Saturday, July 14, 2012

Jonah Lehrer, self-borrowing and the problem with “big ideas” - 03:54 PM

( -- Newly appointed New Yorker staff writer Jonah Lehrer — author of the bestselling books “Imagine,” “How We Decide” and “Proust Was a Neuroscientist” and a former editor at Wired — has been recycling a bunch of his own content in pieces for various publishers. Jim Romenesko discovered the first example — a New Yorker blog post that uses the opening from a 2011 WSJ piece — Joe Coscarelli at New York Magazine’s Daily Intel has more, and Jacob Silverman has more.

Lehrer shouldn’t be excused for cribbing from himself. But in some ways, it’s not that surprising that it happened.

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Jonah Lehrer, in the model of Malcolm Gladwell, is a “big ideas” writer. He writes books that center around a counterintuitive or provocative theme, and explains why things are not as they seem. Books like these are often really popular.

So far, the criticism toward Lehrer has centered around the fact that he copied his own sentences, but copying ideas and themes is also problematic. There is not unlimited material for this kind of pop science writing. It varies in quality, a lot. Malcolm Gladwell’s “The Tipping Point” was (in my opinion) better than his later books like “Outliers,” partly because the idea behind “The Tipping Point” was better and the examples were fresher. (Similarly, when Malcolm Gladwell tried to apply the counterintuitive thing to protests in Egypt and Tunisia, people got mad.)

It is tough to come up with new, fresh material that advances a counterintuitive thesis. It’s even tougher to repeatedly come up with those new “wow, I never looked at it that way” ideas. And when you do come up with those ideas, it’s probably more tempting to recycle them.

Authors like Lehrer and Gladwell do a lot of public speaking along with writing gigs. (Here are some of Lehrer’s public appearances.) In public speaking, borrowing from yourself isn’t such a bad thing. Many public speakers recycle material from one presentation to the next. Presumably, they tailor that material depending on whom they’re speaking to, and don’t give the same presentation to the same group twice.

Lehrer’s self-borrowing is easy to discover because he has written for a lot of high-profile publications — Wired, the New Yorker, The New York Times — that may attract similar audiences. The examples discovered so far are vivid and memorable — the logic puzzles, the “love making.” That could mean that there is a lot more similar content waiting to be discovered, or that Lehrer tends to repeat similar memorable themes. That wouldn’t be so bad if he were giving presentations to different audiences, but expectations are different when you’re writing — and being paid to write for — a popular publication.

Lehrer recently did a video interview with GigaOM’s Chris Albrecht. It’s below.

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Oil Spill: Beware of Models

One of the healthier outcomes from the financial crisis was that the scales fell from our eyes when it came to models. Think back to the really good articles and blog posts that exposed the data faults and logical faults of the mathematical models that underpinned the failed strategies of the financial system. We had learned, or so it seemed, to view these falsely airtight theorems with an appropriate amount of skepticism.

And then along came Deepwater Horizon and with it no end of scientific models purporting to demonstrate how the oil spill would doom the Gulf of Mexico and other bodies of water to potentially permanent dormancy. In and of itself, that isn’t surprising, but the fact that those same media outlets that had so justly pointed out the limits of science when applied to finance somehow lost their new found sobriety.

For instance, the WSJ this week had a remarkably good opinion piece on the oil spill and its potential effects. Titled ” How Far Will The Gulf Gusher Spread” it postulated that we would feel the effects of the spill for years and years and that it would spread to Europe and even the Arctic Ocean. The author makes these projections despite starting the article with this observation:

Now the Loop Current is in the news once again. Oil from the Deepwater Horizon gusher—please don’t call it a “spill”—has begun trickling into the current, prompting anxious speculation as to how much will be swept up and where it will be borne. Only a small quantity of surface oil has been seen entering the current, but much more swirls below. Given the complex natures of both petroleum and marine waters, these underwater plumes will be extremely difficult to measure and track.

So, the author says that underwater plumes are “… extremely difficult to measure…” yet he assumes their existence as one of the central points of his argument. Recall that most financial models assumed that housing prices would not fall.

Before you attack, let me say two things. One, I consider the oil spill to be an unmitigated disaster and, as I said, I found this particular article to actually be quite interesting. At the same time, I am not inclined to accept the predictions of scientific models with the same openness as I once had, particularly when the data supporting the model is admittedly sketchy.

Don’t lose that healthy skepticism that you developed during the financial crisis. As we learned, things are infinitely more complicated than most models assume and, while they are worthwhile tools, they need not be treated as scripture. They are frequently wrong.

Top Stocks For 2011-12-28-2


MAJESTIC GOLD CORP (MJGCF.PK) engages in the exploration and development of mineral properties in China. The company focuses on its gold project located in the prolific gold region of Song Jiagou in eastern Shandong Province. Majestic Gold Corp. is headquartered in Vancouver, Canada.

Gold is an ancient metal of wealth, commerce and beauty, but it also has a number of unique properties that make it invaluable to industry. These properties include:
o Resistance to corrosion
o Electrical conductivity
o Ductility and malleability
o Infrared (heat) reflectivity
o Thermal conductivity

MAJESTIC GOLD CORP (MJGCF.PK) has arranged a $10,000,000 loan to advance its Song Jiagou project in China. Nine million dollars ($9,000,000) from the proceeds from the loan will be used by the Company to in connection with its Song Jiagou project and the balance of one million dollars ($1,000,000) for general working capital purposes.

The loan will have a one year term and loan principal will be convertible at the option of the lender in whole or in part into common shares (”Shares”) of the Company until twelve months from the date of the loan advance at the price of $0.205 per Share. The loan will bear interest at the rate of 7.5% per annum, payable on maturity, and accrued and unpaid interest will be convertible at the option of the lender in whole or in part into shares of the Company until twelve months from the date of the loan advance at Market Price at the time of conversion.

The lender is at arm’s length from the Company and will not become an insider as a result of any conversion of principal and interest. All shares issued on any conversion of loan principal or interest will be subject to a four month hold period from the date of advance of loan proceeds. The loan is subject to acceptance by the TSX Venture Exchange.

As additional consideration for the loan, the Company has agreed to forward at least $9 million to Majestic Yantai Gold Ltd., a British Virgin Islands company owned 94% by the Company to be used to further advance its Song Jiagou project. The Borrower has also agreed to a 90 day period for reciprocal due diligence reviews and discussions for the possible further involvement of the Lender in the Song Jiagou project.

In the event that no further agreement is reached between the Lender and the Company during the 90 day period, then the loan and a minimum of seven (7) months interest will automatically convert to shares in the Company at a price of $0.205 per share and the interest at Market Price respectively. In addition the Company is pleased to announce that it has arranged a non-brokered private placement of up to 15,000,000 shares to be issued at the price of $0.20 per share for gross proceeds of $3,000,000.

For more information about MAJESTIC GOLD CORP. Visit its website:

Century Aluminum Co. (Nasdaq:CENX) will report third quarter 2011 earnings on Tuesday, October 25th after the close of market trading. The news release will be issued through Marketwire.
Century Aluminum Company, through its subsidiaries, produces primary aluminum in the United States, Iceland, and internationally. The company offers molten aluminum, as well as standard-grade ingot, extrusion billet, and other value-added primary aluminum products.

Trinity Biotech plc (Nasdaq:TRIB) will report financial results for the third quarter of fiscal year 2011 on Thursday, October 20, 2011. The Company has scheduled a conference call for that same day, Thursday, October 20, 2011 at 11:00am EDT (4:00pm BST) to discuss the results of the quarter.

Trinity Biotech plc acquires, develops, manufactures, distributes, and sells diagnostic test kits and instrumentation for the point-of-care and clinical laboratory segments of the diagnostic market.

Alpha & Omega Semiconductor, Ltd. (Nasdaq:AOSL) updates its guidance for the first fiscal quarter of 2012 ending September 30, 2011. AOS now expects revenue to be $81 million to $83 million for the quarter, compared to previous guidance of $83 million to $87 million. The change in revenue guidance is due to continued softness in end customer demands and declines in average selling prices.

Alpha and Omega Semiconductor Limited engages in the design, development, and supply of a range of power semiconductors worldwide.

Stock Rally Stays On the Gas

As stocks in the U.S. and overseas continue to echo each others’ recent rally, even the most dour market skeptic would have to admit that the weeklong runup in equities at least had an underpinning of tangible credibility.

Better-than-expected earnings reports late Wednesday from the likes of tech powerhouses Apple (NASDAQ:AAPL) and Qualcomm (NASDAQ:QCOM) kept the love flowing on Thursday, pushing stocks (as judged by the S&P 500) about one more rally away from their highs of the year.

The Dow Jones Industrial Average added 52 points to 12,506, the Nasdaq rose 18 points to 2820 and the S&P 500 gained 7 points to 1337.

Tech stocks were certainly the muscle behind this week’s rally — the Nasdaq posted a 2% gain for the holiday-shortened week vs. the S&P 500′s 1.3% rise.

But we’d be remiss if we didn’t mention the other positives to Thursday’s runup — financial stocks did finally join the rally, with the SPDR Financial Select Sector (NYSE:XLF) exchange-traded fund gaining 0.6%, and market breadth continued to look strong with New York Stock Exchange advancers outgaining decliners by nearly 2-to-1.

Indeed, this was no small-cap-driven gain, although the Russell 2000 did put up a slight outperformance, gaining 0.7%.

Much of that, we’d expect, would involve a return to lower-cap energy plays as here we are again with crude oil jumping over $112 a barrel.

As alluded to on Wednesday, the last time oil reached that level is the last time stocks were once again near their highs for 2011. With many of the big-cap tech names having already provided a lift to stocks in recent days, it seems plausible that the market will need similar good news from other sectors.

However, those other sectors are likely to be more consumer- and manufacturing-oriented, and thus more affected by higher oil prices.

It’s worth noting the Dow Jones Airline Index fell to an eight-month low on today’s oil price rise. Southwest (NYSE:LUV) fell 2.8%, while American Airlines parent AMR Corp. (NYSE:AMR) dipped 2.7%.

As on Wednesday, part of that rise in oil can be laid at the feet of the dollar, which continued to fall, helping also to boost gold and silver, which once again nailed all-time and 31-year highs, respectively.

Perhaps the biggest skeptics on Thursday were investors in Treasuries, with the 10-year note’s yield little changed and not significantly challenging a two-month downtrend.

Time Voice Biz Is actually Most beneficial For Multi Line Business Communication

Initially incorporated as TIME Telecommunications Holdings Berhad, now, as TIME dotCom Berhad, this firm offers different communications and IT solutions in Malaysia. As part of Time communication support, Time Voice Business offers several voice options to the commercial as well as company needs like the Time Voice Biz. The Voice Biz plan would be a set between fundamental lines or ISDN PRI Trunk line. Generally there will likely be a set up payment of RM150 for the four basic lines as well as a monthly cost of RM300. If your choice is 1 ISDN PRI Trunk line, a RM1,500 will likely be required as a create payment and the monthly cost will likely be RM2,400.

Another plan is the Time Voice Corp which demands a create payment of RM1,500 for 1 ISDN PRI Trunk line and with a monthly cost of RM3,000. An additional PRI may have a monthly cost of RM3,000. The free of charge value added support for Voice Corp handles CLIP, immediate dialling, call waiting, call blocking and multiple conference.

In contrast to Voice Corp, the time Voice Biz can acquire of additional lines or an ISDN PRI at any time. The additional four lines may have a monthly cost of RM300. The normal functions of PRI are CLIP and immediate dialling. And for a standard Voice Biz, call forwarding and protected dialling are part of the features should you decide on the basic lines set up.

Amongst the time Voice Business options, Time Voice Corpoffers the lowest fee whether domestic or IDD. The domestic fee for each call is ten sen/min. And should you evaluate the IDD prices, it is essentially the most inexpensive you can discover due to the fact price effectiveness is one of the fantastic functions of Voice Business.

Time Voice Biz domestic prices are a bit greater than Voice Corp at 13 sen/min. But a utilization low cost at ten percent might be availed, so the domestic fee might just fall to 11.7 sen/min. This can be a large amount of price savings in comparison with Voice Basic which is an additional Voice Business plan. Still, absolutely nothing tops Time Voice Corp domestic prices as a Voice Business plan.

Another price effective procedure is that no drop telephone calls are produced and there will usually be a clear conversation. Drop calls mean redialling is necessary. Therefore a drop call leads to additional use of minutes and ultimately additional price.

Every one of these make Time Voice Biz and Time Voice Corp provide greater factors exactly why you ought to initiate signing up the time Voice Business plan you need.

Bad News and Good News for Seagate

Hard drive manufacturer Seagate Technologies (NYSE: STX  ) recently announced some bad news. Revenue and gross margin missed projections for the quarter ending in June. I think this is just one of several examples, though, where bad news contains good news for the company. Let's take a look.

Missing the target

Missing revenue and gross margin estimates is certainly bad news. But why were these numbers missed?

Steve Luczo, Seagate's chairman and CEO, provided two reasons. First, he said that the company "reduced shipments in response to the industry�s faster-than-expected recovery from their supply chain disruption." Translation: Seagate overestimated its selling advantage after last year's flooding in Thailand.

Seagate wasn't as badly impacted as chief rival Western Digital (NYSE: WDC  ) during the 2011 floods in Thailand. As a result, the company was able to sell more of its products for a while. That window of opportunity looks to be closed now. This seems to be the ending of unexpected good news for Seagate rather than overtly bad news.

The second reason given by Luczo for the missed numbers was that Seagate "experienced an isolated supplier quality issue" that impacted enterprise product shipments by around 1.5 million units. According to Luczo, the issue has been resolved. In this case, Seagate had temporary bad news that doesn't appear to have long-term implications.

My opinion is that we can miss the target ourselves by reading too much into Seagate's overestimated numbers.

Dinosaur technology

Another piece of bad news for Seagate is that it is primarily a hard disk drive (HDD) manufacturer at a time when many are enthralled with the rise of solid state drives (SSD). SSD technology offers several advantages over HDD, including energy efficiency and speed. The popularity of hand-held devices, like smartphones, has driven much of the growth for SSD technology.

Is Seagate a purveyor of dinosaur products destined for extinction? I don't think so. For one thing, the rapidly increasing need for data storage should continue to be a catalyst for HDD sales. The economics favor HDD for the next few years, at least.

Also, Seagate isn't allowing the changing world to pass it by. The company developed a hybrid solid state drive that provides near-SSD speeds at a significantly lower cost. It also acquired the HDD business unit from Samsung, which Seagate believes will allow it to better compete in the mobile, cloud, and SSD markets.

To call Seagate a dinosaur technology vendor seems off-base. But, then again, plenty of money is made off dinosaur technology. Just ask the oil companies.

Cheap for a reason

Some investors look at Seagate's numbers and think that a stock this cheap must be a value trap -- cheap for a bad reason. Seagate is definitely cheap. Its forward P/E is barely over three, and its price-to-sales ratio is 0.81. Is there a negative reason that Seagate is this inexpensive?

I suspect that the primary reason is the dinosaur technology fears mentioned above. Primary HDD competitor Western Digital also looks inexpensive, with a forward P/E of less than four.

SSD manufacturers aren't as cheap. Fusion-IO (NYSE: FIO  ) trades at a forward P/E multiple of 63. Fusion-IO became the first company to achieve one billion input and output operations per second earlier this year. That's a significant accomplishment.

Sandisk (Nasdaq: SNDK  ) has a less stratospheric forward P/E of 10. LSI (NYSE: LSI  ) trades at a forward P/E multiple of seven. Neither of these companies garners the buzz of Fusion-IO, but they both are still more highly valued than Seagate and Western Digital.

Whether Seagate is a value trap or not depends whether you think there's a future for HDD, and if you think Seagate can adapt to changing technologies. To me, the answers are in Seagate's favor. I see value rather than value trap.

Driving solid

Even with bad news about missed estimates this quarter, Seagate expects to report record revenue and unit shipments. That's good news -- and there's more. Seagate is still sitting on $2 billion of cash and short-term investments after buying back around $1.2 billion in shares. The company pays a dividend with a 3.9% yield.

The best investing bargains are found in stocks that are cheap, yet still have great potential. Seagate belongs in this club, in my view. This is one inexpensive stock that I think will drive solid profits for investors over the long run.

Technology is ever-changing, but that presents exciting investing opportunities. Check out The Motley Fool's special report "The Next Trillion Dollar Revolution" for information on one of them. To get your copy of this free report, just click here. �

Friday, July 13, 2012

John Griffin And Andreas Halvorsen Are Bullish About These Stocks

John Griffin founded Blue Ridge Management in 1996. Under his management, Blue Ridge has produced exemplary returns for its investors. In 2007, Griffin had an annual return of 65%, making him one of the top hedge fund managers that year. Afterwards, even though the markets went through crises, Griffin still managed to return an average 17.83% the next three years.

Andreas Halvorsen, a contemporary of Griffin, started his hedge fund Viking Global at the end of 1999. The next year, he returned 89%. That high of a return may be a hard act to follow but Halvorsen managed to return a cumulative 119% between June 2005 and March 2010, compared to just 11% for the MSCI World Index. Halvorsen’s winning streak started to taper off last year however; he returned just 3.8% in 2010, but hopes are still high for Halvorsen.

John Griffin and Andreas Halvorsen are both “Tiger Cubs” – a moniker earned from working for legendary Julian Robertson’s Tiger Management, but the similarities do not end there. Griffin and Halvorsen also like many of the same stocks.

Topping their list of common stocks is the popular online storefront Inc. (AMZN). Amazon is Griffin’s 3rd top pick and Halvorsen’s 7th. Together, they own the 2nd and 3rd largest positions in Amazon of all the hedge funds we track (Halvorsen owns the 2nd largest). Ken Fisher of Fisher Asset Management is also a fan (check out Fisher’s top stock picks)

Griffin had almost $510 million invested in Valeant Pharmaceuticals Intl. Inc (VRX) at the end of the June, after increasing his position by 10% that quarter. Valeant is also one of Halvorsen’s top picks, coming at number 20. However Halvorsen decreased his position in the pharmaceutical preparations company by 31% last quarter. Valueact Capital’s Jeffrey Ubben, who owns a $785 million stake in Valeant decreased his position last quarter as well, by 23% (see Ubben’s top picks).

Of the stocks they have in common, Halvorsen is most bullish about Inc (PCLN), He holds a stake worth over $506 million in the online travel company. Griffin holds a more modest position at just over $112 million. Priceline, has returned 1.72% since the end of June, a modest return but still better than the market. The SPY returned -12% during the same period (June 30-Sept 10). John Thaler of JAT Capital is also bullish about Priceline; he increased his position in the company by 173% last quarter.

JP Morgan & Co is another position both Halvorsen and Griffin agree on. JP Morgan is Halvorsen’s 8th biggest position; it is Griffin’s 10th. However, JP Morgan has not been so deserving of the attention so far this quarter, returning a disappointing -21.16%.

Halvorsen and Griffin also agree on another financial stock – American International Group Inc (AIG). Halvorsen owns $29.3 million in the company compared to Griffin’s approximate $9.4 million position. AIG has lost -20.33% since the end of June. The loss is significant but at least it did better than JP Morgan. AIG had a lot of new interest last quarter; Bruce Berkowitz increased the $12.9 billion Fairholme Fund’s position in the company by 133% last quarter (check out Berkowitz’s top positions).

The pair also lost big on Blackrock Inc (BLK). Blackrock returned -20.59% since the end of June, producing big losses for both Halvorsen and Griffin, Halvorsen owns almost $195 million in the company while Griffin owns just over $110 million. Billionaire fund manager John Paulson of Paulson & Co, who owns a $360 million position in Blackrock also got hit hard by the poor performance of the security brokerage company (see Paulson’s top stock picks).

Halvorsen and Griffin did much better on their positions in eBay Inc (EBAY); Halvorsen has a $7.1 million position in the company while Griffin is a bit more bullish, he holds almost $160 million in the online auction company. Since the end of June, eBay has performed on par with the market (eBay 11.81% vs. SPY 12.16%). Citadel Investment Group’s Ken Griffin is also a fan of eBay; he increased his position in the company by 9620% last quarter.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

China’s welcome mat for foreign investors

HONG KONG (MarketWatch) � When China takes steps to open its closed capital account, it is always going to generate keen interest � as the world�s second largest economy.

Last week China more than doubled the amount of money foreign investors can invest in its domestic stock markets.

This initiative offers some encouragement that the recent crescendo of debate on reform will be matched with some action. Attention will also focus on what other steps might be taken apart from increasing the Qualified Foreign Investment Quota (QFII) from $30 billion to $80 billion.

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Yet, although more foreign investment is now welcome, there will be some skepticism on the timing and questions asked if this is more than a token gesture?

Hopefully, there are some contrarian investors waiting in the wings, as this move to expand QFII comes at a time private capital appears to be heading for the exits and fears over a potential hard landing loom as the property market corrects.

Since the beginning of the year there has been a notable reversal in fund flows. As well as slowing forex accumulation, foreign direct investment in China has been falling amid signs of hot money outflows.

Perhaps, QFII investors can take up the slack and provide some cushion to the economy?

Still, some analysts argue this move is less pragmatic and laud it as an important policy break-through. CSFB in a new note argue it shows there is now a broad policy consensus on opening the capital account and domestic capital markets in the coming few years. They add reforms and opening up is gaining momentum and this is a very encouraging sign.

Further, because China�s trade surplus is narrowing and market expectation of yuan USDCNY �appreciation is weakening, this is a good time to act.

Granted, not so long ago, the problem for Beijing was too much money inflows, which was adding to pressure on the yuan to rise at a time when the government was struggling to slow the economy.

CSFB also add the move shows the intention of the government is to boost sentiment in the A-share market.

Still, lifting investor spirits could prove a tall order. CLSA�s strategist says the muted A-share reaction in Shanghai to the QFII news announced last week is a sign of the bearishness of domestic investor sentiment.

Meanwhile, Capital Economics writes the move may help to lift equity prices in the short-term, but the wider impact will be limited without faster progress on reforming the currency regime and state-controlled banking system.

Looking past sentiment after all, QFII numbers are small. The overall value of approved QFII and RQFII funds is currently only 0.8% of total market capitalization. If fully used, the ratio would rise to 2.6% based on current data.

And this cannot be taken for granted say Capital Economics, given only $25 billion of the current $30 billion QFII quota has currently been taken up.

Jobs: Still Disappearing, But the Rate Is Slowing

Two new private-sector reviews of last month’s labor market show that the economy is still shedding jobs. The only good news is that the rate of loss continues to slow. But a loss is still a loss at this late date in the economic cycle, and today’s numbers suggest that Friday’s monthly update on jobs from the government may suffer another round of red ink, albeit in relatively mild form.

The ADP National Employment Report advises that nonfarm private payrolls in the U.S. slipped by 20,000 last month. "The February employment decline was the smallest since employment began falling in February of 2008," according to the accompanying press release.

Was winter weather to blame? Perhaps, although ADP minimizes that gremlin. Again quoting from the company's press release:

Two large blizzards smothered parts of the east coast during the reference period for the BLS establishment survey. The adverse weather had only a very small effect on today’s ADP Report due to the methodology used to construct it. However, the adverse weather is widely expected to depress the BLS estimate of the monthly change in employment for February, but boost it for March. Therefore, it would not be unreasonable to expect the BLS estimate for February (due out this Friday) to be less than today’s ADP Report even though the BLS estimate will include the hiring of temporary Census workers not captured in the ADP Report.

It's come to this: hoping for salvation from the Census Department. So it goes at a time when any scrap of good news, temporary or otherwise, is pounced upon as a pinpoint of light in the dark tunnel of job creation.

Meanwhile, another report from employment services firm Challenger, Gray & Christmas reports more than 40,000 jobs were eliminated last month. That's comfortably below January's 70,000-plus cuts, the firm notes via Nonetheless, it's hard not to notice that two independent reports today indicate the same general trend: another round of job losses for February.

If the Labor Department's update on Friday makes it three, February's retreat will mark nonfarm payrolls' net decline in 25 of the previous 26 months, according to the official government tally. Yes, it's getting better, which is to say the losses are diminishing, but the question still remains: When is net job growth coming? As we wrote last month, "the longer this drags on, the higher the odds that we're facing an even weaker post-recession job recovery than previously anticipated."

With each passing month of loss, the stakes are higher for the necessity of minting jobs. The real challenge isn't one of simply seeing a net gain on the payrolls ledger. That's coming, and perhaps soon. But what's needed is more than a statistical change, i.e., a lengthy stretch of large gains on the order of 200,000, 300,000 and more a month. Unfortunately, almost no one expects that's imminent. Yes, seeing 10,000, 50,000 or even 100,000 net new jobs will be refreshing (when it actually arrives), but that thimble of repair is no match for the tidal wave of 8 million-plus lost jobs since the Great Recession began in December 2007.

As troubling as this is, it's all the more problematic in a world that's just coming to terms with the debt and deleveraging that's weighing on the global economy. Greece and, increasingly, Britain are only the beginning of new world order. The U.S. is part of this infamous club too. And let's not forget the veteran of debt and deleveraging: Japan.

What are the implications for all this red ink? History suggests remaining humble in forecasting a quick and easy solution.

Angry Birds Maker Preps for a $9B IPO

There seems to be no stopping the Angry Birds phenomenon.

Angry Birds and its many spinoffs now boast more than 800 million downloads. Its creator, Rovio, saw its revenues skyrocket 1,000% last year to $100 million and achieved an EBITDA of $48 million. In fact, the company now appears so confident in its financials that an initial public offering could be on the horizon — either on the NYSE, or even on the Hong Kong exchange.

As seen with Facebook�s recent $1 billion deal for Instagram, the mobile space is fetching outsized valuations. Angry Birds is one of the world�s top mobile franchises, and the buzz is that it could be worth as much as $9 billion.

This might be a bit optimistic. Keep in mind that Zynga (NASDAQ:ZNGA) has a market cap of $6 billion, and that’s with sales of $1.1 billion last year. Not to mention, Zynga has a more diversified portfolio of games including CityVille, Zynga Poker, FarmVille, CastleVille, Mafia Wars, Words with Friends and Hidden Chronicles.

Angry Birds is a double-edged sword. Rovio has done a standout job with building the series’ brand, but if the company wants to continue its growth rate, it needs to find a way to lessen its dependence on Angry Birds. Consumers can be extremely fickle, especially in the gaming world, and even long-successful brands can fall off the map.

If Rovio does go public, as soon as the money raised hits the bank, it should be on the acquisition hunt to broaden its horizons.

Tom Taulli runs the InvestorPlace blog IPO Playbook, a site dedicated to the hottest news and rumors about initial public offerings. He also is the author of �The Complete M&A Handbook”, �All About Short Selling� and �All About Commodities.� Follow him on Twitter at @ttaulli or reach him via email. As of this writing, he did not own a position in any of the aforementioned securities.

Social Stock Tracker Treads Water

When Facebook filed for its IPO in the first week of February, the Social Stock Tracker surged over 9%, giving the index a market value of $38.5 billion.

Things have calmed down since then. Last week, the index mustered a gain of only 0.36%.

There still was plenty of volatility. For example, Groupon (NASDAQ:GRPN) shares were off by nearly 14%. The company released its first earnings report since coming public, and it registered an unexpected loss of $42.7 million.

On a brighter note, LinkedIn (NYSE:LNKD) continued to dazzle investors with its hefty growth ramp. According to its latest quarterly report, LNKD posted a 105% increase in its revenues to $167.7 million, and the company’s non-GAAP earnings were 12 cents per share. The key growth driver was the company�s Hiring Solutions business, which provides recruiting services to corporate customers.

Expect more action this week, especially for Zynga (NASDAQ:ZNGA), which reports quarterly earnings Tuesday afternoon.

Tom Taulli runs the InvestorPlace blog�IPO Playbook, a site dedicated to the hottest news and rumors about initial public offerings. He also is the author of��The Complete M&A Handbook”,��All About Short Selling��and��All About Commodities.��Follow him on Twitter at�@ttaulli�or reach him via�email. As of this writing, he did not own a position in any of the aforementioned securities.

Intellectual Property In The Lion City: Security For Everyon

Singapore is one of the most highly-developed nations in Asia and the rest of the world. Their government is likewise one of the best as it features almost zero percent crime rate. The Singaporean government has applied a lot of power to make certain that every citizen, resident, and visitor feels secure in the Lion City.

This is no unlike the security received by organizations and investors. Singapore, as one of world’s top trade centers, is committed to defend the rights of entrepreneurs and stockholders. One of the most crucial types of security offered to businesses is intellectual property protection.

The government urges companies to register their trademarks, artistic and literary works, patents, and industrial designs to ensure that no other individual or entity can copy and reproduce what belongs to them without their permission.

As a business owner or an inventor, you are aware that some people or group can rob your ideas and exploit it for their own benefit. This not just happens to newcomers in the business world but also to distinguished firms with equally famous goods. Failure to register your creation in Singapore or any part of the world means other individuals can duplicate your product or even make use of your brand name in that place. This can indicate millions of deficits for your company and even loss of buyers, as they turn to low-priced imitations of your invention.

This is something you do not like to occur, particularly in a cutthroat industry like that of the Lion City. That’s why you must acquire intellectual property protection in Singapore. Registering for intellectual property protection takes care of this concern. As the inventor or owner, you deserve nothing but the complete right to make and remake your creations. Remember, this is your brainchild, the product of thorough research and hard work.

Indeed, acquiring intellectual property protection in Singapore looks after your company’s position in one of Asia’s financial capitals. By doing so, you are confident that forgers won’t be able to rob your idea.

Click for further information on accounting services or business financing.. Unique version for reprint here: Intellectual Property In The Lion City: Security For Everyon.

Considering the Various Options Offered by Discount Brokers

There are many discount brokers on the internet, all attempting to obtain your business. Most offer free incentives to further entice traders to use them for their buying and selling investment decisions. Along with their low cost per transaction or trade they offer many various free incentives.

Before selecting a broker compare the top discount brokers free incentives to see which one offers the best economical plans, along with free information and market reports. Many will even offer free trades based on how often you trade, how much you initially deposit in your trading account, and the total amount of your buying and selling investments. Consider all the various options offered by each of the top discount brokers to make sure these free incentives will actually benefit your investment decisions.

Other items the top discount brokers will offer are insurance protection. Find out if the discount broker you are planning to use offer protection of your funds in the event of a brokerage meltdown for any reason. In today’s market there are many financial institutions that are having difficulties managing their funds and staying in business. With this increased pressure on financial institutions it is very possible for these institutions or the brokerages firms to collapse or disappear. So make sure your funds are protected if this would actually occur.

Discount brokers do not provide investment advice but some of the top brokers do provide robust platforms and software packages that will help you analyze the market, develop your own trends and strategies based on global markets, news and currencies. These types of tools are invaluable to a trader who does their own strategic planning for investments on various exchanges and markets.

Some of the discount brokers provide these platforms at no charge as long as you have a specific amount in your trading account or you perform a certain number of trades. Others however will charge a fee for using the platform they provide through the internet or on your computer. So make your discount brokerage selection wisely.

For the top discount broker comparisons, reviews and resources visit

2010 Q4 Earnings: State Street Profits Fall

Despite operating earnings that came in at $0.87 per share, beating analyst estimates by a penny, State Street Corp. (STT) on Wednesday took a beating from investors who were unhappy that fourth quarter earnings were so low; its stock dropped 4.1% before coming back to a drop of 3.96% in midday trading.

Net income for the quarter totaled $83 million, or $0.16 per share, compared to $498 million, or $1 per share in the same 2009 period. Full-year earnings were $3.09 per share, compared with $3.46 for the prior year.

In its Q4 release, State Street attributed the performance for the quarter and for the year to “the impact of certain actions taken to accelerate growth and to provide greater capital flexibility.” Those actions, it said, caused a loss of $0.67 per share thanks to investment portfolio repositioning and a restructuring charge stemming from staffing reductions and consolidation of real estate.

In a statement, Joseph L. Hooley, State Street's chairman and chief executive officer, said, “During the quarter, we took significant actions that we expect to positively impact State Street's results in the coming years. First, we announced a multi-year plan to transform our operating model, including a comprehensive technology program, designed to increase efficiencies and position the Company for accelerated growth. Second, we repositioned our investment portfolio to provide greater flexibility for capital deployment in the future.”

CEO Cites Expected Increased Regulatory Costs

Commenting on near-term increases in regulatory costs and lower net interest revenue in 2011 because of the low interest-rate environment and the repositioning of the investment portfolio, Hooley said nonetheless, “... we are well positioned to take advantage of global growth opportunities and, as the economy normalizes, we remain committed to our long-term financial goals.”

He also indicated that the fourth quarter saw favorable growth in servicing and management fees, trading services revenue improvement, and positive operating leverage over Q4 2009 in the amount of 520 basis points.

Read about State Street’s Q3 earnings at

Read AdvisorOne's 2010 Q4 earnings calendar for the financial sector for release dates and links to earnings stories.

Insurance And Financial Industry Trends Investigated

Among the insurance and financial industry trends which are becoming more prominent now are those that pertain to the management of risk. These focus on how to cope with the reams of data coursing through the system at lightning speed. The firms meeting with success here are the ones able to capitalize on new data by being able to quickly determine its worth.

There is no compact which governs such things as financial data or intellectual property on a global basis. There are too many competing interest for any single agency or country for that matter to be able to assert control of this. To deal with it, companies should take the attitude that the more one knows, the better one will be able to avoid the pitfalls and take advantage of opportunities.

There is not standard definition for how to define risk. Understanding how systems work will be the best way to avoid getting into it. It is important not to get locked into approaches that once worked, but now do not. This is the way to remain competitive and stay open to new ventures.

The amount of material available for digital downloads keeps expanding. This data may begin in regions which are fully secured, but then they get transferred over to other places that lack protection. These can be through laptops or other personal devices. The only method to control this will be in making the data itself more protected.

Certain types of data are critical to give protection to. These would be things such as credit card numbers, bank accounts, and any transaction made with cash. These kinds of materials warrant password protection and also data encryption. Fraud which involves these is often very sophisticated and requires advance forms of scrutiny to detect. Most companies are not prepared to do this and must resort to calling in specialists for the task.

After such a system gets set up, a company is less inclined to be devastated by fraud. Whether it comes from inside the firm or exterior agents, there will be less likelihood of major loss. Investigations will not be warranted from regulatory body. The company will be free to concentrate on the market processes that are makes the most use of.

Insurance and financial industry trends are acting to cope with fast changing world events. Firms must quickly react to disasters and political conditions which abruptly change. This is the new means for judging success. Those firms with the fastest response times will be the ones which can profit most from information access.

Insurance Continuing Education Mississippi

IMF Seeks to Boost Capacity by $500 Billion

The International Monetary Fund intends to boost its lending capacity from the current level of $385 billon by asking members to contribute more funds, up to $600 billion, as it seeks to forestall the spread of the European debt crisis.

Bloomberg reported that Christine Lagarde, managing director of the Washington-based IMF, said that staff members are reviewing ways to increase available lending funds. Eurozone countries have already promised to kick in some 150 billion euros ($192 billion), although the U.S. has said it does not intend to up its contribution and G20 nations were unable to agree on funding at their last meeting in 2011.

In a statement, Lagarde said, “The biggest challenge is to respond to the crisis in an adequate manner and many executive directors stressed the necessity and urgency of collective efforts to contain the debt crisis in the euro area and protect economies around the world.”

An unidentified G20 official was quoted in the report saying that oil-producing countries, Brazil, China, India, Russia and Japan were being pushed by the IMF to contribute additional funds toward the new lending goal. The official added that it was hoped such an agreement could be nailed down at the Feb. 25-26 meeting of G-20 finance ministers and central bankers in Mexico City.

At a November summit in Cannes, France, G20 officials held off on any additional contributions and insisted instead that Europe’s governments work harder at fixing their troubles. In the meantime, they said, they would make sure “continues to have resources to play its systemic role.” Still, G20 deputy finance officials scheduled to meet this week in Mexico City are expected to discuss Lagarde’s proposal.

Three ETFs to Watch This Week: EWD, LIT, FXE

Equity markets started off in the red last Monday and continued their downward trend on Tuesday after dismal housing data showed existing home sales plunged by more than 20% as buyers shied away from the market now that the tax credit for new purchases has expired. This news, compounded with new home sales on Wednesday (which sank 12.4% to their lowest level since the government began keeping track of the statistic in 1963), led many to believe that a double dip in housing was just around the corner. This spike in anxiety sent shocks through global equity markets and had investors running to the relative safety of Treasury bills and precious metals. Salvaging the week, equity markets surged higher on Friday thanks to comments from Bernanke that seemed to suggest the Fed would be willing to do anything in its power to try to boost the economy and reduce unemployment. This surge on Friday helped markets to regain much of their losses and finish down less than 1% on the week.

With minimal earnings reports, investors will once again focus in on a number of key data releases in the coming week. Among the most influential bulletins looks to be a variety of GDP reports from industrialized countries around the globe as well as U.S. unemployment to cap things off on Friday before the long holiday weekend. Below, we profile three ETFs that look to be in focus over the next several days:

Global X Lithium ETF (LIT)

Why LIT Could Be In Focus: In a little over a month, this new fund from Global X has seen respectable asset flows of close to $25 million, but this week could be the most important for the fund since its launch. That is because Chilean mining giant SQM, the largest producer of lithium in the world that makes up 20% of LIT, is scheduled to report earnings on Tuesday. That should give investors a glimpse at the health of the lithium industry. The company is expected to report earnings of $0.31 for the most recent quarter, down one cent compared to the same period last year. However, should SQM manage to beat expectations and show growth, it could help to spur increased interest in the lithium industry and boost some of the smaller companies who depend to some extent on SQM.

Rydex CurrencyShares Euro Currency Trust (FXE)

Why FXE Could Be In Focus: With the Fed suggesting that it is willing to perform more quantitative easing, all eyes will be on the ECB this week to see what plans are to revitalize the struggling European economy. The common currency will also see the release of figures regarding German unemployment levels and euro zone GDP growth, which could also heavily impact the currency and signal the strength of the European economy. Most analysts anticipate that the bank will leave rates on hold and maintain the generous liquidity programs; there is not really much of a choice given the weakness in other large developed markets such as Japan and the U.S. The bank cannot risk a rapid rise in the euro which could choke off an export-led recovery, and the economy is likely still too weak to endure a quick exit from the liquidity provisions that seem likely to last well into 2011 at the earliest.

iShares MSCI Sweden Index Fund (EWD)

Why EWD Could Be In Focus: As Sweden’s market continues to surge past its euro zone rivals, the Swedish currency is in danger of becoming uncompetitive with its southern counterparts. The country’s central bank will meet on Thursday to discuss rates that were bumped up to 50 basis points from their earlier level of 0.25% at a meeting at the start of July in an effort to slow the economy. According to analyst predictions, the Bank is expected to raise rates by 25 basis points yet again this week, a number which will likely further increase the value of a currency that has gained almost 10% against the euro this year. That could potentially endanger export competitiveness and cut into Swedish profit levels. Additionally, the ECB meeting and corresponding data releases could further drive investors into this surging economy, so look for any news out of Frankfurt to heavily impact EWD as well.

Last Week’s ETFs To Watch

EWA: The Australian election remains undecided thanks to a competitive vote that left both major parties shy of the required number of seats to form a majority government. With a “hung Parliament” the future of Australian policy in the near term could go either way. Meanwhile top component of EWA, mining giant BHP Billiton reported strong earnings with a 16% increase in profits and a 5.2% increase in revenues. However, the company cited its concerns over the global economy as reason to temper expectations heading into the end of 2010, causing shares to sell-off in mid-week trading. Nevertheless, a strong Friday session in which commodity prices jumped across the board helped to buoy shares of BHP and send EWA back to break-even range on the week.

PGJ: Shares of this popular fund targeting Chinese ADRs sank by 1.5% in last week’s trading thanks to weakness out of top component PetroChina. Although the company reported surging profits overall, dramatically lower refining margins–which fell 68%–helped to turn investors bearish on the Chinese oil giant. More weakness came after China Life Insurance disappointed investors by posting weak earnings, pushing the company lower by more than 5%, its biggest drop in nine months. These two giants weighed on PGJ and more than canceled out the relatively strong news out of Yanzhou Coal Mining, which like other industrial resource firms posted decent gains on the week.

EWC: Shares of this popular Canadian ETF managed to squeeze by with a slight gain on the week thanks to a 2.7% gain in Friday trading. This gain on the week seemed in doubt on Thursday as the Royal Bank of Canada (RY) missed earnings estimates and fell by 3.5% on the day. Its quarterly profits were down more than 18% thanks to weakness in capital market businesses and credit losses. However, not all the Canadian banks had a rough week; the Bank of Montreal (BMO), Canada’s fourth biggest bank, saw earnings rise to C$1.13 from 97 Canadian cents a year earlier. The company also reported an ROE of 13.7% and closed up by almost 1% after it reported this solid result, helping to balance out the weakness from the Royal Bank.

Disclosure: Eric is long LIT, photo is courtesy of Javier Martin.

Disclaimer: ETF Database is not an investment advisor, and any content published by ETF Database does not constitute individual investment advice. The opinions offered herein are not personalized recommendations to buy, sell or hold securities. From time to time, issuers of exchange-traded products mentioned herein may place paid advertisements with ETF Database. All content on ETF Database is produced independently of any advertising relationships.

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Australian Dollar Firmer After Mixed RBA Minutes

By Lujia Lin,

THE TAKEAWAY: RBAminutes show policymakers saw scope for “modest” ratecut > Board members recognize several areas of strength> Aussiestrengthens The Australian Dollar strengthened after minutes from the RBA’s December 6 policy meeting presented a mixed assessment of the overall economic environment and pointed to several areas of strength. Immediately following the release, the Aussie rose from 0.9910 to 0.9931 versus its US counterpart. Chart generated using Strategy Trader In the minutes, the RBA noted the continuing deterioration in the Eurozone debt crisis through November but adopted a more positive outlook toward the Asian economies. Despite signs of a slowdown in the Asia-Pacific region, RBA policymakers continued to see “solid” expansion in Australia’s top export markets, which “did not suggest any strong need to cut interest.” On the domestic front, the central bank assessed recent data as “mixed but, on balance … slightly stronger than … around the middle of the year,” citing the recent strength in business investment, not only in mining but also in manufacturing. At the same time, Board members recognized tighter credit conditions, softness on the property market, and mixed consumer sentiment as areas of weakness in the domestic economy, while expecting wage pressures “to remain contained.” On the whole, the Board saw “scope for a modest reduction in the cash rate.” Overall, the RBA’s statements suggest that the central will adopt a “wait-and-see” approach ahead of its next policy meeting on February 7. Since its last rate decision, however, important economic indicators have exhibited further weakness, with November employment figures showing a loss of 6,300 jobs and an uptick in the jobless rate, and a Westpac index pointing to a plunge in consumer confidence in December. Should key indicators continue to lag, and should Chinese economic activity continue to cool, the RBA could very well contemplate further cuts in its benchmark rate, a prospect that would be expected to cap any significant gains in the Aussie. DailyFX is the forex news and research arm of FXCM, Inc (NYSE: FXCM), which provides currency trading and brokerage services and is an advertiser on TheStreet websites. Any opinions, news, research, analyses, prices, or other information is provided as general market commentary, and does not constitute investment advice. Dailyfx will not accept liability for any loss or damage, including without limitation to, any loss of profit, which may arise directly or indirectly from use of or reliance on such information. Currency trading involves significant risk of loss. Individual authors may hold positions in the currencies discussed in the article.

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Thursday, July 12, 2012

How Efficient Is Solar Energy

Solar energy has been represented as being the very best alternative source about energy accessible, and in some cases this is correct. But exactly how efficient is certainly solar energy as a substitute power source? Let us look at some examples associated with exactly how sunlight has been used previously to respond to this question. The sun was used all through history to warm water, dry garments, cook also to warm households. Just before the particular creation of electrical energy humans have discovered to utilize solar energy.

Early Greeks 2,000 years ago received the very first architectural designs to take advantage of solar heat. Even the Romans had utilized solar energy to battle adversary boats, as large magnifying glasses were utilized to direct solar radiation of burning the sails of attacker vessels. We will note that through history man has utilized solar power and dependably depended on it. What about these days in modern time? Is solar energy being used any more, or even much less, and exactly how trusted is solar energy these days?

Solar powered energy continues to be used nowadays just as it has been used for millennia. People in building places even now heating the water, prepare their foodstuff and warm their properties with it. Although with the new technology regarding electric power humankind today makes use of solar power to create electric power. One of the modern methods to crop solar electric power is through the use of solar panels, together with solar panels changing solar radiation within electricity.

Among the modern methods to harvest solar electric power is thru the use of solar panel systems, together with solar energy panels switching solar light directly into electrical power. By producing usable energy through the suns light many people all over the world, specifically in isolated communities, depend on solar energy regarding electric power needs. More and more people are selecting solar energy in this manner, and it’s also being a popular as well as reasonably priced solution to generate electricity.

Is definitely solar energy reliable? Of course it is. Nevertheless, the scientific techniques that we use today to turn solar sun rays directly into electric power, isn’t 100% efficient. Solar power electrical technologies have definitely made great strides, but it is still to use start phase. Yearly possible ways for you to harness direct sunlight are generally growing, but the primary obstructions during this degree of technologies, reducing solar energy through staying 100% trusted, would be the climate.

Throughout dark and stormy times electrical energy outcome through solar power panels decrease considerably. Its potential though to achieve 100% reliability from solar powered energy, by just establishing solar energy panels that has a wind generator to generate plenty of electrical power for a house. In this regard the sun is a practical and also trusted renewable energy resource.

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Could Costco, JCP Suffer for Downplaying Black Friday?

Wal-Mart (WMT) opened for “Black Friday” sales this year on Thursday night at 10 p.m., two hours earlier than the previous year. And Target (TGT) moved up its opening to midnight. Both stores appeared to benefit from deal-fever that overcame consumers this year. In general, discounters are expected to post the strongest gains in November, according to estimates from Thomson Reuters.

But some stores were less aggressive with their holiday promotions, and some analysts expect them to suffer for it.

Costco (COST), for instance, could get hurt by its less promotional stance around Black Friday.

“Overall, we believe a big Black Friday could have siphoned off traffic from COST as they do not open early nor promote especially that day,” writes Stifel Nicolaus analyst David Schick. Schick sees Costco posting a 5% increase in same-store sales, below the Street median estimate of 6.5% (above target’s 2.8% expected growth) . Costco’s same store sales growth is being aided by food inflation and more affluent customers migrating to the store.

JC Penney (JCP) delayed its Black Friday opening until 4 a.m. this year, and its same-store sales are expected to fall 1% in November.

Are You Watching This Trend at KAR Auction Services?

Margins matter. The more KAR Auction Services (NYSE: KAR  ) keeps of each buck it earns in revenue, the more money it has to invest in growth, fund new strategic plans, or (gasp!) distribute to shareholders. Healthy margins often separate pretenders from the best stocks in the market. That's why we check up on margins at least once a quarter in this series. I'm looking for the absolute numbers, so I can compare them to current and potential competitors, and any trend that may tell me how strong KAR Auction Services's competitive position could be.

Here's the current margin snapshot for KAR Auction Services over the trailing 12 months: Gross margin is 45.5%, while operating margin is 14.8% and net margin is 3.1%.

Unfortunately, a look at the most recent numbers doesn't tell us much about where KAR Auction Services has been, or where it's going. A company with rising gross and operating margins often fuels its growth by increasing demand for its products. If it sells more units while keeping costs in check, its profitability increases. Conversely, a company with gross margins that inch downward over time is often losing out to competition, and possibly engaging in a race to the bottom on prices. If it can't make up for this problem by cutting costs -- and most companies can't -- then both the business and its shares face a decidedly bleak outlook.

Of course, over the short term, the kind of economic shocks we recently experienced can drastically affect a company's profitability. That's why I like to look at five fiscal years' worth of margins, along with the results for the trailing 12 months, the last fiscal year, and last fiscal quarter (LFQ). You can't always reach a hard conclusion about your company's health, but you can better understand what to expect, and what to watch.

Here's the margin picture for KAR Auction Services over the past few years.

Source: S&P Capital IQ. Dollar amounts in millions. FY = fiscal year. TTM = trailing 12 months.

Because of seasonality in some businesses, the numbers for the last period on the right -- the TTM figures -- aren't always comparable to the FY results preceding them. To compare quarterly margins to their prior-year levels, consult this chart.

Source: S&P Capital IQ. Dollar amounts in millions. FQ = fiscal quarter.

Here's how the stats break down:

  • Over the past five years, gross margin peaked at 45.1% and averaged 43.2%. Operating margin peaked at 14.9% and averaged 11.8%. Net margin peaked at 3.8% and averaged -1.3%.
  • TTM gross margin is 45.5%, 230 basis points better than the five-year average. TTM operating margin is 14.8%, 300 basis points better than the five-year average. TTM net margin is 3.1%, 440 basis points better than the five-year average.

With recent TTM operating margins exceeding historical averages, KAR Auction Services looks like it is doing fine.

Over the decades, small-cap stocks, like KAR Auction Services have provided market-beating returns, provided they're value priced and have solid businesses. Read about a pair of companies with a lock on their markets in "Too Small to Fail: Two Small Caps the Government Won't Let Go Broke." Click here for instant access to this free report.

  • Add KAR Auction Services to My Watchlist.

The Week Ahead, Five Minute Drill: Greek Bond Sale, U.S. Non Farms Report

See The Week Ahead: Stocks, Commodities, Forex: March 29th -April 2nd–What To Watch for more detailed analysis of key market movers over the past and coming week.


Stocks began the week strongly on hopes for a solution to the EU debt crises, then faded into the end of the week as the EU provided a partial, stopgap solution, and rising US bond yields scared markets with the threat of rising interest rates. See the above link for details.

For the week, the DJIA gained 1%, the Nasdaq rose 0.9%, and the S&P500 climbed 0.6%.

Given that stocks sit at 16 month highs, they are subject to pullbacks on negative news. Primary market moving news to watch in the coming week:

  • Greek attempts to sell about €5 bln in bonds as the EU’s plan to support Greece gets its first real test. If Greece is able to borrow at rates it deems acceptably low it need not actually test the new default contingency plan.
  • US monthly job reports this coming Friday and the events that serve as leading indicators for them.

Go with the trend higher, but keep stops tight. Should the Greek bond sale go sour, or US jobs figures disappoint already high expectations for about a 200K increase in jobs, a pullback would likely follow.


Continue to trade within multi-week ranges, with oil holding steady and gold falling back slightly.


The week in currency trading began on a subdued note as European leaders continued to send out conflicting signals over aid to Greece ahead of Thursday’s EU Summit. The EUR/USD ended the week off its worst levels above 1.34. That the EU managed as much of an agreement as it did was a pleasant surprise, though few saw it as anything more than a temporary bandage over a gaping wound. Greece’s attempted bond sale this week will be the first test of whether the accord had the desired effect of calming markets into keeping Greece’s borrowing costs acceptably low. See the above link for full details.

In addition to the Greek bond sale, the other big focus of the forex market will be the U.S. non-farm payrolls and a number of other mostly related key economic reports due for release. With a consensus forecast that calls for 195,000 new jobs to be created this month, economists clearly have high expectations for the labor market report.

If payrolls are able to meet this goal remains to be seen and even if job growth is really that strong, traders will wonder if the pace can be sustained. The March payrolls report will be distorted by the hiring of census workers (which are temporary) and the addition of jobs deferred forward from the snowstorms in February.

The ADP and Challenger layoff reports will help to guide the market’s expectations for payrolls and in turn, the movements of the dollar ahead of Friday’s release.

In addition to the NFP report, we will also be watching what comes out of China’s Vice Minister of Commerce’s visit to Washington D.C., with tensions between the U.S. and China exceptionally high right now due to trade and currency issues.

China’s reluctance to revalue the Yuan and increasing calls by members of Congress for Yuan appreciation has celebrity NYU Professor Nouriel Roubini predicting that the U.S. and China are on a Currency and Trade Collision Course.

US Dollar Weekly Outlook: Moving With EU Debt Crisis, Rising US Bond Rates, Coming US Monthly Jobs Numbers

US Dollar Bias: Bullish

  • US dollar hits fresh highs against euro on Greek worries, but fades slightly after EU accord to support Greece, as even a partial, ambiguous, and temporary solution is still a step in the right direction.
  • Fed’s Bernanke sets a relatively hawkish tone, setting stage for US dollar gains.
  • Rising bond yields may force US rates higher regardless of Fed plans, another coming 10 year bond auction in the second week of April will tell more.
  • For this week, watch the Greek bond sale to check the EU accord’s effectiveness, and US jobs figures (consensus is for +200K increase).
  • USD unaffected by downward revision of US Q4 GDP from 5.9% to 5.6% given the relative advantage over that of the EU, UK, and upwardly revised UoM Consumer Confidence figure

Euro Weekly Outlook: Greek Bond Sale To Test Whether EU’s Ambiguous Greek Accord Succeeded in Lowering Greek Borrowing Costs

Euro Bias: Longer term Bearish, but in the coming week record oversold levels leave it ripe for a bounce if Greek bond sale is smooth or US jobs data disappoints

  • European Union officials agree to joint Euro-area/IMF bailout for Greece should it be necessary
  • Moody’s downgrades Portugal’s sovereign debt rating
  • EU accord ambiguities leave markets unsettled, major questions about whether the amounts discussed are enough even for just Greece, never mind the rest of the PIIGS block
  • Greek bond sale this week will test whether the accord achieved its key goal: to keep Greek borrowing costs low enough so that it doesn’t need to test the EU agreement.

Japanese Yen Weekly Outlook: Uncertain as Yields, Risk Compete for Influence

Japanese Yen Bias: Neutral

  • Japanese Media Report Insurance Companies (huge yen bond buyers) Bearish on yen, to hold unhedged foreign bond positions
  • Japanese Large Manufacturer’s Survey points to jobless recovery
  • Bank of Japan leaves rates unchanged, doubles bank lending
  • All Activity Index outperforms in January on Japanese service sector sales
  • Could be pressured by USD strength, or lifted by its weakness, thus moving with the same forces as the USD

British Pound Weekly Outlook: To Test Upper Trading Range as ‘Relative’ Economic Outlook Improves

British Pound Bias: Bearish

  • Employment and public spending improve, but still awful even compared to just last year
  • U.K. Consumer Prices weaken more-than-expected
  • Chancellor of the Exchequer Alistair Darling maintains pledge to cut deficit
  • Retail spending tops forecasts
  • Bloomberg Survey shows economists expect BoE to refrain from more QE at April 8th meeting

Swiss Franc Weekly Outlook: May Decline Against Pound and Dollar, Gain on Euro

Swiss Franc Bias: Neutral

  • Speculative sentiment favors Swiss franc gains vs. US dollar
  • Futures positioning hints of possible franc trend reversal
  • Moving With markets, SNB policy shift to allow CHF to rise
  • CHF gaining on commodity dollars as they test support

Canadian Dollar Weekly Outlook: Looks to Nonfarm Payrolls, Crude Oil, Equities for Direction

Canadian Dollar Bias: Bullish

  • Canadian dollar test of parity awaits breakout in Crude Oil
  • Medium-term momentum and crowd sentiment favors Canadian dollar gains
  • Canadian dollar proves resilient amid broader US dollar rally
  • CAD holds fundamental advantage over USD, which faces serious mortgage reset issues from July forwards

Australian Dollar Weekly Outlook: Will Gauge Interest Rate Forecast Ahead of RBA Meet

Australian Dollar Bias: Bearish

  • Moving With risk appetite, which in turn will move with Greek bond sale, US jobs news
  • RBA Financial Stability Review keeps Australia on pace for further rate hikes
  • Dollar volatility and a steady Dow run don’t necessarily confirm sentiment trends
  • Australian dollar further develops a reversal pattern

New Zealand Dollar Weekly Outlook: Will Higher Rate Expectations Spur Break Out?

New Zealand Dollar Bias: Neutral

  • Moving With risk appetite, which in turn will move eith Greek bond sale, US jobs news
  • New Zealand 4Q GDP expands at fastest pace in two-years
  • Current account deficit widens more-than-expected
  • Trade deficit widens For first time in eight months

Disclosure: No Positions

Increase The Value Of Your Home With These Handy Home Improvement Tips

Your home needs repairs from time to time, so you may as well make these repairs the way you want to. There are many projects that you can complete on your own, eliminating the need to hire someone else. The advice in this article can help.

Consider the location of your home before making home improvement decisions. A home in a warm state like California would benefit more from adding central air than adding a fireplace. Outdoor pools work well in a sunny climate, not as well in a cold, cloudy region.

Resting the broom on the bristles will cause them to bend and make the broom less efficient. The way to keep a broom working well is to hang it with the bristles off the ground. The same principle is true for mops. The added concern for a mop is to allow for drying to lessen the amount of bacterial growth.

When you are working on home improvement projects outside, you can easily forget how long you’ve been outside. An important safety rule is to make sure you stay hydrated on hot days. Take some time out from doing manual labor to enjoy some water and look at what you have done.

If you have sharp furniture, you should put down some padding, which will keep children safe and make your home look nicer. Most hardware stores carry a variety of foam or rubber products designed to protect those corners and keep them from hurting others. Don’t forget to tape down any loose wires. This way you protect your children from potential hazards like accidental strangling while playing.

One excellent money saving home improvement tip is to join up with your community to boost your effectiveness and build your collective toolbox. Rather than buying expensive tools that you will only use once, try to borrow the tools from neighbors who enjoy home improvement projects. You can even trade tips with your neighbor.

It can be tempting to eye out your measurements when doing woodworking, but using absolutely exact measurements is the key to quality work. Remember to use a level, speed square and tape measure.

If your living room screams boring and too natural looking, add a bold print in the room to help give it extra personality. Look for accessories or furniture with zebra or leopard prints to create an interesting motive.

If you have a hole in your home that you think mice are using as an access point, put steel wool inside. This is a preventative measure, used while full repairs are made. Mice are unable to chew through the steel wool which makes it invaluable.

Consider arranging your tools, not by the type of tool, but by what type of project you will need them for. If you have a plumbing project, keep all tools related to plumbing in a separate box. In a separate box, keep your electrical tools and supplies. When you have your supplies organized, you will have no problem finding what you need to complete any home improvement project.

Performing home improvement projects on your home does not necessarily have to prove overwhelming. Regardless of whether you do your projects on your own or hire a professional, using these helpful hints is sure to launch you towards home improvement success.

Looking for more articles on home improvement? Look no further than the premier Beachwood water damage website. Find more tips on fire damage, smoke damage and flood restoration at

VeriFone Earnings Preview

VeriFone Systems Inc. (PAY) is expected to report fourth quarter results on December 14, 2011.

The company expects revenue between $409 million and $411 million in the fourth quarter, up from its previous estimate of $395 million and $400 million.

Excluding amortization of step-down in deferred revenue on acquisition, VeriFone expects revenue between $414 million and $416 million.

Adjusted EBITDA (earnings before interest, taxes, depreciation, amortization, stock compensation, acquisition-related expenses, restructuring costs and certain other expenses and income that result from unique or unplanned events) is estimated between $77 million and $81 million. As of October 31, 2011, VeriFone had cash and cash equivalents of $595 million.

Last month, VeriFone signed a definitive agreement with Nordic Capital Fund V to acquire European-based Point for approximately $824 million. Management expects to close the acquisition by the end of 2011. The transaction is expected to be accretive to the bottom line by $0.08 – $0.10 in fiscal 2012 and by $0.30 – $0.35 in fiscal 2013.

VeriFone expects the acquisition to add approximately $260 million to the top line in the first year. The acquisition is also expected to be immediately accretive to gross margins, operating margins and growth rates. The company further expects total services revenue to exceed 30% of total sales in fiscal 2012 and 50% by fiscal 2015.

Excluding any impact from the planned acquisition of Point, VeriFone expects revenue between $400 million and $405 million for the first quarter of fiscal 2012. Net income is projected to be in the range of $0.50 - $0.52 per share.

Excluding any impact from Point, VeriFone projects revenues in the range of $1.70 billion to $1.72 billion for fiscal 2012. Net income is projected between $2.45 and $2.50 per share.

Earnings estimates for fiscal 2011 have been static as of late. Earnings estimates for 2012 have increased by $0.02 to $2.21.

We currently have a Neutral recommendation on VeriFone. The company holds a Zacks #1 Rank, which translates into a short-term Strong Buy rating.

Read the full analyst report on PAY

Colfax Goes Red

Colfax (NYSE: CFX  ) reported earnings on Feb. 7. Here are the numbers you need to know.

The 10-second takeaway
For the quarter ended Dec. 31 (Q4), Colfax missed estimates on revenues and missed expectations on earnings per share.

Compared to the prior-year quarter, revenue expanded, and GAAP earnings per share dropped to a loss.

Margins shrank across the board.

Revenue details
Colfax booked revenue of $177.8 million. The nine analysts polled by S&P Capital IQ expected revenue of $189.5 million. Sales were 6.7% higher than the prior-year quarter's $166.7 million.

Source: S&P Capital IQ. Quarterly periods. Dollar amounts in millions.

EPS details
Non-GAAP EPS came in at $0.40. The nine earnings estimates compiled by S&P Capital IQ predicted $0.45 per share on the same basis. GAAP EPS were -$0.37 for Q4 against $0.20 per share for the prior-year quarter.

Source: S&P Capital IQ. Quarterly periods. Figures may be non-GAAP to maintain comparability with estimates.

Margin details
For the quarter, gross margin was 34.6%, 110 basis points worse than the prior-year quarter. Operating margin was 15.0%, 90 basis points worse than the prior-year quarter. Net margin was -9%, 1,420 basis points worse than the prior-year quarter.

Looking ahead
Next quarter's average estimate for revenue is $171.4 million. On the bottom line, the average EPS estimate is $0.33.

Next year's average estimate for revenue is $759.4 million. The average EPS estimate is $1.68.

Investor sentiment
The stock has a three-star rating (out of five) at Motley Fool CAPS, with 264 members rating the stock outperform and 13 members rating it underperform. Among 76 CAPS All-Star picks (recommendations by the highest-ranked CAPS members), 73 give Colfax a green thumbs-up, and three give it a red thumbs-down.

Of Wall Street recommendations tracked by S&P Capital IQ, the average opinion on Colfax is outperform, with an average price target of $33.38.

  • Add Colfax to My Watchlist.

RFMD: Oppenheimer, Davidson Say Hold; Margins a Mystery

Shares of wireless chip maker RF Micro Devices (RFMD) are down $1.07, or almost 19%, at $4.58, and traded as low as $4.45, after the company last night said its December-quarter fiscal Q3 revenue will miss analysts’ estimates on weakness in sales of 2G cellular handsets, as well as its “multi-market products group.”

The stock got two downgrades this morning, one from Oppenheimer & Co.’s Ittai Kidron, who cut his rating on the stock to “Perform” from “Outperform,” and by D.A. Davidson’s Aalok Shah, who cut his rating on the stock to Neutral from Buy.

Shah, who also lowered his price target to $5 from $7, writes that the weakness was not totally unexpected, as the company had warned about “mixed signals” in the market for its chips in China, and at customers HTC (2498TW), and MediaTek.

But the mystery, writes Shah, is the company’s warning that gross profit will decline by nine percentage points. That may mean competition is heating up for chip business in the cheaper 2G phones:

The 900 basis point decline in gross margin is a big surprise. We understand mix and under-utilized assets have an impact, but to see this level of a decline, given that MPG revenues were already down 10% in the September quarter and gross margin in that quarter actually managed to increase sequentially. The company did not hold a conference call to explain this but it is possible that it is taking some inventory write-downs. If this is mostly related to weakness in the 2G market, this worries us even more, given that we see increasing competition in this space and pricing pressure will become an even bigger concern. This could lead to several quarters of depressed gross margin.

RF Micro didn’t’ offer an outlook for the quarter’s but profit, but Shah estimates it will probably be 3 cents a share, down from his prior expectation for 11 cents a share.

Kidron writes of the margin issue, “We believe ~3 pts. relates to inventory absorption with China (a false recovery in September) and potentially Samsung (channel fill) contributing factors. We expect only slight improvement in March as seasonality weighs further on utilization.” He cut his Q3 EPS estimate to 2 cents from 10 cents.

On the other hand, Cody Acree with Williams Financial Group writes that there’s better times ahead:

We are obviously disappointed by the news,�particularly as macro China issues are obscuring the company�s substantial progress with multiple new products into multiple new leading OEMs. Although the Chinese inventory correction will likely linger into�the March quarter, we do not believe this issues changes anything about RFMD�s opportunity to perform through 2012/13 as new product growth begins to eclipse legacy revenue, driving gross margins and profitability.

RIM: Deterioration Nixed Microsoft Bid, Says Globe & Mail

Following reports on Tuesday and Wednesday that Research in Motion (RIMM) has been a take-out target of several companies, including (AMZN), the Globe & Mail’s Iain Marlow and Boyd Erman this morning write that the reason no deal has happened is because Microsoft (MSFT) was scared away by the “rapid deterioration” of the BlackBerry business, citing a single anonymous source.

Marlow and Erman say hedge funds walked away for the same reason.

In any event, the authors note investors believe RIM management, and its board, are resistant to any takeover efforts:

I think in terms of separating the chairman and CEO roles, it�s possible [the board] might have some success there, but I don�t think they�ll have any success in terms of replacing Mike and Jim,� said one fund manager, who has sold down his firm�s large position in RIM but remains a shareholder. �I think RIM wants to see how the new QNX smartphones are received in the market before they would contemplate selling out.

RIM shares today are down 25 cents, or 2%, at $13.53.

Wednesday, July 11, 2012

Taking A Look At The Machine Guard

Business has long been considered to be the essential backbone of our modernized society. There are various forms and types of businesses. Worldwide, many types thrive through viable logistics, administration, supply and demand. Since the industrial revolution, owners have sought ways to protect workers in a productive manner. Let’s take a look at the machine guard.

Since the invention of the wheel, the world has experienced a profound burst in technological innovation. This innovation has led to what we see today in global industry. Due to this, more and more companies are utilizing and creating, bigger, better and more efficient machines. This has led to a spike in global production.

Advanced machines help provide owners and manufacturers with easy, quick and simple products. Items that previously took years to make are now reduced to one day’s time. Unfortunately, many of the machines of old and of today, often lack the necessary protective gear needed. Due to this, global standards have been implemented and are now required.

Due to current mandatory regulations, factory owners are now required to implement productive protective measures and standards. Most machines pose a threat to operators, especially moving part machines. These machines have the ability to amputate limbs, create burns, blindness and more. Before these standards were enacted, millions of individuals fell prey to these devastations. Due to this, billions were spent in out of pocket expenses on hospital bills and medical care. These procedures were set in place to reduce these mind boggling statistics.

There are various types of guards. Standard Flanged Guards have been proven to be useful in the protection of same size or clearance spindles. Standard Unflanged guards are useful in the protection of same size spindles needing side mountings.

In addition to these, Tapered Flanged guards aide in the protection of spindles that have contradicting dimensions. Tapered Unflanged tools also protect differing spindles but also protect those with restrictions. Furthermore, Rectangular safeguards were created to assist in providing coverage to sections. Most consider the fact that they can be fully customized, thus fabricated, with or without flanges, to be an added bonus.

There is currently a multitude of guard varieties. They often vary based on materials. These varieties include, Bearing, Drive and Coupling safeguards. In addition to these, owners have been known to purchase custom fabrication, in-house tooling and conveyor roofs. Also, most vendors provide access to a fully customized web site, which allows consumers the ability to browse, research and shop for products. Experts recommend that consumers diligently research prior to purchasing in order to obtain the cheapest price.

When a loved one is injured due to a work related injury, most families are devastated. If the employer does not have adequate compensation insurance, this can lead to increased medical premiums, hospital and rehabilitation bills. If it is found that the employer did not use wisdom by the purchasing of sustainable protective machine tools, the feelings of anxiety and frustration are increased. If you are seeking to learn more information about purchasing a machine guard, contact your local manufacturer.

Companies must protect people from the hazards of machinery to do so it is necessary to install machine guards or a safety guard.

Helix Easily Beats Earnings Estimates And Still Has Plenty Of Upside

I continued to believe the energy sector offers some of the better bargains in this market. This is especially true for oil services firms as I think they have been oversold on concerns about low natural gas prices and their impact on future exploration plans. Both Halliburton (HAL) and Schlumberger (SLB) reported better than expected earnings last week. I believe others in the sector will follow suit and now is the time to snap up some good long term values. One stock that reported earnings today that looks undervalued is Helix Energy Solutions (HLX).

7 reasons Helix has long term value at $17 a share:

  • The company just reported earnings and revenues that easily beat estimates. The company has crushed estimates four of the last five quarters as analysts continuing underestimate this company both on the earnings and revenues front.
  • The company now has raised gross margins for five straight quarters.
  • The median analysts' price target for the six analysts that cover the stock is $23. I would look for some upgrades in the near term based on today's earnings report.
  • Insiders have been net buyers over the prior 9 months.
  • Earnings estimates for FY2012 have significantly increased over the past two months (up 8%). I would look for those upward revisions to continue given recent earnings.
  • The stock is selling at 9 times forward earnings which is a 25% discount to its historical average.
  • HLX is selling at under 4 times operating cash flow and grew OCF approximately 40% from FY2009 to FY2011.

Disclosure: I am long HAL, SLB. May initiate a long position in HLX over next 72 hours.

Amgen, Abbott, Teva All Incredibly Undervalued Stocks

In this article, I will run you through my DCF model on Amgen (AMGN) and then triangulate the result with an exit multiple calculation and a review of the fundamentals compared to Abbott (ABT) and Teva Pharmaceutical (TEVA). I find that these companies are significantly undervalued.

First, let's begin with an assumption about the top-line. Amgen finished FY2011 with $15.6B in revenue, which represented a 3.5% gain off of the preceding year: acceleration. I model growth trending from 4% to 1% in the 2014 - 2016 period and then bounding back to 3%.

Moving onto the cost-side of the equation, there are several items to consider: operating expenses, capital expenditures, and taxes. I model cost of goods sold eating 14.8% of revenue versus 18.5% for SG&A, 20% for R&D, and 4.5% for capex. Taxes are estimated at 15% of adjusted EBIT (ie. excluding non-cash depreciation charges to keep this a pure operating model).

We then need to subtract out net increases in working capital. I expect this to hover around 1% of revenue.

Taking a perpetual growth rate of 2.5% and discounting backwards by a WACC of 10% yields a fair value figure of $92.59, implying 36% upside. DCF models are often criticized for the "discount" part, so it is important to consider the sensitivity of the input figures. My sensitivity analysis that considers a variety of perpetual growth and WACC inputs yields a standard deviation of $13.14 - 14.2% of the intrinsic value result. This indicates that the DCF model is reliable in this instance.

All of this falls within the context of strong momentum:

"As you've seen from our results for the fourth quarter, we ended the year with momentum, and we expect 2012 to be even stronger. I'll touch on some of the highlights. We entered 2012 with our Neulasta franchise growing, with Enbrel maintaining its market leadership and more stable outlook for EPOGEN, particularly now that we have long-term contracts in place. Prolia and XGEVA are obviously the important part of our outlook for 2012 and beyond".

From a multiples perspective, Amgen is equally attractive. It trades at a respective 16.8x and 10.1x past and forward earnings versus 20.5x and 11.5x for Abbott and 14.5x and 7.4x for Teva. Assuming a multiple of 14x and a conservative 2013 EPS of $6.65, the rough intrinsic value of Amgen's stock is $93.10 - virtually in-line with my DCF result. What's more, the historical 5-year average PE multiple of Amgen is 14.2. The historical 5-year average low PE multiple is 11.7. Amgen only requires 10.1x to appreciate!

Consensus estimates for Abbott's EPS forecast that it will grow by 7.5% to $5.01 in 2012 and then by 6.6% and 5.2% in the following two years. Assuming a multiple of 14x and a conservative 2013 EPS of $73.92, the rough intrinsic value of the stock is $73.92, implying 20.6% upside. The company delivered strong performance in 2011 with sales growth of 10% and double-digit momentum in a variety of segments. HUMIRA, in particular, has done far better than what I expected.

Teva is similarly significantly undervalued. Consensus estimates are that its EPS will grow by 12.7% to $5.60 in 2012 and then by 8.2% and 7.4% in the following two years. Assuming a multiple of just 11x and a conservative 2013 EPS of $6, the stock will rise 46.5%. Investors have overly lamented the slow momentum in generics. I am optimistic about the company's M&A strategy exciting back investors. Towards that end, management's hiring of Jeremy Levin as CEO, who comes with a history of overseeing takeovers at Bristol Myers (BMY), is a solid step in the right direction. It is thus only a matter of time before Teva's multiples return to normalized industry levels.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

Will Gold and Silver Revert to Being Safe Havens Again?

The 18th century author Oliver Wendell Holmes suggested not to put your trust in money, but your money in trust. What about gold and silver? Can you trust them to be the safe haven again they’re supposed to be?

2011 was a turbulent year for precious metals, gold and silver in particular. Silver spiked to a new nominal all-time high on April 25. Gold outlasted silver and recorded a new nominal all-time high on Sept. 6.

Time has a way to obliterate unpleasant memories, but let’s take a moment to revisit the frenzy that was so prevalent at silver and gold’s all-time high.

Silver Frenzy

For two days in late April, the iShares Silver Trust (NYSE:SLV) was the most heavily traded ETF in the world. Investors were even willing to pay a premium to own SLV over physical silver.

On April 25, the day silver topped, The Wall Street Journal wrote in a front-page article titled “Silver rush spreads to stock market” that “Investors have turned to precious metals amid worries about inflation and the weakness in the U.S dollar. The metals are increasingly considered attractive as a permanent store of value that doesn’t diminish like paper currencies.”

Since then, the “permanent store of value,” silver, is down 43%, while “diminishing paper currency” (the U.S. dollar) is up 9%.

Contrary to the silver rush, the ETF Profit Strategy Newsletter warned on April 10: “Silver seems to be in blow off mode just as oil was in the summer of 2008. Chances are that similar to oil, prices will collapse once up side momentum is exhausted. Picking a top is treacherous but silver is definitely overbought and may collapse at any moment.”

Gold Frenzy

Gold in September followed the same template as the silver top. The SPDR Gold Shares (NYSE:GLD) became the largest ETF in late August with $78 billion in assets, and the gold rush was on.

At the time, gold was viewed as the ultimate safe haven against inflation, deflation, European defaults and whatever other problem you can think of. The Aug. 24 ETF Profit Strategy Newsletter, however, looked at gold prices from a different angle and warned:

“Even though gold is the logical fear trade, price action is also dictated by liquidity. At some point investors will have to sell holdings to pay off debt or answer margin calls. Commonly the most profitable asset is sold first. Gold has been the best performing asset for a decade and a liquidity crunch could produce sellers en masse.”

Gold prices are down 18% since their September high.

Silver Outlook

The chart below shows silver prices for 2011 along with some simple but effective trend lines. It’s funny that a digital crayon can prove more powerful than the combined power of Wall Street’s analysts.

Based on a simple resistance line, the Oct. 30 ETF Profit Strategy Newsletter said, “Silver is getting close to resistance at 36 – 36.4. The outlook for silver is bearish as long as prices stay below 36 – 36.4.’

Since then silver has broken through a number of support levels. If current support fails, silver will drop into a technical vacuum with no real support levels for quite a while.

Gold Outlook

Hope for gold was high at the beginning of December. Here are some headlines from Dec. 2:

Investopedia: “5 best bets for buying gold”
Motley Fool: “$7000 gold is closer than you might think”
Reuters: “Gold bull run to extend to 2012 on resilient demand”

The same day, the ETF Profit Strategy Newsletter identified this short opportunity:

“Gold prices are butting up against a trend line that originates from the September high. This is a low-risk opportunity simply because the risk is well defined by the trend line. Traders may go short gold with a stop-loss at 1,760 for gold futures or 171.1 for GLD.”‘

The chart below shows various gold trend lines, including the upper yellow trend line that acted like resistance of a bearish triangle. Of importance to gold is also the 150-day SMA, which has provided support for gold about a dozen times since January 2009. The Aug. 31 ETF Profit Strategy update suggested that a test of the 150-day SMA (a $250/oz. drop) is next.

CNBC aptly summarized goldbugs’ frustration this way: “In just three months, gold has gone from the trade that works in every kind of market to the trade that doesn’t work in any market.”

Gold has found support at the final support line. It is possible that gold will come back to kiss one of those trend lines goodbye, but regardless, the trend is pointing to lower prices.

A Remarkable, Yet Ominous, Trend

If you look at gold, silver and the euro, and compare them with U.S. stocks, you’ll find that U.S. stocks are the best performer.

Considering the backdrop of bad news, this is remarkable and ominous at the same time. In fact, it raises a number of red flags.

1) U.S. stocks are strongly correlated to the euro. The euro (NYSE:FXE) dropped from 1.49 to 1.28 while the U.S. dollar (NYSE:UUP) rallied. January tends to be a seasonally weak period for the euro. A weak euro is bad for commodities (like gold and silver) and U.S. stocks.

2) The U.S. stock indexes are fragmented. On Dec. 28,the Dow rallied to new recovery highs (highest since July 21). The S&P 500 and Russell 2000 did not get past their Oct. 27 high, and the Nasdaq didn’t even make it past its Dec. 5 high.

3) 50.5% of investment advisers and newsletter writers polled by Investors Intelligence are bullish again. This is the highest reading since July. Event though this doesn’t mean stocks can’t go any higher, it suggests that stocks are in a countertrend rally.

In short, the metals and the euro have already turned, while U.S. stocks are holding on by a thin thread. The question is not if but when U.S. stocks will join the rest of the bunch. An interesting side point is that the S&P is stuck in a similar triangle formation as gold was just a few weeks ago.

The ETF Profit Strategy Newsletter outlines the price target for gold and silver and the triangle support/resistance lines for the S&P along with short, mid and long-term forecasts for stocks.