Top Stocks

Has the recent correction presented investors with a chance to buy back into the market, or is it a sign of more -- and greater -- trouble to come for stocks? While the market gurus I keep an eye on are tending to lean to the bullish side of that question, there are some very bright minds on both sides of the issue.

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On the bullish side, for example, there's Bob Doll, portfolio manager and chief equity strategist for fundamental equities for Blackrock. In an opinion piece for The Wall Street Journal this week, Doll said that despite the formidable challenges the U.S. faces, “overweight positions in U.S. equities are more than warranted”.

 

Ah, somebody is finally spelling out the trade-offs if the world's developed economies move now to cut government spending or to raise taxes!

This isn't another one of those exercises that says health care spending and welfare payments will get cut if governments adopt austerity budgets. Really? No kidding. If governments cut spending, governments will spend less?

No, what the World Bank has done is to look at what the effects of different timing for cuts in government spending would do to growth in different parts of the world.

 

Activist investor Carl Icahn sent a letter to the board of directors of his latest takeover target, Lionsgate, on Friday, threatening to tip the company into bankruptcy if it didn't go along with him.

Icahn, who holds 19 percent of Lionsgate's outstanding shares and likely will be tendered another 5.4 percent by Mark Cuban and about 4 percent by individual investors, said he had enough shares to trigger "cross-defaults" on Lionsgate's outstanding debt, which he put at "over $472 million of bond indebtedness."

• Related: Cuban, Icahn Play Cat-and-Mouse With Lionsgate

Warning that Lionsgate may not have enough money to repay its debt all at once, Icahn said that could send the company into voluntary bankruptcy.

 

The unease in the markets over the last few years has caused the price of gold to soar.

If you don't think gold is in a bubble, and want to diversify your portfolio to include the precious metal, there are plenty of ways to do it. Check out the SPDR Gold Trust (GLD), for example.

And, as CBSMoneyWatch.com shows, there are terrible ways to buy gold. Kathy Kristof lists the five worst ways to buy, and it's a good read before venturing into the gold business: 

Burger King (BKC) launched a bit of an unexpected campaign this summer with its barbecue pork ribs. With a price tag north of $7 for eight pieces, the ribs are an oddity in an era when many other merchants are offering up bargains for cash-strapped consumers.

 

Well it turns out Burger King's rib deal may wind down sooner than expected -- but perhaps not for the reason some think. Demand turned out to be so strong for the tasty barbecue items that BK has just sold its 10 millionth rib and expects to exhaust its supply this month!

 

This is great news for Burger King and its shareholders, and could be a further sign of a moment towards a "new upscale" in fast food where higher-priced, higher-margin items compliment traditional offerings of cheap burgers and fries.

 

By Jim Cramer, TheStreet

 

My checklist keeps getting granted. The other day, I said one of the six things we need to see before the market can make real gains was some stabilization in the Spanish banking situation, particularly with Banco Santander (STD). Last night, on the way home, I said that in order for a second-day follow-up rally, you had to have STD go higher.

 

Voila, my wish has been granted. The CEO this morning said the interim picture for the continent's largest bank is "brilliant." He reiterated that the year would be good, and next year would be at least as good. He also declared the dividend.

 

The good news is igniting a second-day rally in Europe, which should spill over here. (No pun intended, but the spill stock, BP (BP), is climbing, too.)

 

Written by Douglas Estadt

 

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Investors, you just haven't been freaking out enough this week. The markets have been too friendly. How about opening up a can of WLI to change that?

We're talking about the ECRI Weekly Leading Index, which Jon Markman calls "the most prescient statistical guide to the health of the U.S. economy."

The ECRI is set to go negative Friday for the first time since early 2009, which Markman says will spook super-bulls and make super-bears happy. 

General Motors caused a ruckus this week by telling employees to phase out the "Chevy" nickname in favor of "Chevrolet."

The company asked workers to say "Chevrolet" when talking to a dealer or even when speaking with friends or family, according to a memo obtained by The New York Times.

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Why kill off one of the most beloved American brand names? To be consistent, the memo said.

 

It's out of fashion for stocks to split nowadays.

That's the opinion of Howard Silverblatt, a senior index analyst at Standard & Poor's, according to Bloomberg. Three companies in the S&P 500 Index are splitting this week, which is a little unusual.

But a decade ago, Bloomberg reports, that would have been par for the course. 

I'm going to take advantage of the half-hearted bounce this week to sell Microsoft (MSFT) out of Jubak's Picks. (For more on this bounce, see this post).

The stock has not performed well on up days for the market and looks locked into a short-term down trend. (On the chart, Microsoft is flirting with a negative cross-over, where the 50-day moving average breaks below the 200-day moving average.) The stock traded just below $25 in late Wednesday trading.

I might want to own this one in the fall again when visions of higher sales for the Vista operating system and for Office 2010 start to dance in investors' heads.

 

Will the bailed-out American International Group (AIG) ever repay taxpayers in full? Doesn't look likely.

A panel investigating the bailout said that the federal government -- still an 80% owner in the company -- will likely continue as a significant shareholder through 2012, according to The Wall Street Journal. Taxpayers still "remain at risk for severe losses," the panel added.

AIG continues to be an embarrassment for the federal government, having received around $132 billion in aid from the Treasury Department and the Federal Reserve Bank of New York. 

Microsoft (MSFT) will offer as much as $1.25 billion in three-year convertible notes, according to the Dow Jones news service.

The software company will use the sales proceeds to repay short-term debt. If it was any other company I’d ignore this news as a daily noise, as this kind of things happens all the time.

But Microsoft has $39 billion of cash and generates $16-$17 billion of free cash flows a year. Issuing short-term debt, for which Microsoft will surely pay higher interest than it receives on the pile of its cash makes absolutely no economic sense -- zero.

 

Morningstar has a really nice rundown on using ETFs for pairs trading. It's a good explainer for investors who want more of an introduction into this area.

Pairs trading is when you trade two securities against each other in a long-short strategy, targeting a specific area in which they are different. "Pairs trading attempts to control for outside risk and allows you to focus on just one risk at a time," writes Michael Rawson.

For example, Rawson writes, if you thought the iPad would steal market share from Amazon's Kindle, you would simply buy shares of Apple (AAPL) and short Amazon (AMZN). That's an easy example. The bigger problem with pairs trading, Rawson writes, is that you need to have two good trading ideas when even one is sometimes hard enough to find. 

By Jim Cramer, TheStreet

 

We just get a number, simply a blow-away number, from China, showing much stronger exports and imports -- fully 50% more than people were looking for in terms of exports -- and what's the first thing the reporter and the anchor ask? "Is it sustainable?"

 

Wait a second. It wasn't even supposed to happen. This is huge news. China was supposed to be slowing to a crawl as they break the real estate market -- people are still looking at prices, which were up, and not transactions, the precursor, which are down huge -- and yet the economy there roared. That means they need more of our imports.

 

That means Europe is still growing, because China sells more into Europe than the U.S.