As the market wades through what many people hope is a sixth bull year, some have grown nervous about how long the run can go.
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On Wall Street, you'd be hard-pressed to find similar continuity in leadership, long-term vision and constant questing for the next big thing.
Exxon Mobil (XOM) was all over the news Wednesday, thanks to a joint venture to hunt for oil in the frozen north of Russia. Some pundits questioned whether Exxon will succeed in navigating the risky terrain of Soviet-style politics, to say nothing of the difficulty of drilling in Siberia. Others said Exxon could have just forged its most profitable partnership in history.
However the Exxon deal in Russia plays out in the years ahead, investors should take note of one very important fact: Exxon has been building this deal for years, with an eye on the long term and a refusal to let its current dominance and $350 billion market capitalization overshadow the need for future successes.
Sadly, such discipline in vision is rare in corporate America these days.
Bank of America is raising capital through new deals, but its mortgage nightmares won't go away.
Hints of more cheap cash from the Federal Reserve help stocks, commodities, and other risky assets push higher. But can it last?
Investors have sure been doing a lot of Fed watching lately. With the economy on a knife's edge, dancing between tepid halting growth and a new recession, the people want to see more stimulus on top of the central bank's recent promise to hold interest rates near zero through 2013. So every hint and every wink from Federal Reserve officials is being closely examined as investors worship at the altar of cheap money.
And based on recent market movements, traders seem to think some additional policy easing is likely at the next Fed meeting in three weeks and that whatever measures are announced will be enough to get the economy revved up again. Sure, precious metals have been on the move over the last few days. But I think the real story has been the rebound in industrial commodities like crude oil and copper.
Fed chairman Bernanke raised expectations by extending the upcoming meeting by a day to allow a "fuller discussion" of the merits and costs of additional stimulus measures. Based on public comments by other Fed members, that discussion seems headed for a positive outcome. Here's why and a look at how investors should prepare.
John Paulson is having a tough year, but we can learn from his mistakes.
"Watch the downside, the upside will take care of itself. That's been a very important guiding philosophy for me. Our goal is to preserve principal, not to lose money. Our investors will forgive us if our returns don't beat the S&P in a given year, but we are not forgiven if we have significant drawdowns."
– John Paulson, 2007
It's been a horrendous August for John Paulson, the hedge fund manager who rose to prominence after earning billions of dollars for himself and his investors betting against subprime securities. As of Aug. 19, one of his flagship funds was down 22% for the month, and 39% year to date.
Here are three lessons ordinary investors can learn from Paulson's experience:
One investment firm is selling securities backed by subprime mortgages. Seriously?
Springleaf Financial plans to sell $242 million in residential mortgage-backed securities backed by subprime loans, The Wall Street Journal reports. Oh, good. I was just about to take a blowtorch to my savings account. This is a much safer way to burn money.
The attraction of these bonds is the yield, priced Wednesday at 4%. And get this: They are rated AAA by Standard & Poor's, so they're a better bet than the U.S. government. S&P is apparently just fine with bonds tied to loans to homeowners with below-average credit scores and almost zero home equity.
But the move changes nothing. AT&T and Verizon are still top dogs, T-Mobile is still going to disappear, and consumers will face fewer options.
By Jeff Reeves, Editor, InvestorPlace.com
Poor AT&T (T). We just learned Wednesday that the Justice Department will try to block its proposed merger with T-Mobile.
Justice lawyers say the acquisition of the No. 4 wireless carrier in the country by No. 2 AT&T would reduce competition and raise prices, The Associated Press reports. Expect AT&T to take the fight to court.
Meanwhile, how will AT&T muddle through with a measly $125 billion in annual revenue and just 110 million wireless subscribers? What ever will the company do with its $3.8 billion cash stockpile if it can't buy this competitor?
In case you haven't sensed the sarcasm yet, wake up and smell the coffee. AT&T is hardly on the brink of collapse and hardly a bit player in the telecom sector. The sad reality is that the mobile marketplace has been consolidating for some time, and this will continue with or without the merger.
When it comes to choosing locations for its sought-after stores, Apple's process is similar to high-end brands like Hermes and Louis Vuitton, say real estate experts.
By Olivia Oran, TheStreet
Brooklyn Borough President Marty Markowitz caused a stir recently by making a public plea for an Apple (AAPL) store to be built in Brooklyn as part of a downtown revitalization effort. He was shut down repeatedly.
How could Brooklyn -- a cultural hub filled with musicians, artists and entrepreneurs -- not be a good match for Apple, whose products are used widely and prized by creative types, Markowitz wondered.
The answer lies within Apple's core retail strategy: capitalize on already well-trafficked, well-to-do areas that don't need help gentrifying. In other words, go where the money's at.
For 25 large corporations, the top boss took home more money than the entire company paid in federal income taxes, one study shows.
But what about when a CEO's salary is fatter than the entire federal income tax bill for the company? Or better yet, what if their companies didn't pay any 2010 federal income taxes at all? Is this becoming the new normal?
That's what some of the largest U.S. companies managed to finagle last year, according to a new study from the Institute for Policy Studies. The study found that 25 of the 100 highest-paid CEOs took home more money than their company paid in federal income taxes. The average pay of those 25 CEOs was $16.7 million.
Recent strength in homebuilding stocks may set up good trading opportunities, but as long as the overall trend remains down, long-term investors should stay away.
The surprise increase boosted the homebuilding stocks, as many were already trading well above their recent lows.
The Dow Jones Home Construction Index completed a major head-and-shoulders top in May 2006. It peaked in 2005 at 1100 and closed Tuesday at 208. It is down 81% from the 2005 highs.
Though the SPDR S&P Homebuilders ETF (XHB) and the key homebuilding stocks have provided some good trading opportunities in the past, there are no signs yet of a major bottom.
Twenty-five of the 100 highest-paid bosses made more than their companies paid in taxes last year.
By Jeanine Skowronski, MainStreet
IPS says the 25 highest-paid CEOs averaged 16.7 million in annual compensation, with 22 of them getting net pay increases last year. In 13 of the companies, the pay increases coincided with either a decline in the corporation's tax bill or an increase in their tax refund check.
The low tax bills and large refunds could not be attributed to lower profits at those companies, the institute says, but rather to the use of offshore tax havens and corporate tax breaks.
Don't underestimate the power of the world's biggest online retailer and the godfather of e-commerce.
By Tom Taulli, InvestorPlace.com
Today, we may be witnessing something similar playing out. As Apple (AAPL) and Google (GOOG) get the headlines, there doesn’t seem to be as much adulation for Amazon.com (AMZN). Yet this company’s potential may be larger than these two companies - combined.
It apparently escaped its cage in a New York airport on Aug. 25 and still can't be found. So feline lovers have taken Jack's cause to Facebook.
Jack has been missing since Aug. 25, when his owner, Karen Pascoe, checked him and his brother in as cargo for a flight from John F. Kennedy airport to California. It didn't take long for Jack to go missing. Pascoe was called by the airline soon after she cleared security, CBS reports.
She searched the inbound baggage area for an hour with no luck and eventually boarded a later flight with her other cat, Barry. The airline promised to keep searching. Jack still hasn't been found.
Cat lovers are ratcheting up the pressure on American, and Jack is now famous. A Facebook page with his picture has more than 4,000 fans. The news is spreading, and the last thing American wants is another embarrassing episode like United Airlines (UAL) faced with the United Breaks Guitars video on YouTube.
The hurricane was devastating, but it may end up giving the economy a much-needed boost.
Some of the damage was not insured, either. Estimates show the hurricane's cost to insurers at about $2.6 billion. The total economic losses, including the noninsured portions, could hit $7 billion.
But there may be a hidden stimulus package here. MarketWatch's Irwin Kellner said Irene might have reduced growth in the gross domestic product by as much as a full percentage point. But the effects of the storm could boost the fourth-quarter GDP by even more.
A lesson in how to squander capital.
Last month, I pointed out what I thought was an amazing statistic: Hewlett-Packard (HPQ) shares were so cheap that, based on average share buybacks over the last three years, the company would repurchase its entire market cap within the next decade. It didn't need to grow earnings. Ever. Just carry on, slow and steady. At well under 10 times earnings, repurchasing shares was likely a good use of capital that would treat shareholders well.
You know what happened next: The urge to do something dumb.
After offering to buy U.K. software company Autonomy for $10 billion in cash, HP management signaled in a conference call that it would effectively can its share repurchase plans for the near future. Buying Autonomy is a better use of its capital, it reckons.
These 3 mutual funds -- one of which was launched in 1929 -- stand out among thousands.
By Frank Byrt, TheStreet
The hot shot with the yacht-club pedigree, white duck pants, cravat and the hat to match? Or the guy who's been around the world a few times, quietly displays his confidence and can back it up with double-digit returns that go back a decade?
The answer should be clear by now: the steady, experienced hand with nothing to prove.
Here are three funds cited by Standard & Poor's as giving a series of market storms a run and having proved their skills over the decades. Their managers oversee "blended" mutual funds. That is, they invest across different asset classes. The funds offer investors the potential for capital appreciation from equities along with income from bonds -- a combination that fits well in these turbulent times.
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[BRIEFING.COM] Equity indices strung together a daylong rally on Tuesday, giving the S&P 500 its sixth consecutive advance. Some selling during the final hour of action pressured the indices from their highs, but they still ended with the bulk of their gains. The benchmark index added 0.4% with eight sectors finishing in the green, while the Nasdaq (+1.0%) outperformed throughout the session.
Although the stock market began the day on a flat note, the major averages quickly took the ... More
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