Jim Cramer asks, why pay any attention to letters from a manager who lost money in the first quarter?
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The sluggish economy has investors buying Treasurys and yield-paying stocks.
By Robert Holmes, TheStreet
Many Americans are relieved, though angered, that Congress worked out an eleventh-hour deal so the world's largest economy would avoid defaulting on its debt.
But the situation is even worse than they may have feared. After legislators stop playing political games with the nation's debt limit, they will face calls to revive the economy, which has slowed dramatically. Restricting borrowing and raising taxes, which is likely, will put an even larger damper on the economy.
With such dire circumstances, investors now have an appetite for U.S. Treasurys and dividend stocks as they count on income in tough times, says Jason Brady, a co-portfolio manager for the Thornburg Investment Income Builder Fund (TIBAX). Investors' reaction to recent economic data re-enforces the need for better risk management and dependable income.
Between the terrible data on housing, autos and retail sales and the near financial death of the US, it's no wonder we're hurting.
OK, July was an awful month. Awful for housing. Awful for cars. Awful for retail sales. Just plain awful. All made worse by the climate of fear stemming from a president and a Congress that told us we were about to die financially, and all I can say is: You don't feel great after having a near-death experience.
Not only that, but Europe was awful, too, particularly its banks, which are experiencing the kind of sell-off that we had around TARP. The declines are hideous.
You can't be that excited about Brazil, India or China either, because they are trying to raise interest rates to stem inflation, but it isn't working. Inflation is still going up.
So you can say we are on some sort of precipice and the stock market is doing its level best in eight days to build in the fall from the precipice. Here's the issue: Is there anyone who doesn't know this?
The consensus among technical analysts is that we have roughly a 6% slide in store for the major indexes. Here's how to prepare.
By Jeff Reeves, Editor, InvestorPlace.com
Well, the markets sure were ugly Tuesday, and Wednesday was shaping up to be bad as well. What does the stock market hold going forward?
The unfortunate answer is that we face more of the same. So it's time to prepare your portfolio with a three-step survival guide.
But first the details on the slide -- and predictions on how ugly things will get before this ride downhill finally hits bottom:
The Obama administration has proposed to boost US fuel-efficiency standards to 54.5 miles a gallon.
Wall Street gives the new debt deal a big thumbs down as stocks and commodities plunge, taking out significant technical support.
It was an ugly, ugly session Tuesday. It seemed strange, considering Congress got its act together to pass a debt deal with not a day to spare. The deadline was Tuesday, when the bill was passed into law. How's that for cutting it close?
Stocks plunged anyway, with the S&P 500 dropping more than 2.6% in its worst one-day loss in nearly a year. And it caps an eight-day 6.7% losing streak for the Dow Jones Industrial Average, the worst run since May 2010, a month that featured the "flash crash" and the panicked start to the eurozone debt crisis.
Investors are reacting to a number of big negatives: the fact that the debt bill probably won't save America's AAA credit rating, the fact the economy is on the edge of falling into outright contraction, and the fact that the eurozone crisis is spreading like a disease into Italy and Spain.
As a result, significant technical support was taken out, clearing the way for a very nasty and dramatic market meltdown over the next few days. Here's why.
One newsletter says that if you have $100,000 to invest, then Exxon is a better choice than the 10-year Treasury.
Normally, an investor mulling these two options would look to Treasurys for security, safety and a higher yield, and to Exxon Mobil for growth opportunities.
But is Exxon Mobil, which closed Tuesday at $77.86, now the safety net? The company has raised its dividend every year since 1983, writes Asset Inflation, a contributor on Seeking Alpha. The stock now has a $1.88 dividend for a 2.35% yield.
The Treasury note, with its (for now) triple-A rating, has a yield of 2.66%.
While small- and mid-cap companies typically make for speculative trades, these can offer protection in turbulent times.
By Bryan Ashenberg, TheStreet
With market volatility rising and the health of the global macroeconomic outlook in question, many investors are looking for a haven. Small and mid-caps are typically among the more speculative types of equities, but some have defensive characteristics. Here are three companies worth checking out.
First up is Healthcare Services Group (HCSG). The company is a leading provider of housekeeping, laundry, linen and food services to the long-term-care industry and is a high-quality growth play with impressive defensive traits.
The company boasts 90%-plus customer renewal rates, a robust balance sheet and a healthy 4.3% dividend. In fact, Healthcare Services Group has raised its dividend for an impressive 32 consecutive quarters.
Though Congress has passed a bill to raise the debt ceiling and cut the deficit, S&P may still cut the US credit rating -- or risk losing credibility forever, one fund manager says.
By Robert Holmes, TheStreet
On March 28, after a week that saw the Dow Jones Industrial Average ($INDU) jump 3%, money manager Jeffrey Sica predicted that U.S borrowing and spending would prompt a downgrade of U.S. debt. Four months later, it appears that gloomy prediction will come true.
Sica, who is the president and chief investment officer of Sica Wealth Management, a company in Morristown, N.J., with about $1 billion in assets under management, says Standard & Poor's has to make good on the threat to downgrade U.S. debt or lose credibility forever.
With a debt deal now in place, Sica is bracing for a downgrade of U.S. debt by credit ratings agencies by making what some have called unpatriotic bets: short U.S. Treasurys, short the U.S. dollar, move to higher levels of cash and buy commodities like oil, silver and gold.
The company offers 2 of the most popular footwear brands.
A few years ago my teenage daughter told me she wanted Uggs for Christmas. I spent days going from store to store to find them. Since then I've noticed many teenagers in shorts and even bathing suits wearing the clunky-looking boots.
My Teva sandals are my favorite footwear, and lots of people must agree. Deckers Outdoor (DECK) knows how to design and distribute creative footwear that is worn by people young and old, and its stock deserves your attention, too. Based on its recent price momentum, investors also think so.
Steve Jobs caves in and offers complimentary storage for music and e-books, though extra space will cost you.
By Tom Taulli, InvestorPlace Writer
For Apple (AAPL) CEO Steve Jobs, the word "free" is nonexistent. If a product is good, a customer should buy it, right?
But as for the wild Internet world, the approach is often different. Reliance on advertising revenue means many services cost users zilch, and people have come to expect such freebies.
So in the case of Apple’s widely anticipated iCloud service, Jobs has had little choice but to cave in and use the F word. There will actually be a free version (at icloud.com, the service is still in beta but is expected to launch in September). That is, anyone can get 5 gigabytes of space to store music files, apps, photos and e-books.
But there's a hitch. If you want more storage, it looks like you'll need to pay up.
Crude's usual summer correction is setting up risk-controlled buying opportunities for several strong stocks and an ETF.
Try as I might, I simply can't be as bearish as everyone else is right now.
Maybe it's the large cash position we have on hand in our ActionALertsPlus portfolio. Maybe it's the sigh of relief -- audible for me even as it seems to be inaudible for so many other people -- but I want to do some buying here. I know the hazards:
1. Unknowns in the budget bill
2. Anemic hiring
4. Lack of leadership
5. European woes
But guess what. We've dealt with all of those before, and they didn't kill us. The systemic risk, the crisis risk of the president's invoking the 14th amendment or selling the gold in Fort Knox, is off the table, and that's what matters to me.
A new rumor pushes Apple's launch date to as late as the end of October.
By Jeff Reeves, Editor, InvestorPlace.com
A more likely release date will be in October. Possibly late October, according to reports.
Of course, that's just a rumor, too, but the disturbing trend all these recent rumors share is clear: a later and later launch date for the highly anticipated smartphone.
In a slow economic recovery, the company keeps up pricing pressure. That will mean earnings growth when volume picks up.
In the current slow-growth economic environment, I'm looking for shares of companies that can turn modest top-line growth in unit volume into better-than-expected bottom-line earnings growth.
And that's exactly what DuPont (DD) reported on July 28 for its second quarter of 2011. Earnings of $1.37 a share were two cents a share above consensus, and revenue climbed 19% from the second quarter of 2010 to $10.26 billion, above the Wall Street estimate of $9.9 billion.
But to see what I mean, look at how DuPont got that 19% increase in revenue. Just two percentage points came from higher volumes, while a whopping 11 percentage points came from higher local prices. (Exchange rates and a shift in the company's sales mix toward higher-margin products account for the rest of the revenue gain.)
Although Congress is moving toward an agreement to raise the debt ceiling and trim the budget deficit, we're not out of the woods yet.
As I write this, Congress is moving toward a budget deal that would slash spending by at least $2.1 trillion over 10 years while raising the U.S. Treasury's borrowing limit by $2.4 trillion -- enough to get us past the 2012 presidential election.
By all indications, the bill will pass. The House approved it Monday evening, and the Senate -- which was expected to OK it as well -- scheduled a vote for Tuesday morning.
And as I outlined on Friday, this couldn't come soon enough. Economic growth is waning and investor confidence fading. As the once unthinkable -- a default by the United States government -- suddenly became a very real threat, it took the wind out of the sails of the recovery just as it was building some momentum after a spring slowdown.
But with GDP growth slowing to a crawl and factory activity essentially unchanged in July, is it too late? Has too much damage already been done? Maybe. But the bigger problem is that the deal doesn't go far enough. And that risks America's losing its vaunted AAA credit rating at a time of economic vulnerability. Here's why.
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Stocks are facing some serious resistance as the bears tear into the market's respite.
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[BRIEFING.COM] The stock market finished the Wednesday session on a modestly lower note, but it is worth mentioning today's retreat took place after six consecutive gains. The Dow Jones Industrial Average (-0.1%) and S&P 500 (-0.2%) settled not far below their flat lines, while the Nasdaq Composite (-0.8%) lagged throughout the session.
Equity indices started the day in the red, with the Nasdaq showing early weakness as large cap tech names and biotechnology weighed. The technology ... More
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