The most likely scenario is that the markets will begin to rise from here -- and that bounce is just beginning to take hold.
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Almost no mutual fund managers have been able to protect Americans from losses in the stock market during this year's volatile trading.
By Frank Byrt, TheStreet
The mutual fund industry this year has been overrun by a stampede out of U.S. stocks and into safer alternatives, namely large-company and bond funds, much as in 2008 when the financial industry needed a bailout to survive.
Investors pulled $14.6 billion from U.S. equity mutual funds and put $102 billion into taxable bond funds through the end of July, said Ryan Leggio, a mutual fund analyst at Morningstar. The S&P 500 ($INX) is down 6.6% so far in 2011 after two years of gains and a slight rebound last week. The benchmark for American equities lost 16% of its value between July 22 and Aug. 19, the most in four weeks since March 2009, which turned out to be the bottom of the last stock-market crash.
"It's been a flight to bonds and away from equities," Leggio said.
Yes, Berkshire bailed out Bank of America last week, but not every ugly company deserves to be saved.
Do you think Warren Buffett was a Lone Ranger fan? It's likely, considering he rode that white horse to the rescue. Berkshire Hathaway (BRK.A) announced $5 billion investment in Bank of America puts him back in the role of hero last week. For the second time since the financial collapse of 2008, Buffett is bringing his substantial war chest of capital to the financial services industry under the auspices of providing confidence and support to the U.S. economy.
But don't think Buffett is out to save every ugly company out there. Here are 3 picks Warren Buffett wouldn't touch at ANY price.
Hurricane Irene looks tough enough, but the barrage of economic news next week could be even more of a problem for the market, given the trend of recent reports.
The markets' strength early in the week was in spite of more Eurozone concerns, as spreads widened on the Spanish and Italian credit-default swaps, and Greek bonds hit a new high in yield.
Even the US financial sector was under pressure, as rumors swirled about Bank of America (BAC). Even though it hit a low of $6.01 on Tuesday, the S&P 500 managed a 3.3% gain for the day.
The short-term technical picture improved further Wednesday, suggesting the S&P 500 could again move to the upper boundaries of its trading range. The rally was quashed Thursday in spite of Warren Buffett's $5 billion vote of confidence in Bank of America.
Bears have crushed several retail stocks - here is a trading story of a diamond in the rough
The market is clearly at a tipping point. With stocks in correction mode, investors are clearly concerned about a double dip recession. Wall Street economists have been cutting estimates for GDP growth over the last two months.
At the same time Wall Street analysts, those responsible for making forecasts of corporate profits have not yet adjusted downward. That disconnect creates plenty of opportunity to trade companies that are releasing earnings results. The real numbers will be given greater weight than Wall Street expectations.
In the last two weeks I have noticed a change in tone from those companies releasing result. While most companies are still beating analyst estimates the number of misses is on the rise. More importantly guidance for the future is noticeably weaker. There are stocks Warren Buffett will buy and stocks Buffett would not touch.
The price of oil has dropped already this summer, and could go even lower if Libya can restore significant production.
Wal-Mart, Home Depot and other big-box retailers go to great lengths to prepare for natural disasters.
Those big-box retailers have been in hurricane-anticipation mode for nearly a week, NPR reports. They're an important stop for worried residents seeking plywood, duct tape, bottled water and batteries.
And the last thing they want is empty shelves.
The company's newest intern is a Brown University student who told the world how to dismantle the smartphone's security restrictions.
Nicholas Allegra, 19, says he will start an internship at Apple in September. That's a bit of a surprise, considering that the Brown University student created the JailbreakMe code that lets people pull off the security restrictions Apple built into the iPhone.
And Allegra made it very easy to do. In fact, iPhone users just had to visit jailbreakme.com to automatically hack the device, opening up the phone to apps that were not authorized by Apple. Allegra was bold and brash and probably created some large headaches for a company that likes to keep tight control on all aspects of its products.
Thursday’s news-driven rally fizzled out, and with ominous bear flag patterns forming on the charts for several major stock indices, the short-term market action will be critical.
By Tom Aspray, MoneyShow.com
The close on Tuesday (August 23) suggested a short-term bottom was in place, which indicated that the major averages and ETFs should challenge or exceed last week’s highs. Wednesday’s higher close supported this view.
Stocks started off Thursday in a bullish mood following Warren Buffett’s investment in Bank of America (BAC), but the rally fizzled, which makes Friday’s action quite important.
If the financial media is correct in concluding that the market’s strength was based on today’s speech by Fed Chairman Ben Bernanke, it suggests that the market is really in weak hands. Though it is possible Bernanke will say something supportive for the markets, basing a trading or investing strategy on this hope is not really a strategy at all.
The primary concern now is that many of the key global markets show chart formations that are commonly referred to as “bear flags.” These are continuation patterns which are an interruption or pause in the overall trend. These will be confirmed by a break below Monday’s lows, which would signal another sharp market decline.
If the NY markets were forced to close because of hurricane Irene, and with overseas markets also weak, it could make any decline even worse.
HP shares tumble after a catastrophic conference call and Verizon's union strikes out in this week's round-up of business-world blunders.
By Greg Greenberg, TheStreet
Here is this week's round-up of the dumbest actions on Wall Street.
5. HP's catastrophic conference call
Shares of the once-proud technology giant took their biggest intraday shellacking in three decades last Friday, tumbling 20% after Apotheker issued forecasts that missed analysts' estimates and unveiled strategic changes that had Wall Street analysts scratching their heads. In a bid to boost margins, Apotheker laid out a series of major maneuvers, including jettisoning the company's personal computer business, closing its tablet and smartphone hardware unit and acquiring the enterprise software provider Autonomy Corp. for about $10.3 billion.
Despite high expectations, the Fed chief's speech was no repeat of last year's confidence-boosting performance. That's a shame.
The cliffhanger ended in disappointment. All eyes were on Federal Reserve Chairman Ben Bernanke's speech at the Jackson Hole symposium this morning for clues, hints and winks -- anything that might suggest the central bank was willing and able to support a newly weakened economy.
Many investors were hoping for another round of money printing like the $600 billion bond-buying program that was teased at Jackson Hole last year. But as I discussed in my column this week, something less was more likely.
Yet I still expected something to sooth raw nerves. Investors, executives and consumers are all feeling like something is not right. And their caution threatens to pull a still-growing economy into outright recession. Instead, we got nothing -- aside from a promise that the Fed will reconsider additional policy options at the end of September. So the question is: Now what?
His deal with Bank of America helps us avert bigger catastrophe.
Here’s my take. I heard this same sort of criticism when Prince Alaweed took the historic plunge and bought a huge chunk of Citigroup (C) the first time it imploded, in 1990-1991. People thought that the store had been given away. That the dilution was ridiculous.
The critics were ridiculous. He saved Citigroup.
Now, Bank of America wasn’t in as bad shape as Citigroup back then. But you have to understand that the pressure on this institution’s stock was eventually going to show up on the ratings agencies’ screens. We know that they downgrade when they see stocks plummet endlessly. We saw that time and again. Even when they shouldn’t.
Sell aggressive stocks and insurers now -- and jump into Home Depot.
By Jeff Reeves, Editor, InvestorPlace.com
Hurricane Irene is dominating the headlines this weekend, with the entire East Coast on high alert. The storm will strike North Carolina early Saturday morning and sweep all the way up to Maine if its current path holds, most likely roaring through New York, Boston, D.C. and Philadelphia.
Big storms like this create a big fear factor because residents in affected areas don't know what to expect. Will there be flooding? Lost power? Will it all blow over? It seems prudent to prepare for the worst and hope for the best.
Investors hope to see a third round of quantitative easing, but the economy is growing strongly enough without it.
Berkshire Hathaway will invest $5 billion in Bank of America, and could become a major stakeholder if all warrants are exercised.
Berkshire Hathaway (BRK.A) has agreed to invest $5 billion in Bank of America (BAC), reviving the stock price and giving investors more faith in the financial sector's future. Shares of the bank rose 15% early Thursday, but by the close had settled to a 9% gain at $7.61.
Another round of mortgage purchases is on the menu of possible stimulus options to be unveiled during Bernanke's Jackson Hole speech.
Like children waiting impatiently for Christmas morning, Wall Street is being held in suspense. But instead of Santa Claus bearing gifts, it's all about Federal Reserve Chairman Bernanke's speech at the Jackson Hole, Wyo., summit of central bankers Friday.
Will Bernanke manage a repeat performance and unleash another stock market rally by teasing additional policy tools? That's what happened last year as he tipped what eventually became the $600 billion money printing operation that was dubbed QE2 by the press.
Unfortunately, and as I discussed in my column this week, lingering inflationary pressures will likely keep a QE3 off the table. Instead, a number of other options are available, with the most probable being an increased focus on pushing down long-term interest rates by lengthening the average maturity of the Fed's bond holdings. What I didn't discuss in my column, and what is generating increased chatter across Manhattan trading desks, is that this strategy could have a pleasant side effect: support for the beleaguered housing market.
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[BRIEFING.COM] The stock market ended the holiday-shortened week on a mixed note as the Dow Jones Industrial Average shed 0.1%, while the S&P 500 added 0.1% with seven sectors posting gains.
Equity indices faced an uphill climb from the opening bell after disappointing quarterly results from Google (GOOG 536.10, -20.44) and IBM (IBM 190.04, -6.36) weighed on the early sentiment. Google reported earnings $0.15 below the Capital IQ consensus estimate on revenue of $15.42 ... More
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