Saturday, December 19, 2009

Evil Agency—And It Ain’t the CIA

Most people probably haven't heard of one of the most powerful and destructive agencies in Washington: the Public Company Accounting Oversight Board (PCAOB). It was created by the 2002 Sarbanes-Oxley Act, with the task of setting and policing the auditing standards for publicly held companies. The PCAOB not only conducts investigations of accounting firms but also interprets key sections of Sarbanes-Oxley, particularly the notorious Section 404, which covers a company's internal controls. The agency also has the power to tax--dubbed an "accounting support fee"--to fund its operations. The PCAOB has five members. Not surprisingly, with their power to tax, these members pay themselves handsomely. PCAOB Chairman Mark Olson took home about $654,000 last year, and his four colleagues each raked in nearly $532,000. This far exceeds what the U.S. President makes ($400,000), as well as the $500,000 cap the Obama Administration has set for CEOs whose companies receive federal bailout money.

The PCAOB has morphed into an accounting version of Nurse Ratched from One Flew Over the Cuckoo's Nest, demanding costly but useless procedures, including such minutiae as which workers in a company can have office keys and telling companies how often they should change computer access codes. While drenching itself in such trivia, the PCAOB was out to lunch on the biggest economic/ accounting issue of our time: the subprime mortgage disaster.

The whole point of Sarbanes-Oxley was to prevent fraud. In that regard it has failed miserably. Three years after Sarbanes-Oxley was enacted a major commodities firm, Refco, collapsed amid brazen accounting fraud. A Brookings-American Enterprise Institute study has found that Sarbox has cost the U.S. economy more than $1 trillion in direct and indirect costs.

PCAOB was a vigorous champion of that weapon of mass destruction, mark-to-market accounting. Even now it is waging a rear-guard action to undo the easing that the FASB promulgated in April.

Relief may be on the horizon. In a move that astonished observers the Supreme Court announced last month that it would hear a case brought by the Competitive Enterprise Institute and the Free Enterprise Fund challenging the constitutionality of the PCAOB. The challenge sounds arcane, but it could be one of those landmark cases that occasionally crop up and bolster the sanctity of the rule of law, which undergirds the U.S.' political and free-enterprise system.

The challenge is based on the appointments clause of the Constitution, which requires that "Officers of the United States" be appointed by the President or by the head of an agency. The officials of the PCAOB--despite their enormous powers, including civil and criminal investigations of accounting firms--are appointed by the SEC commissioners acting collectively. As CEI General Counsel Sam Kazman puts it: "The framers of the Constitution believed that if government officers were appointed by collective bodies rather than by individuals, then responsibility for their actions would largely vanish." The PCAOB is not accountable to the President or to the SEC chairman.

This is a case worth watching. If constitutional prohibitions are treated as relics, if commercial contracts can be brazenly upended to serve short-term political ends and if property rights can be trampled on for political purposes, then the U.S. will indeed sink into an Argentina-like morass in the years to come. But such a disaster would have mortal--not just economic--consequences. Without a strong, purposeful U.S., the world would be a far more violent and tyrannical and less prosperous place. One need only look at the 1930s to see what can unfold when the U.S. is weak and withdrawn.

The latest business loans numbers show that bank loans to businesses are still falling. AS I have written in recent posts, large banks have systematically shut down their lending to small businesses over the past 2 months, an unintended consequence of the hugely profitable government bailout programs. Basically, today if you can't sell it to the government don't bother making the loan.

Banks have loaned approximately -$100 billion to U.S. companies since last fall. Tough to make payroll when you have to pay more to the bank than you get from the bank.

The latest weekly figures, show that banks have reduced loans to businesses by $15.8 billion–roughly -$4,000,000,000 per week–in the past month alone. That does not mean there is less borrowing; it means there is negative borrowing. Banks have forced their business customers to actually pay down their loan balances by $4 billion per week. The only way to do that in a small business is to lay off a worker or sell some inventory or other assets at a deep discount.

Essentially all business loans are small business loans–big public companies get their working capital in the commercial paper market. This is a major reason why employment continues to fall.

This is not the end of the world. I wrote a few days ago, in a piece called Time to Think About the Next Story-Inflation, Rising Rates, Commodity Prices, Weak Dollar, that the tsunami of bank reserves released by the Fed over the past six months is hugely profitable for banks and will eventually force a reopening of the credit markets. This chart is just to remind you that it is going to take longer to show up in jobs numbers than it has in bank stock prices.

The big question around Google's new push into e-books is how, if at all, it will change Amazon's fortunes. Jefferies & Company analyst Yousseff Squali argues that Amazon will likely remain the e-books leader, but that the move by Google (NSDQ: GOOG) may force Amazon to provide publishers with better financial terms and offer aggressive discounts on the Kindle. Squali didn't provide specifics on what those new terms might be, but he did analyze the competitive challenges the two will face as they grow their e-books businesses.

—Search is a key advantage for Google: Squali said Google could use its dominant search engine as a distribution channel that could trigger impulse buys. Google could, for example, easily publish its own sponsored search or paid click listings alongside searches for e-books or relative products. 

—Google's profit margins will likely be higher: By offering an e-books sales-and-delivery service rather than selling an e-reader, Squali believes Google could get higher profit margins from its e-books business than Amazon (NSDQ: AMZN). (Amazon, of course, has manufacturing, distribution and support costs related to the Kindle.) If Squali's prediction that Amazon will have to drop its price for the Kindle is right, margins would be even lower since the costs of making and distributing the Kindle likely wouldn't change.

—Several factors will determine the winner: Squali sees three primary factors in deciding who will be the ultimate winner in the e-book battle: 1) whether users gravitate to reading e-books online or on devices; 2) whether users will be satisfied with reading books that are stored on Google's servers or "own" them on their hard drives; and 3) which company wins the pricing war.

Wednesday, December 16, 2009

The Lowdown on Tech's Ultimate Bellwether

As a longtime watcher of Cisco Systems, I have always known the tech giant was a bellwether company in more ways than one.

When the internet exploded onto the scene in the 90s, Cisco was literally at ground zero of what became Web 1.0. As Cisco went, so went the tech sector.

After all, its switches and routers made it all possible. And in the run-up to the tech bubble that ultimately collapsed, Cisco's share price went hyperbolic, as did numerous others'.

But sales figures and inventory numbers weren't what made Cisco a hot stocks market of 2010 indicator for me for me back then — not as much as its name.

That's because, in the hands of my sister, Cisco's name proved to be the greatest bellwether of them all.

It happened in the spring of 2000 at a typical family gathering. You know the kind: spiral ham, potato salad, a Jell-O mold, and some lukewarm beer.

I was making the usual small talk with my pop when my sister — God bless her — appeared out of nowhere and began talking about how we should look into a stock she was thinking about buying.

She said — and I'll never forget this as long as I live — "You guys need to buy some shares of Cisco Systems stock. I think it could easily double." Cisco, as you may remember, was trading over $100 at the time.

Now, knowing her as I did, my reply was quite simple. "What makes you think that?" I asked her, trying not to chuckle.

"Well," she said, "everyone I know thinks so. And besides, I see their trucks all over the place."

With that, I could barely hold onto my warm beer and Jell-O because I was laughing so hard.

I realized my sister didn't know the difference between Sysco Foods and Cisco Systems, and she was about to buy the high flier at its peak.

Of course, once I finally got control of myself, I tried talking her into a nice mutual fund.

But driving home that night, it struck me: my sister was really no different than that stock-picking shoeshine boy before Black Monday in 1929. And suddenly, all that talk about bubbles began making perfect sense to me.

Cisco, of course, never did double again. In fact, it soon tanked along with the rest of the high fliers.

Tech's Ultimate Bellwether: Cisco Systems Stock 

But unlike those other companies, Cisco just kept chugging along — growing and capturing top stocks market share. Its share price may have gone virtually flat, but the company managed to hold onto its bellwether status.

A bellwether, by the way, is loosely defined as anything that tends to create, influence, or set trends.

It comes from the Middle English word bellewether and actually has nothing to do with the "weather" as we know it. It refers to the practice of putting a bell around the neck of a castrated ram (a wether) so it may lead its flock of sheep.

Of course, the October 2007 comments from Cisco CEO John Chambers spooked the stock markets and basically marked the top of the tech stocks market. (Who said the bell doesn't ring at the top?)

Back then, Chambers was merely warning about the outlook for flat U.S. sales — and the Nasdaq has been down ever since. Today, of course, it has turned into something else entirely: a global slowdown.

That has given the company a certain layer of doubt, leaving investors to worry how Cisco's sales will measure up, since it's always about winning the expectations game on the Street.

And in a free, new six-page report, The Wealth Advisory research team has broken down the tech giant, answering the question on every investor's mind these days. . .

Is Cisco Systems Inc. (CSCO) a Buy, Sell, or Hold?

In this free report, Wealth Daily subscribers will receive:

  • The results from The Wealth Advisory's proprietary scoring model

  • A buy, sell, or hold recommendation

  • A 12-month Price Target along with a current Stop/Loss

  • A technical and fundamental analysis of the company's share price

  • And much more. . .

To receive a free download of this report and our Buy, Sell, or Hold recommendation for Cisco Systems Inc.

I hope you enjoy your free Cisco Sytems stock report. I'll be publishing many more of these in the weeks to come. . .

Tuesday, December 15, 2009

How It Successfully Predicts Top Stocks

It was almost two years ago, since I met with Ian Cooper in the corner of one of Baltimore's newest Thai restaurants.

I remember calling the near-spontaneous Saturday afternoon meeting like it was yesterday. And for good reason.

You see, word was traveling - and traveling fast - that Ian's deadly-accurate stock-picking method enhanced somehow by manipulating Google's top-secret search algorithm... the same one that makes it the most powerful and trusted search engine on the planet today.

If the rumors were true, it would mean that Ian very well could have single-handedly unlocked the easiest - and most profitable - top stock analysis tool on the planet.

As I would find out... and as you'll see in the free report below... successfully manipulating Google's one-of-a-kind algorithm is just the tip of the iceberg.


In the few short years the company's been around, the coveted search engine's rapidly transformed from a college buddy start-up into THE household search engine.

In fact, the top-secret algorithm they created is so powerful that you never "search" for anything any more - you "Google" it.

... even if you're still using Yahoo! for your queries.

To top it off, it's so versatile that people across the world trust it to rapidly find everything from accurate maps and driving directions to breaking news and their children's GPS positions.

The Wall Street Journal recently reported that this legendary algorithm can even predict which employees are about leave their jobs - even before they know themselves!

But it's what one investment legend's been successfully using it for that I find astounding.

Let me explain...

Imagine for a moment being able to take that same algorithm - the one that's made it the most trusted and reliable search tool on the planet - to find something much more valuable... best stock advice.

I'm not talking about coming out with double-digit gains here, either. I'm talking about being able to manipulate this coveted algorithm safely, and use it to pull in triple-digit winner after triple-digit winner in an otherwise dangerous small-cap sector.

Well... his name's Ian Cooper. And after a near decade-long tenure showing investors how to rake in some of the largest gains in the market, approaching 1,500 of them, you could say with confidence that he's on to something big... VERY BIG.

Meeting the man who manipulated Google's algorithm.

Our paths initially crossed in a chance meeting at a Christmas Party back in 2001. He was just starting his soon-to-be highly successful career as a research analyst for a firm just down the street.

Since then, Ian's created quite the name for himself as a small-caps and options trading wizard. He's pulled in gains of:

120% on Royal Caribbean

194.12% on QQQ

269.52% on On2 Technologies

270% on ONT

268% on CYD

206.33% on VTSS

246% on IPIX

233% on TLTCJ

515.38% on MQJSB

225% on ETGP

302.15% on ASTM

And that's just to name a few.

His off-the-charts accuracy for reliably reading the markets, matched with his winner-after-winner track record, has plastered his sought-after advice on the pages of numerous publications. He's filled columns from Investor's Business Daily all the way to Forbes.

He's also frequently appeared on investment shows such as Money Matters with Barry Armstrong and On the Money with Mike Stein.

In other words, Ian has rapidly become the real deal.

He's successfully helped thousands of investors just like you, beating the Dow every year. And not just in good times. He saw the sub-prime collapse over a year before it started and warned investors right on time.

He saw it coming ahead of time and didn't just show them how to come away unscathed, they made money - lots of it - while the rest of the market panicked. He'd pulled in gains of:

188% gain from Thornburg

138% gain from Hovnanian

150% gain from Standard Pacific

Just to name a few.

It wasn't the first time. Ian somehow manages to unearth amazing plays no matter how the markets behave. Always one step ahead.

In fact, when things are bad, that's when he's pulled in the biggest gains.

Manipulating the world's most reliable algorithm into a profit-generating machine.

It's one of the greatest achievements the internet ever experienced. And it almost never took place...

In 1996, two young, Stanford PhD students were partnered together by their professor, in an advanced computer-science class.

As with most - eventually - famous partnerships, the two geniuses were polar opposites.

In fact, aside from their taste in women, the only thing they had in common was their obsession with fixing the massive glitches found in every (at the time) internet search engine. To them, they weren't anywhere near as accurate as they should be.

They knew the solution lied in the algorithm, a powerful formula for computing and finding virtually anything.

It took over two years and several failed theories. But they finally hit pay-dirt. And landed a discovery so astounding that within just eight years, their algorithm would rapidly become the most trusted and reliable search engine on the planet.

Its one-of-a-kind, highly reliable system has launched Google from a single-server search engine to the largest American company outside of the Dow. It's so reliable, in fact, that after just nine years you no longer perform a "web search" for something, you "Google" it.

Its mainframe is built like a fortress, changing codes and updating itself almost every day.

But their algorithm, as I would soon find out, wouldn't be strictly limited to internet searches. As Ian phrased it...

What if you could take this algorithm and tweak it for your own uses?

What if you could use it to detect the hottest emerging trends, and the companies within them, the same exact way that makes Google so reliable?

What if there was a way to use it to detect one best stock out of more than 17,000 that is just about to explode?

I learned that's exactly what Ian's been doing.

The details I learned while talking with him are highly complicated. And if you aren't an experienced IT professional, you most likely wouldn't understand it.

That's all right. All you need to know is that six years ago, Ian started manipulating the algorithm.

And as you'll see in a moment, it's making a handful of investors like you quite rich.

It's not all he uses. But it is the last of ten powerful indicators Ian has perfected to help confirm the high probability of the best stock launching several hundred percent!

He calls these ten indicators his Maxims of Fortune. And it's a fitting name.

In short, when the indicators align, it creates an extremely strong buy signal, and a stock's share price soon after does something marvelous... it skyrockets.

Now, something Ian has learned the hard way over the years is that even if you have nine out of ten indicators, forget about it. Save your money. It's not worth it.

Move on.

But when all ten are combined, the gains are so explosive, it's like hotwiring an ATM.

I'm not talking about finding one-trick ponies, either. Ian is dipping into the elusive small-cap sector and finding companies that rapidly turn into the giants of their industries.

These stable opportunities didn't used to come around all the time. Ian used to uncover maybe one or two a year. But now, thanks to his little-known ability to manipulate the most powerful algorithm on the planet, he's starting to find them closer to once a month!

And when his list of indicators starts urging a buy, he's been right there to recommend it. Always before it starts to surge.

For example, in October 2001, his indicators were urging a buy on Navisite, an IT hosting company whose share price had sunk from $1,000 to just $0.16.

Nobody wanted a piece of it, as people were fleeing dot-com stocks like the plague.

But Navisite's price was too low. And thanks to Ian's "Google-style" manipulation, the indicators fired on all cylinders when it bottomed out. It was time to buy.

Six years later, shares of Navisite traded for about $10. And investors who got in when Ian made the recommendation safely turned every $10,000 into $625,000!

Have a look:

(image) Chart

Then, in October, 2002, he used these indicators again to uncover a growing web-acceleration company called Akamai...

At the time, shares of this company were bottomed out, trading for just $0.84. But at the same time, all signals from the indicators revealed the company as a go.

As expected, the price started to take off shortly after. By 2007, this emerging web-accelerator's shares broke $60!

The 7,043% gain made investors like you $714,285 for every $10,000 they started with!

Here. Check it out:

(image) Chart

And then there's this Blockbuster from ATP Oil and Gas...

When he found it, shares were trading for $3.64. Again, the indicators, topped with Google's manipulation, issued a strong buy signal.

Today, shares of ATP trade for over $38.00!

(image) Chart

If you haven't noticed, he's finding these monsters in the once-inscrutable small-cap sector.

It's easy to see why. After all...

This is the sector where the real money is made. Where every investor dreams of "hitting it big." And where a stake of just a few thousand dollars could secure your entire retirement.

Ironically, most mainstream publications won't touch it with a ten-foot pole.

Tapping into an advantage of more than 21% a year - since 1925!

But Ian's found a way to detect these soon-to-be leaders of their industries among thousands of bottoms-up companies running on nothing more than rumor and fluff.

The method here, finding outstanding investment after investment, could be summed up in one word - leverage.

After all, this is the sector where index-crushing companies get started. It's the birthplace of Fortune 500 leaders such as Cisco Systems, Best Buy, and even the number-one Fortune 500 company, Wal-Mart.

In fact, the 2007 Ibbotson yearbook, considered the bible of the investment analysis community, recently announced that since 1925, small caps have outperformed large caps by more than 21% a year!

What's even more amazing is that only about 1% of the companies in this sector ever make any money. But that handful of best stocks for 2010 launches so high, so fast that it carries the entire sector's average above already-established large caps.

And now, thanks to this powerful Google manipulation, Ian's knock-'em-down set of indicators is taking full advantage of it.

And Ian's going to share his powerful secrets with you!

Now, in this extremely rare opportunity, Ian will share his Ten Maxims, along with his highly reliable algorithmic manipulation of Google, with investors just like you.

All you have to do is accept this trial run into what could be the most profitable small-cap advisory on the planet. It focuses solely on unlocking highly explosive opportunities in the small-cap sector using these indicators. I highly recommend you check it out.

It's called the SC Trading Pit.

SC, as you might have guessed, stands for Small Cap. And as the name implies, none of these opportunities will have a market cap of more than $500 million.

I know that might seem large, but in the investment world, it's not. Just look at Wal-Mart's massive market cap of over $198 billion - compared to the $205 million it started out with.

Even $22 billion giant Best Buy started with only $79 million. Now they're both household names.

The story's the same for scores of other Fortune 500 companies. And Ian's Ten Maxims will easily uncover future blockbusters for investors just like you.

In other words, if you were ever looking for an advisory that requires only a tiny bit of money to make an absolute fortune, this is it.

How the SC Trading Pit could make you filthy rich.

It's perhaps the fastest, most efficient way an investor can make several hundred - even thousand - percent gains. And thanks to Ian's set of Ten Maxims, it's as easy as checking your email.

Every other week, a new issue of SC Trading Pit enters email boxes across the world.

Each issue will explain all the details of Ian's latest SC Trading Pit recommendations. These are the companies that Ian has thoroughly examined using the same painstaking criteria that made him the sought-after analyst he is today - using the secrets of his Ten Maxims of Fortune and his manipulation of the world's most trusted search engine.

These are companies that could easily break 1,000% gains within months - not decades.

On top of that, you'll also receive the latest updates from the companies currently in the SC Trading Pit portfolio. You'll be among the first to know about any company updates, news, progress and deals that are coming down the pike.

And of course, with any best stocks of 2010 Ian recommends or sells (for a profit, of course), you'll know where to buy it, how much you stand to make, and most importantly, when to sell.

We'll also rush every new member a list of Ian's secret criteria he personally uses to find these companies.

It's a very easy-to-understand guide called The Ten Maxims of Fortune.

That way, not only can you analyze for yourself the companies we recommend and test them to see how they match up... but you can also use this report to find hidden opportunities of your own.

What's more, this report can be adapted to help you determine the attractiveness and probability of success of virtually every best stocks for 2010 in the market.

It's yours FREE, just for joining SC Trading Pit.

I encourage you to print it out, keep a copy of it and use it for every opportunity you're considering, now and in the future.

And best of all...

You get all this for less than the cost of the Wall Street Journal.

As the trend goes, the more general a publication, the lower the price.

Take a look at some of the mainstream outlets. They're all extremely vague, big-picture and generalized. They run between $79 and $250 a year.

Don't get me wrong. We're not running them down at all. In fact, there's a copy of the Financial Times on the table as I write this letter. But the truth is, we don't care about a good chunk of what's in there.

It all concerns BIG business... and while it's valuable for reading up on any "safe," already established company, most truly wealthy investors have made the bulk of their money from the exact opposite.

That's why Ian has created SC Trading Pit in the first place.

Now, typically, a highly specific service like SC Trading Pit would cost several hundred dollars a year. Heck, even several thousand isn't unheard of in this business. But we're not going to go anywhere near that.

The price for an annual membership in SC Trading Pit?

It's only $99 a year.

That's right. An annual membership in SC Trading Pit is just a hair over $0.27 a day!

For that, you get instant access to the SC Trading Pit Portfolio, 26 information-packed issues detailing the opportunities in this explosive sector, industry updates, AND your own copy of The Ten Maxims of Fortune so that you can gauge our picks and even find some of your own.

And here's my promise to you:

If for any reason SC Trading Pit doesn't match up to your expectations, simply let me know within the first 30 days, and I'll refund every penny. No questions asked!

On top of that, keep the report, The Ten Maxims of Fortune, as my gift to you.

That's about as good as I can make it.

Monday, December 14, 2009

Low Share Price, High Dividend, & Free Booze

They came in droves to T-Mobile's party. Admission was free, and so was the booze.

Few cared about the fact they'd just become a walking T-Mobile ad... Bright wristbands emblazoned each partygoer with the company's logo and new product name.

I heard the news from a friend who read about it on Facebook. Another buddy found out that a top DJ was set to spin music all night.

But the key for Deutsche Telekom (NYSE:DT), T-Mobile's German parent, is that the bash will always be remembered as "that T-Mobile party."

With DT's share price way down, its dividend nearing double-digits, and a social marketing strategy in place to keep the revenue pipeline flowing, we could be looking at a great global telecom play.

Walking Billboards Top Stocks Investment

Word of mouth is no longer word of mouth, after all. Text messages, Facebook posts, tweets, and chirps can turn every potential reveler into a peer-to-peer electronic marketing unit.

Right now, with ad budgets tighter than ever and customer retention being everyone's top task, social marketing makes sense.

The cost of acquiring new customers can vary wildly from company to company and campaign to campaign. . .

Yet, it must be true today that rather than cast the advertising dragnet of a billboard ― where you grab plenty of eyes but maybe only a few you really want ― social marketing allows for better focus and more momentum as the marketing message goes viral.

Otherwise, T-Mobile wouldn't be buying Jack Daniels & Coke for a warehouse full of 20-somethings.

Winning with Global Telecom Strategies

The 18-24 demographic is more powerful today than ever before. Winning a new customer means new revenue through service upgrades, overage charges, and a constant urge to have the freshest voice and data devices.

But Mobile Number Portability (MNP) is the sword dangling over every telecom exec's head, threatening to take all that juicy income elsewhere.

As I'm the traveling type, the communications advances of the past half-decade have made my life amazingly easy to manage, no matter where I am.

Most importantly, perhaps, MNP allows me to take my 10-digit serial number to any company that can successfully woo me.

Spending to drag customers like me away from a competitor with MNP requires more effort through upfront spending and direct pricing competition. That can mean a $200 credit on a $250 phone, or unrelated goodies like drinks and dancing.

Top Stocks For 2010

T-Mobile recognizes the continuing revenue opportunities that social marketing can create (their dance invasion of a London Underground station this spring was also a web sensation).

This year will probably still be tough for Deutsche Telekom shares and telecoms in general, the company warned on full-year earnings in late April.

Nevertheless, as a lasting proposition for earnings growth, I like what the company is doing.

NYSE:DT currently trades at just over $11 per share, down from nearly $18 one year ago.

Of course, I wouldn't expect you to wait around for the company to throw you a party just so you pick up some shares.

It's their hefty dividend over 9% (DT just paid $1.04 on under $11 per share April 28) that should keep you hanging with it.