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Be wary of dire market forecasts

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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The yellow metal and companies that mine it remain in a bull market.

By TheStreet Staff Aug 12, 2011 10:31AM

Image: Gold Bars (© Photodisc/SuperStock)By Frank Byrt, TheStreet

 

Standard & Poor's is recommending gold and gold miners as top investment picks only days after downgrading U.S. Treasurys, which sparked a firestorm in financial markets worldwide that boosted the price of the precious metal.

 

S&P's Equity Research Services unit, which made the recommendation, is independent of the firm's Ratings Services division, which lowered its long-term credit rating on the U.S. to AA-plus from triple-A with a long-term negative outlook last week.

 

Gold futures tumbled Thursday after CME Group, the owner of the world's biggest futures market, increased margins on gold contracts by 22%. Gold had soared 8% in the previous three days, bringing a one-year gain to 49%, on U.S. and European debt concerns and a slowdown in global economic growth. Haven investments such as gold, Treasurys and the Swiss Franc have benefited the most.

 

"We believe that gold is in a bull market," S&P analyst Leo Larkin wrote in a research note, because demand will outstrip supply "for the foreseeable future."

 

Spooked by a severe market slump and the first downgrade of US credit, investors are on pace to redeem record amounts.

By TheStreet Staff Aug 12, 2011 9:57AM

the streetBy Frank Byrt, TheStreet

 

U.S. stock mutual funds are forecast to set a record for investor withdrawals in August as Americans recoil from the biggest equity market slump in three years and the first downgrade of Treasurys.

 

The prediction, from analyst Kevin McDevitt at mutual fund tracker Morningstar, comes after July's $22.9 billion in outflows, the most since the peak of the credit crisis in October 2008, when investors pulled $28 billion from U.S. stock funds. "With August off to a very rocky start, this trend is sure to continue, with deeper outflows to come."

 

Investors have withdrawn a net $200 billion from U.S. stock mutual funds over the past five years. Total fund industry assets peaked at $4 trillion in late 2007, but the subsequent stock market crash a year later, the prolonged recession and last year's flash crash have contributed to skittish investor behavior that has resulted in outflows of about $500 billion since the peak, according to Morningstar.

 

That's roughly equivalent to the assets of the seven largest U.S. mutual funds, a list that includes Pimco Total Return (PTTRX), SPDR S&P 500 ETF (SPY) and Fidelity Contrafund (FCNTX).

 

Big upswings are good for 3 things: selling tech, selling banks and selling companies that receive most of their earnings from budget-strapped governments.

By Jim Cramer Aug 12, 2011 9:24AM

the streetthe streetNice action Thursday.

 

Principally because it made us forget how horrible Wednesday was. The last-hour buying that accompanies an up day (courtesy of the rebalancing of double and triple exchange-traded funds -- the machine buying) put whip cream on top of the bullish concoction. 

 

And I hated it.

 

I hated it because it was a day when rumors didn't fly in Europe -- or at least they were temporarily muted by the shorting ban.

 

We need real resolutions to real problems.

 

First, we need to take off the table a possible recession, courtesy of governmental uncertainty here and in Europe and higher interest rates in emerging markets. Second, we have to see a substantive conclusion to the sovereign and bank debt problems in Europe.

 

Around the world, central banks are dragging out or canceling interest-rate increases. The effect, however, is unclear.

By Jim J. Jubak Aug 11, 2011 3:52PM
Jim JubakThe combination of slower economic growth and a global stock market rout are enough to change the strategies of central banks around the world.

Already.

The almost uniform global response from central banks has been to drag out or cancel interest-rate increases that were in the works. In general that will help stock markets -- but how much they help an individual market depends on how convinced investors were that the central bank was serious about hiking rates in the first place.

For example, in the United States, the Federal Reserve has already told the market not to expect higher benchmark interest rates until 2013. Investors who have watched the gradual slowdown of the U.S. economy had already decided that the Fed wouldn’t move in 2011, as had seemed likely earlier in the year.
 

A few thoughts after a wild few days.

By Motley Fool Pick of the Day Aug 11, 2011 2:56PM

By Morgan Housel

 

After several days, a stock market plunge and a flurry of finger-pointing, we're still trying to figure out what Standard & Poor's downgrade of U.S. Treasurys really means. Here are four points to keep in mind.

 

1. It had no impact on Treasurys. The biggest risk of a Treasury downgrade was the possibility that interest rates would rise. That could add trillions to future federal borrowing costs and stifle economic growth.

 

But interest rates didn't rise at all after the downgrade. In fact, they've plunged. Monday turned out to be the eighth best day for 10-year Treasurys in modern history. The biggest irony of downgrading Treasurys is that it instantly increased global demand for . . . Treasurys. One blogger, mocking the stereotypical investor, quipped: "Treasurys were downgraded? Wow! Sell my entire stock portfolio and get me into Treasurys!"

 

Sales are suspended for repricing as gold soars.

By Kim Peterson Aug 11, 2011 2:41PM
The price of gold (-GC) has soared so high that the U.S. Mint took the unprecedented step this week of halting the online sale of gold collector coins. The coins were back within a day at a higher price.

These are the gold numismatic coins sold to collectors, not the gold bullion coins sold to investors, the Mint told Reuters.

The problem was that the market price for gold bullion was fast approaching the price of gold collector coins. The U.S. Mint has the right to stop collector sales when that happens, but that apparently has never happened, at least as far as anyone can remember. 
Tags: gold

As stocks flirt with losses of 20% or more, many observers are calling for the end of the March 2009 uptrend. Here's why they're wrong.

By Anthony Mirhaydari Aug 11, 2011 1:07PM

It's been a brutal few weeks. Stocks at home and abroad have been pummeled by the combination of fresh recession fears and financial panic. Instead of focusing on solid second-quarter earnings or a slowly improving jobs picture, all eyes were on sovereign debt concerns and the rising potential of two disaster scenarios: a default by the U.S. Treasury and a breakup of the eurozone.

 

As a result, a number of major stock averages have fallen more than the 20% technical guideline used to define new bear phases. The Russell 2000 Small Cap Index is down more than 22% from its high. The iShares Transportation (IYT) is down nearly 21%. Markets in Brazil, France, Germany, China and India have also crossed the 20% threshold.

 

Yet mindless terror is now giving way to a more reasoned analysis as stocks whipsaw near their lows. The surge of buying in U.S. Treasury bonds proves America still issues the reserve asset of choice and retains its haven status. And a big drop in Spanish and Italian bond yields shows that European policymakers are serious about ring-fencing their problems.

 

This is the bottoming process I've been waiting for. And it's a sign that the time to start buying up stocks at deeply discounted prices is nearly here. Here's why.

 

One enterprising designer is turning the convicted fraudster's old pants into pricey tablet covers.

By Kim Peterson Aug 11, 2011 12:48PM
Credit: (© FrederickJames.com)
Caption: iPad cover made from a pair of pants once owned by Bernie MadoffAfter Bernard Madoff was jailed for perpetrating one of the biggest investment frauds in history, the U.S. Marshals Service auctioned his belongings to raise money for the victims.

And now what once covered Madoff's rear end can protect your iPad.

Introducing the Bernie Madoff collection at Frederick James, a designer that makes iPad covers from "rescued" and vintage fabrics. Frederick James won 16 pairs of Madoff's pants at an auction in 2010 and turned them into iPad covers selling for between $250 and $500 each.

For $350, you can get the Ralph Lauren Polo blue khaki pants cover

Even after sharp recent declines, the chart patterns show that four of the most prominent global bank stocks still have more downside potential.

By MoneyShow.com Aug 11, 2011 11:58AM
By Tom Aspray, MoneyShow.com

As if the US debt-ceiling debacle and credit downgrade wasn’t enough, now the market has shifted its attention to rumors swirling in Europe about the solvency of several large banks and even an entire country.

France has come under the gun, as it has invested heavily to help prop up Italy and Spain, putting its own credit rating at risk in the process. Though the French banks received most of the attention, it is important to look at some of the other major global banks.

By applying basic chart projection techniques, we can get a better idea of whether this is the beginning or the end of the slide.
 

It's a good time to buy stocks at current depressed levels. Here's a start.

By TheStreet Staff Aug 11, 2011 11:47AM

By Jamie Dlugosch, Stockpickr

 

In September 2008, I wrote that it was not too late to sell stocks. With the market in the middle of a sell-off, that article went against the grain of popular opinion. I was proud of the result. The S&P 500 ($INX) ultimately lost 39% between September 2008 and March 9, 2009, when the market hit its low.

 

I bring this to your attention as we attempt to deal with the current market environment. Should investors sell? Should investors buy? Should investors buy gold? These are legitimate questions, to which many people are desperately seeking answers.

 

Despite recent volatility, the Oracle has maintained his faith in the US economy and a long-term investment approach.

By TheStreet Staff Aug 11, 2011 11:39AM

By Don Dion, TheStreet

 

The past week's gut-wrenchingly volatile market action has stoked fears into the hearts of even the most confident investors. One individual who appears solidly set in his bullish ways, however, is Warren Buffett.

 

On a number of occasions, I have commented on the Oracle of Omaha's unwavering optimistic view of the ongoing global economic recovery. Using a variety of mediums including New York Times op-eds, shareholder letters, and sit-down interviews, the billionaire investor has attempted to ease investor fears, arguing that the world's largest economy still holds promise over the long run.

 

As investors have clamored and panicked following Standard & Poor's' credit downgrade and renewed concerns over the European debt crisis, Buffett has once again taken to the stage in an effort to quell fears.

 

Orders miraculously pick up, giving the company and investors a sense that the worst of the tech spending slump might be over.

By TheStreet Staff Aug 11, 2011 10:46AM

the streetBy Scott Moritz, TheStreet

 

Cisco's (CSCO) surprisingly strong earnings and solid outlook sent its stock soaring and pulled other tech names up with it.

 

In a possible signal that there is light at the end of the dismal spending tunnel, the network equipment giant boasted that order growth had returned for the first time in a year.

 

The unexpected optimism sent Cisco shares up 15% in early trading Thursday, helping to lift the Nasdaq ($COMPX) almost 3% and boosting peers like Juniper (JNPR) and tech giants like Microsoft (MSFT), which were surging 7% and 3%, respectively. (Microsoft owns and publishes MSN Money.)

 

"The key takeaway is that things have likely stopped getting worse, even if the company is still facing competitive threats," Morgan Stanley analyst Ehud Gelblum wrote in a note Thursday, upgrading Cisco to a buy.

 

A portfolio of master limited partnerships that yields roughly 6% is there for the asking.

By Jim Cramer Aug 11, 2011 9:07AM

jim cramerthe streetSomeone listened to the Federal Reserve chief, who gutted any opportunity to make money in Treasurys, and went and got some yield.

 

That's the only explanation that I can come up with for the incredible resurgence in master limited partnerships Wednesday. On a day when the Dow ($INDU) tanked more than 500 points, almost all were up, as witnessed by the moves in Enterprise Products Partners (EPD), Markwest Energy (MWE) and Energy Transfer Partners (ETP).

 

I don't care that I sound like a broken record about yield, but a portfolio of master limited partnerships that yields roughly 6% is there for the asking. These MLPs are amazing in their comebacks, as anyone who bought Linn Energy Limited Liability (LINE) the other day, catching a monster move, knows.

 

You just caught a four-point move from the $32 level simply focusing on yield, or focusing on insider buying, which is aggressive in LINE.

 

Buffett and other top investment experts believe in America over the long term -- and you should, too.

By InvestorPlace Aug 11, 2011 6:51AM

By Jeff Reeves, Editor, InvestorPlace.com

 

Warren Buffett isn't too worried about the recent market mayhem or the big, bad S&P downgrade. And as you watch your own portfolio gyrate wildly, it's worth remembering seven simple words from the Oracle of Omaha: "It's never paid to bet against America."

 

Yet if you turn on the TV, you will find plenty of fund managers in $5,000 suits who argue the opposite. Buy gold, short Treasury bonds or the dollar, prepare for the worst! So who is right?

 

The answer lies in your point of view. Many Wall Streeters view the market day to day, minute to minute. And there's a very good chance we will see things stay rocky for a while. But the good news is that things will turn around -- and may do so faster than you think, based on the words of Buffett and other investment experts.

 

The tech giant ends the trading day as No. 1, beating Exxon Mobil in terms of market value.

By Kim Peterson Aug 10, 2011 5:37PM
Apple (AAPL) made its official debut as the world's most valuable company Wednesday, booting Exxon Mobil (XOM) from the top spot at the market close.

Apple was headed for the top spot Tuesday, only to be foiled by Exxon in the afternoon. That changed Wednesday, when Apple finished out the day with a stock price that fell 2.8% to $363.69 -- giving it a market value of $337 billion. Exxon shares tumbled 4.4% to close at $68.03, making its market cap $331 billion. 

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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.

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