US jobless rate falls to 7.4% in July (via AFP)The US unemployment rate fell to a better-than-expected 7.4 percent in July from 7.6 percent in June but jobs growth disappointed, official data released Friday showed. The Labor Department reported the United States added 162,000 jobs last month, well…
“Fabulous Fab” Goldman Sachs Trader Found Liable (via NewsLook)Video News by NewsLook A New York jury found former Goldman Sachs trader Fabrice Tourre liable on six charges of misleading investors before the 2008 crisis.
By The Sizemore Letter
It’s so good to be bad—at least when it comes to investing.
Vice stocks are a corner of the market where many investors—and particularly professionals—are afraid to venture. But this reluctance by many investors to embrace vice stocks is precisely what makes them such profitable investments (see “The Price of Sin”). Because professional investors like to avoid being associated with merchants of death and peddlers of peccadillo, these companies tend to trade at discounts to the broader market and often pay substantial dividends.
Some areas of the vice world—in particular tobacco and firearms—have moats around their businesses that mafia dons or drug lords would envy. Government regulation and a hostile legal regime make it almost impossible for new company to set up shop in these businesses. The compliance costs would prevent them from ever getting off the ground…and the first lawsuit would bury them.
Today, we’re going to take a look at five high-profile vice stocks and evaluate their investment merits.
3 options strategies to protect physical metal holdings (via Futures Magazine)If you believe that no nation can become wealthier by going deeper in debt, then gold, silver and platinum might be a viable hedge against the inevitable inflation that follows massive government infusions. Because investment metals can be cashed into…
It’s Friday in the Wall Street Daily Nation. That means it’s time for some charts.
And it’s also time for “just a bit of a break from the norm / just a little somethin’ to break the monotony,” as D.J. Jazzy Jeff and The Fresh Prince famously put it.
Let me explain…
A New Kind of Bragging Right
Most analysts in the blogosphere and newsletter industry happily (and all too frequently) tout their winners. And only their winners.
Their marketing departments love to engage in the same chest-thumping exercise, too. It’s what sells subscriptions, after all.
Don’t act shocked. The average investor (i.e. – you) is exactly the same way. Do you ever go to dinner parties and share the worst investment you ever made? My point exactly. It’s just the winners that get acknowledged.
Well, last night I received my July issue of Mossberg’s Investor Digest. And right there on pg. 2 were all the goods. It broke down the performance of every single investment idea that Editor Dave Mossberg shared over the past 12 months or so. The good, the bad and the ugly. (FYI – There’s only one ugly pick on his list, which is why I’m a loyal subscriber.)
It got me thinking, too.
Yesterday, I bragged a little too much about being one of the first to bet on Europe. I’ve done the same thing with my calls on Japan and U.S. real estate, too. Collectively, the bragging paints a picture that I think I’m so smart.
But I’m not.
To prove it, I want to share three charts that demonstrate my lack of brilliance, what I’ve learned from the mistakes – and, most importantly, what you need to do to protect yourself from my occasional bouts of suckiness…
Print is Dead! Or Not
Back in February, I boldly proclaimed that print media was on its deathbed. Since then, the evidence in support of my viewpoint continues to pile up. Like when PC World magazine decided in July to join the likes of Newsweek and go all-digital.
Despite the obvious signs of a terminal decline, shares of the two print media dinosaurs that I told you to bet against – The New York Times Company (NYT) and Gannett Co., Inc. (GCI) – keep defying gravity.
Each stock is up about 40% year-to-date, more than doubling the return of the S&P 500 Index. Death never looked so good. Especially when you consider that “death” actually occurred all the way back in 2002, when NYT shares topped at $51.
Let’s give the CEO major props for resurrecting the company.
Lesson: When we sell a stock short based on the impending obsolescence of the company’s products, we need to be committed. I’m taking about “until death do us part” commitment. Or we shouldn’t bother. Because no matter how sickly the company, it could take a while before share prices finally kick the bucket.
The Wrong Way to Play the Natural Gas Boom
Last February, I teased you with a killer “pick and shovel” company in the fracking services space that I had just recommended to WSD Insider subscribers. It was a company that was growing sales and earnings at an insanely fast clip. And it paid about a 10% dividend, too.
How could you resist? Be glad that you did.
In August 2012, I finally caved and shared the identity of the company with you: Poseidon Corp. (PSN.TO). And it ended up being a killer idea, all right. A wealth killer, that is.
After reporting an unexpected 45% drop in profits, shares plummeted 62% in a single day. Now the company is defunct, after a special committee found egregious accounting errors (i.e. – fraud).
Lesson: When the growth appears too good to be true – and management keeps making boasts like “our addressable market keeps getting larger [and we’re a rare], growth-oriented, yield investment” – run for cover. Because it is too good to be true.
The Sun Will Come Out Tomorrow
After correctly panning Zynga (ZNGA), Groupon (GRPN) and Facebook (FB) before their historic IPO flops, I tried my hand at predicting the ultimate fate of SolarCity’s (SCTY) IPO.
I dedicated two entire columns (see here and here) to tearing apart its business model, too. Boy, do I wish I spent my time doing something else.
The stock is up 250% (and counting).
Lesson: When it comes to evaluating renewable energy investments, I can’t underestimate consumers’ unwavering commitment to “go green.” It’s a powerful force, sometimes more powerful than economics.
The Best Defense Against Bad Advice
Full disclosure is always the best policy. And with that in mind, please know that I get it way wrong sometimes.
Let that be a friendly reminder, though, that we need to put safeguards in place to protect against my bad calls blowing us all up. Specifically, trailing-stop and position-sizing disciplines.
Now, if you choose to ignore that advice – and blindly follow my lead – well, you get to share in the blame for the impact of any bad recommendations. Trust me, it’s much more therapeutic when you get to blame me for everything.
Speaking of which, feel free to sound off on any of my bad calls – or any of our work here at Wall Street Daily – by dropping us an email here.
That’s it for this week. On Monday, I’m back to uncovering profitable recommendations for you. Count on it.
Louis Basenese
The post Charting My Three Worst Recommendations of the Last Year appeared first on | Wall Street Daily.
Article By WallStreetDaily.com
Original Article: Charting My Three Worst Recommendations of the Last Year
Stock in the European market started the day in green as investors focus on the US non-farm payrolls report, which is expected to be released later during the day as it may show when the Federal Reserve (Fed) may begin to scale back on its bond-buying program.
The European Euro Stoxx 50 advanced 0.29% to 2,816.66 at the market open, while the German DAX rose 0.24% to 8,430.51. The French CAC 40 jumped 0.25% higher at 4,052.69, while the UK’s FTSE 100 gained 0.23% to 6,697.53.
The expected US non-farm payrolls report is expected to show an addition of 185,000 jobs to the US employers in the month of July, while the unemployment rate is expected to show a slight fall from previous record of 7.6% to 7.5%.
Earlier this week the central bank said that it would begin to scale back on its monthly bond-buying program if the US economy have boosted.
The Federal Open Market Committee has said it wants to see its target met before proceeding with scaling back with the quantitative easing, with targets 6.5% for unemployment rate and inflation rate at 2.5%.
Spain’s unemployment figures for July showed that unemployment fell by 64,900, compared to previous figures for the month of June with a fall of 127,200, according to reports from Spain’s employment ministry.
Eurozone producer prices are expected to gain up to 0.1% in the month June on a monthly basis, after previous fall of 0.3% in May.
The post Europe Shares open green ahead of US payrolls report appeared first on | HY Markets Official blog.
Article provided by HY Markets Forex Blog
Shares for the world’s largest social network Facebook has surpassed the initial estimated price of $38 and has advanced as high as $38.31, first time since May 18, 2012.
Ever since the social network company reported the better-than-expected earnings report on July 24th, Facebook shares have been boosted.
Facebook shares moved back from its high $38.31, to $36.80 at market close in New York.
The company has been supported by the innovations and fast growth of Facebook’s mobile advertising revenue, as it currently earns 41% of its total revenue from mobile advertising.
In May 2012, the social network floatation started with a disappointing start, as investors and shareholders worried over the company’s slow revenue growth.
The company share price dropped drastically to $18, with approximately $48bn cleared off from Facebook’s stock market value.
The founder of Facebook Mark Zuckerberg is now benefiting from the high demand in ads targeting smart phone users and tablet users.
Last week Facebook said that the figures for tablet and smart phone users rose to 819 million during the second quarter. The company’s revenue rose by 53% to $1.81 billion, exceeding analysts’ sales forecast of $1.62 million.
The world’s largest social-networking site intends to expand and create an additional source of advertising revenue by selling TV commercials on sites for up to $2.5 million a day.
The post Facebook share price tops $38 flotation appeared first on | HY Markets Official blog.
Article provided by HY Markets Forex Blog
US auto sales accelerate to best July since 2006 (via AFP)US auto sales continued to accelerate, posting the best July performance since 2006 Thursday as consumers flocked to dealerships to replace ageing vehicles with new models at low interest rates. “Solid industry sales in July point to a stable market…
EURUSD breaks below the support of the lower line of the price channel on 4-hour chart, suggesting that consolidation of the uptrend from 1.2756 is underway. Range trading between 1.3100 and 1.3344 would likely be seen over the next several days. Key support is at 1.3100, as long as this level holds, the uptrend could be expected to resume, and one more rise towards 1.3600 is still possible after consolidation.
Provided by ForexCycle.com
You know their interests aren’t really in line with your interests.
And yet you also know these are some of the most powerful folks in investing.
So, should you follow them or bet against them?
It’s a tough question to answer.
That’s why we prefer to ignore it altogether…
Who are we talking about? We’re talking about the big investment banks – in particular, Goldman Sachs.
If you trust that Goldman’s has the average investor in mind when it makes the big strategic calls, then you’d follow their advice.
And what does the banking giant suggest investors do today?
These two reports will give you an idea. First, Goldman’s suggests you sell India, as reported by Bloomberg:
‘India’s capital outflows deepened in July, spurring Goldman Sachs Group Inc. to recommend reducing stock holdings as central bank efforts to support the rupee threaten to worsen the nation’s economic slump.‘
What should you do with your money after you sell India? Easy, the Financial Times tells you what Goldman’s says to buy:
‘Goldman Sachs Asset Management has significantly increased its exposure to European equities in anticipation of an end to the recession in Europe.
‘The US investment house had been overweight European equities by 4 per cent compared with the MSCI All Country World Index, but it recently doubled its overweight position to over 8 per cent.‘
Trouble is: can you trust the advice?
It will take a long time before Goldman Sachs wins back its reputation. After all, the trial has just ended in New York of Fabrice Tourre, an ex-Goldman Sachs trader.
The US Securities & Exchange Commission (SEC) has charged him with misleading investors.
The prosecution presented a whole bunch of evidence that suggests Tourre knew the investments he sold clients weren’t very good (and that’s putting it kindly).
Overnight, the jury found him guilty.
It’s no wonder the big investment banks have gotten a bad press. If even their biggest customers can’t trust them, why should the average investor believe what they say?
To our mind that’s one of the biggest issues with big-picture macro investing. By that, we don’t mean ‘top down’ investing of the kind we mentioned yesterday, that’s different.
By big picture macro investing we mean buying and selling an asset based on political or central bank policy decisions.
As we see it, investing at the macro level puts you at the mercy of politicians, central bankers, and perhaps most of all, the huge investment banks like Goldman Sachs.
Now, that’s not to say it’s impossible. We just prefer focussing on things at the micro level – entrepreneurs and businesses. That’s why we generally stick to individual stocks.
Of course, big macro-economic events can still impact individual stocks. You see that all the time. After all, stock market indices comprise tens or hundreds (sometimes thousands) of individual stocks.
But the benefit of targeting a stock or a number of stocks is that you have many more chances to pick a winning trade.
Furthermore, backing one big macro-economic event is just like backing an index. It means you end up over-diversifying your exposure. Take the US market and the iShares NASDAQ Biotechnology Index ETF [NASDAQ: IBB].
The main stock indices have caught all the headlines for hitting an all-time high this year. Over the past two years the S&P 500 index has gained 30.4%. That’s pretty good.
But it’s not that great compared to something like the Biotech ETF. It has gained 90.4% during the same time. Some individual stocks in that ETF have done even better.
The biotech sector is a typical sector that doesn’t always move in line with the broader economy’s fortunes. Although when it does, and if the market is in the mood for it, it can outperform the broader indices many times over.
Look, investing is like anything else, you should always know which battles to fight and from which to walk away. If you’ve got the resolve to do it, you could pit your wits against Goldman Sachs and the other investment banks in the world of macro investing. If you do, good luck. We’ll cheer for you.
Or, you could play at micro investing instead. That way you could make much bigger returns without worrying about the big bankers influencing the market one way or the other.
We know which type of investing we prefer. How about you?S
Cheers,
Kris+
From the Port Phillip Publishing Library
Special Report: The Sixth Revolution
Daily Reckoning: The Global Trend Towards Wealth Protection
Money Morning: Two Approaches to Investing…
Pursuit of Happiness: Learning to Avoid the Governments ‘Noble Wealth Trap’
Australian Small-Cap Investigator:
How to Make Big Money from Small-Cap Stocks
