Investazor.com

For better understanding why nowadays trading is considered to be fast and easy to be done by anyone, we should have a look back in history.

For an individual to invest in the stock or the commodities market it was needed a big sum of money. First of all because there were no leverage and second the commissions paid for each investment or trade was big. To place a trade in the market the investor had to call his stockbroker and give him the order. The broker then entered the order in their system which was linked to trading floors and exchanges. For every operation made, the stockbroker had a commission. So, if an investor wanted to open a trade, he had to pay; if he wanted to close its position, this time again he had to pay.

Besides the fact that a lot of money were paid to the stock brokers as commissions, there was another problem: the time for the trade to get into the market was too long. The investor had to call his broker, from whom he got the quotation and approved it. After that, the broker sent the order into the market. With all these steps it would have been very difficult for someone to trade on a short term basis and make profits.

In August 1994, K. Aufhauser & Company (later known as TD Ameritrade) became the first online brokerage house. They offered their clients the possibility to trade online via WealthWEB. Since then the online investing has known an impressive growth. Now anyone can have a trading account with one or more online brokerage houses. The orders are placed almost instantaneously and the commissions are very low or sometimes nonexistent.

Another advantage of the online trading, beside the fact that the order is placed immediately with low or no commissions, is considered to be the trading platforms. Every online brokerage house is offering their clients a trading platform through which they can place and close orders, set Stop Losses and Take Profits, but this is not all. The platforms also offer to the user analytic tools for him to do his own analysis and take his own decisions.

The post A Look in the Past for Online Trading appeared first on investazor.com.

Article by Investazor.com

United Kingdom is barely keeping its worrisome economic situation under control. The unfavorable conditions given by the worldwide difficulties are making the U.K. recovery more difficult to be accomplished. If China, Australia and United States are growing at a relatively good pace, U.K. still produces 3%, less than it did five years ago, mainly because of the poor situation of the Euro zone. Looking at various sectors of the economy, traces of a hard struggle to resist to the recession are visible: 7.8% jobless rate as well as a significant breakdown of the business climate.

As current measures that are considered in order to deal with this situation, we can enumerate:

• Keeping the interest rate at 0.50% until the labour market will significantly improve (means falling below the threshold of 7% jobless rate in order to start speaking about a possible decision in the interest rate’s value);
• Rebuilding the confidence imagine of the bank in order to be able to better serve the economy with credits (capital ratios need to reach a threshold of 7%);

British officials are very much confident in the forward guidance and the set of rules that has been established so far. Approaching the situation in a realistic manner, U.K. is expected to recover in a slow pace, being required another 2 or 3 years before breathing easy. The inflation is thought to be kept under control and is expected to get to normal parameters by evolving in a natural rhythm. Strong assurance came from the Governor Mark Carney who is willing to take any action, including adding stimulus, if the situation requires it.

The post Mark Carney Believes in United Kingdom appeared first on investazor.com.