There are some picks in this sector that have excellent valuations and strong earnings growth.
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Here's why gold and silver prices are falling, and why there's reason to believe they will rise again.
By John Browne, TheStreet
Fall officially began on Sept. 23, but it's not just leaves that are cascading downward. In the few market days of the new season, precious metals prices have seen significant drops, some 11% for gold and 31% for silver. In its lurch downward, gold plowed through support levels at $1,750, $1,700 and $1,645 an ounce. I'm sure many readers are concerned.
After all, by the time gold put in its recent peak on Aug. 22, it had logged a stunning 44% appreciation in calendar year 2011. And even after its recent tumble, the metal is still 22% higher than it was on Jan. 27, the 2011 low. Therefore, some may conclude that gold has further to fall, and that the descent could be steep.
Given this anxiety, it might be helpful to summarize some factors we see impacting prices. Emotions loom large in the financial world, and it is easy to lose one's focus during periods of uncertainty. From as rational a perspective as I can gain during these irrational times, here is my view on why precious metals have recently pulled back so violently:
Investors of dividend-generating securities need to acknowledge the fact that dividends can and do experience declines.
By Ron Rowland, TheStreet
There is a raging debate regarding the best way to live off your portfolio. Young adults are told, by those older and wiser, to save and invest for retirement. There is never a shortage of ideas and suggestions on how to build a nest egg. For those lucky enough to have accumulated a nest egg large enough to meet their financial needs, the dilemma is determining the best way to tap that egg.
When it comes to defining the best solution for this task, there are two major camps -- and they rarely see eye-to-eye. In one corner are the total return proponents. They believe the optimum approach is to manage the portfolio for total return. They assume the income generated by the portfolio will not be sufficient to cover retirees' annual financial needs and therefore some holdings will need to be sold to make up the shortfall.
In the other corner is the dividend income camp. That camp believes the optimum approach is to invest strictly in dividend-generating securities that kick out the required income without ever having to sell any holdings. The dividend camp makes some compelling arguments, but that is a subject for another article.
Meet your enemy, shareholders.
By Morgan Housel
"HP's Board of Directors Is Pathetic."
That was the headline floating around last week. It's hard to disagree. Hewlett-Packard's (HPQ) board is getting good at two things: tripping over their own incompetence and handing out dynastic pay packages.
It started last year when HP's board pushed out then-CEO Mark Hurd for allegedly abusing $20,000 worth of corporate expenses. For his misdeeds, Hurd was shown the door with a $35 million severance package, and quickly took up an executive position at rival Oracle (ORCL). Some claim the board's hands were tied with the severance package, and that it was contractually obligated to make the payout. Blarney. As Nell Minow of the Corporate Library pointed out, by letting Hurd resign, rather than firing him, the golden parachute was entirely voluntary.
Evidence builds that a major market turnaround is nearing as economic fundamentals improve and technical indicators reach extremes.
As the third quarter ends, it's been a terrible few months for stocks and other risky assets. Since early July, the S&P 500 has lost more than 15%. The small caps in the Russell 2000 have been hit even harder, down nearly 24%. Industrial commodities like copper have been hit, too: The iPath Copper (JJC) is down 31%. Even gold, a perennial favorite of the doom mongers, has lost 16% in just the past few weeks.
All of this has been driven by a massive markdown in economic growth expectations, something I warned of as far back as late April, just days ahead of the market's topping out. In "Investors, it's time to run and hide" I discussed how negative catalysts like Japanese supply chain woes, new concerns in Europe and rising inflationary pressures were about to pop the bubble in bullishness as the economy started to sag.
Demonstrators in New York and San Francisco rail against power, money and influence.
The protests have gone on for two weeks straight in New York and have recently moved to San Francisco and other parts of the country. Many media sources have summarily dismissed the group, as you can see in the following video, but that isn't taking any steam away from the demonstrations.
Use proven market tools to determine whether it's truly safe.
By Tom Aspray, MoneyShow.com
Most investors have heard the phrase "buy the dips" from the financial pundits when the stock market has been in a well-established uptrend.
But to most, a dip is quite a vague term and it means something different to a fundamental analyst than it does to a technical analyst. This was illustrated in a recent column in The Wall Street Journal by Jason Zweig titled Why Buying on the Dips Isn’t All It’s Cracked Up to Be.
In a nutshell, Zweig looks at how buying on a 2% or a 5% market correction impacted the performance when compared a single purchase over a ten-year period. I think his conclusion misses the point, however, as to most traders or technical analysts, buying the dips generally refers to a specific issue, and not the market as a whole.
There are many reasons everyday investors are losing interest in stocks, but the daily beatings we receive from across the pond might be the most frustrating.
If you are like me, you tire of knowing you are going to be down big because Germany is down 3% or France is down 2.5%. It takes any joy or hope out of the game. We know that we are less important than they are, and we can't just decide that because jobless claims were better than expected by a couple of thousand we are now free to trade on American news.
There are several debilitating aspects of this business right now that have simply made stocks unpalatable -- justifiably -- to everyday investors.
Technical analysis offers no support to a market in decline. In other words, look out below.
Stocks opened with a technical recovery Thursday after a drubbing on Wednesday. That followed positive news from Europe and a drop in weekly jobless claims.
A late rally recovered most of the losses, but the Nasdaq closed the day down. And judging by sentiment early Friday, it looks like we could be headed lower again to end the week.
Thursday's extreme volatility may not be evidenced by the closing numbers. And the prospect of end-of-quarter window dressing may also mask some of the mayhem. But if you look at the charts, you can see a rather ugly story unfolding in the days ahead.
It's time for investors to get very, very worried. Just see for yourself in these charts:
Two pieces of economic news could move the markets.
The Chinese number is the official version of the preliminary manufacturing purchasing managers' index (PMI). The preliminary version, released by HSBC and Markit Economics on Sept. 22, showed the manufacturing PMI falling to 49.4 in September from 49.9 in August. Any index level below 50 indicates that the sector is contracting. [Update, 7 am ET, Sept. 30: The PMI came in at 49.9 in September].
The bookseller's stock has fallen 10% since Amazon announced its new tablet.
Barnes & Noble was already having a tough time. Its shares have dropped more than 50% in three years, and executives had hoped the Nook would carry it out of its misery. Those hopes may be dashed now.
The presidential candidate says the investor, with his tax-the-rich suggestions, is unaware of the jobs situation in parts of the country.
Perry took aim at the Oracle of Omaha in an interview Thursday on CNBC. He was asked about the "Buffett rule," which says people making more than $1 million a year should at least pay the same tax percentage that the middle class does.
Starting next year, the $5 charge will hit most customers who buy things with debit cards.
The Dow Jones news service uncovered the plans after seeing an internal memo sent to bank executives Thursday. It's safe to say that customers will be outraged if the new charges start early next year as planned.
The fee will kick in only during the months when customers use their debit cards to make a purchase, Dow Jones reports. If you use your debit card only at an ATM, you won't get charged.
The grocery store cash register is doubling as a vacuum.
By Jeff Reeves, InvestorPlace.com
Inflation is the untold story of the economic downturn. While unemployment, foreclosures and government debt make plenty of headlines, it's startling to consider the slow and steady ascent of consumer staples. Inflation is driving up things like beef, soft drinks, grains and milk.
There are ways to hedge your investment portfolio against inflation, such as the best inflation investments I highlighted recently in a separate column. But there is little you can do to cut back the grocery bill as food prices continue rising.
Haven't noticed how bad inflation has gotten at the supermarket? Well, here are nine ugly instances showing how much damage inflation is inflicting on family budgets:
The huge number of unlocked smartphones illustrates either fans' fervor for Apple or customer dissatisfaction with AT&T and Verizon.
Apple (AAPL) iPhone fans know no bounds. Sprint (S) and T-Mobile might not formally carry the iPhone or subsidize sales of the smartphone, but that doesn't stop Apple junkies from finding a way around limitations.
Case in point: A blog post from T-Mobile this week claims that 1 million T-Mobile iPhones are already on the company's network.
Contrast a company like Paychex, which is finding new ways to grow, with Darden, which asks you to keep waiting for a turnaround.
That -- plus some very negative commentary about challenges and inflation and still one more promise to revitalize stores -- makes me feel that, while there's a 3.8% yield, maybe it's not worth waiting for this company to get its act together.
Contrast Darden with Paychex (PAYX). Here's a company that is levered to hiring and business formation. It should be getting hammered, because we don't have a lot of hiring or business formation in this country. Has Paychex decided it will sit around and wait for things to get better? Hardly. It has created services, including human resources outsourcing options, that enabled it to beat numbers and report 13% growth.
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[BRIEFING.COM] The major averages ended the midweek session on a flat note after spending the day inside narrow ranges. The S&P 500 hovered near the 2,000 mark for the majority of the trading day, but slumped to new lows during the last hour of action. The index then returned to its flat line, where it settled for the day. For the third day in a row, participation left a lot to be desired with just 487 million shares changing hands at the NYSE.
Equity indices opened with slim gains, ... More
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