Sell-off may continue, but don't panic
Sell-off may continue, but don't panic

Experts say that the recent market action feels 'more like a repositioning,' and that it won't stop anytime soon.

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Scouring the investment landscape for thoughts, insights and stock picks from market gurus.

By John Reese Dec 5, 2009 9:29AM

When it comes to investing, reinventing the wheel can be a dangerous game. If you want to beat the market over the long haul, I think your best bet is to learn from those rare investors who have done just that. That's why I created my Guru Strategy computer models on Validea.com, which are based on the approaches of proven winners like Warren Buffett, Martin Zweig, and Peter Lynch, and it's why at the end of every week I examine what some top strategists have been saying about the market and the economy.

 

This past week, with stocks up some 60% off their lows, the gurus I follow have been trying to find areas of the market that still offer good values. And several are focused on a controversial area that's not getting much love these days: healthcare.

 

Among those seeing bargains in the sector is Bruce Berkowitz, whose Fairholme fund's returns rank in the top 1% of its category over the past three and five years, according to Morningstar.

 

Gold prices have soared in recent weeks, but will the rise continue?

By Money Staff Dec 4, 2009 5:54PM

Gold futures dropped to $1,161 a ounce Friday after an optimistic job market report perked investor confidence.

 

Even with that dip, though, many analysts believe the price of gold, which hit a record of $1,226 an ounce this week, will continue to rise. Some even predict gold could hit up to $5,000 an ounce.

 

As the hype around gold continues there are strong reminders to remember 1980. 

 

TheStreet.com asks readers for 12-month price targets for gold, which topped $1,200 an ounce this week.

By TheStreet Staff Dec 4, 2009 2:40PM

TheStreetBy Scott Eden, TheStreet

 

It's been one of the biggest financial stories of the year and, now, the holiday season: gold.

 

Apart from the fake foil stuff that dangles from Christmas tree branches, December may be a banner month for the shiny yellow metal. (Of course, November also was a banner month, with gold prices rising 14%, their sharpest monthly increase in a decade.)

 

On Monday, futures prices crossed the $1,200-per-ounce level and looked to be going higher. But by the end of trading Tuesday on the New York Mercantile Exchange, the December contract had retreated to $1,199.10, up $18, or 1.5%, from the previous day. Gold for February delivery, the most heavily traded contract, settled at $1,200.20, up $17.90, after touching $1,204 earlier that day.

 

Bing: More on Gold

 

As the worldwide recession begins to slow, chemical companies should benefit

By Jim Van Meerten Dec 4, 2009 2:21PM
I had some room in my Wall Street Survivor portfolio, so I used BarChart to screen for stocks hitting new highs recently and then sorted for ones hitting new highs the most consistently.

Huntsman (HUN) came in near the top of the list after I screened for some of my other criteria. HUN is a manufacturer of differentiated and commodity chemical products for industrial and consumer applications. It is worldwide, so it should benefit as the global recession comes to a turn.

Huntsman has hit new highs in 15 of the last 20 trading sessions and five for five in the last week. There has been a 39.32% price appreciation in the last 65 days. BarChart's 13 technical indicators all have buy signals for a 100% buy recommendation.

The five Wall Street analysts who follow the stock look for an 11% increase in sales and a whopping 112.7% increase in EPS.
 

Stocks failed to break out of trading range despite surprise drop in unemployment.

By Anthony Mirhaydari Dec 4, 2009 2:17PM

MirhaydariThere's a lot of activity in the financial markets today as participants react to a better-than-expected jobs report for November. Payrolls dropped just 11,000 compared to a loss of 190,000 in October. The consensus was expecting a drop of 100,000. The unemployment rate fell two-tenths of a percent to 10%.

 

Philippa Dunne and Doug Henwood of the Liscio Report, who are both veteran watchers of the job market, said that the report was "the best since December 2007" with only a few blemishes under the surface.

 

Sure, employers still made cuts. But by all indications were on the cusp of a job market turnaround. Unfortunately, Wall Street isn't reacting well to the data.

 

Positive jobs news could push the S&P 500 above 1110. If it doesn't, we'll learn something about the market.

By Jim J. Jubak Dec 4, 2009 1:58PM

Jim JubakIf stocks don't soar Friday -- and they were up slightly early in the afternoon -- investors will need to rethink their explanation for recent market weakness.


Friday morning, the Bureau of Labor Statistics announced that the economy lost just 11,000 jobs in November. That was a huge surprise: Wall Street had been expecting a loss of 125,000 jobs.


The good news in the numbers didn't stop there, though.

The average work week picked up to 33.2 hours from 33.0 hours in October and the average workweek in manufacturing went to 40.4 hours from 40.1 in October. 


The economy may not be generating full time jobs yet, but it did add 52,000 temporary jobs in November. That's a huge positive step for the economy since employers typically add temporary workers before hiring full time help.

 

Big Lots is emerging from the recession a clear winner as it blasted by analyst estimates Friday morning.

By James Dlugosch Dec 4, 2009 1:32PM

Jamie DlugoschThe recession may be ending, but don't expect consumers to change their behavior any time soon. That means less spending and a thirst for deals and discounts.

 

Need proof? Check out the earnings report from discount retailer, Big Lots. The company blasted by analyst estimates for the period ending Oct. 31 on strong sales, real estate gains (not a typo) and lower freight expenses.

 

Excluding the gain on a real estate sale, Big Lots earned 27 cents per share versus an expectation of 15 cents. In addition, the company upped its guidance for the fourth quarter to $1.09-$1.14 from prior guidance of $0.99-$1.04.

 

Investors are cheering the news and sending shares of Big Lots (BIG) up more than 15% today. Considering that the stock was already up more than 60% this year, this move is no small feat.

 

A tough-talking, fast-moving CEO is just what the automaker needs, and he's turning the company on its head.

By Kim Peterson Dec 4, 2009 1:13PM
Kim PetersonCan one man truly force change at General Motors, the heavily bureaucratic, slow-moving automaker that finally fell into the hole it had been digging for decades?

Ed Whitacre is sure giving it a try. The 68-year-old Texas retiree is turning GM on its head, axing underperforming executives and pushing everyone to dump the company culture.

His core message? Move faster. Take risk. Fire up.

"We want you to step up. We don't want any bureaucracy," he told employees in a company-wide broadcast. "We're not going to make it if you won't take a risk and step up and be held accountable for it."  
Tags: GM

Luxury homebuilder fell 7% after reporting a quarterly loss that exceeded analyst estimates by 22 cents.

By TheStreet Staff Dec 3, 2009 5:31PM

TheStreet.comHomebuilder © Paul Burns/Getty ImagesBy Eric Rosenbaum, TheStreet.com

 

Shares of Toll Brothers (TOL) plunged after the homebuilder’s quarterly earnings missed analyst estimates by 22 cents. The stock dropped more than 7%.  

 

Toll lost $111.4 million, or 68 cents a share, in its fiscal fourth quarter because of the writedowns for decreased land values and staff reductions. In the year-ago quarter, Toll lost $78.8 million, or 49 cents a share. Analysts polled by Thomson Reuters were expecting a loss of 46 cents a share on revenue of about $450.1 million. Revenue for the quarter ended Oct. 31 fell 30% to $486.6 million from $691.1 million.

 

Toll’s loss follows disappointing results from D.R. Horton, which targets the buyers looking for lower prices. They come weeks after Toll said contracts were up 42%, based on preliminary data. The stock gained 16% that day, lifting the industry 7%.

 

Bing: More on Toll Brothers

 

Shares of the teen retailer sank after the company reported a 17% decline in same-store sales in November.

By TheStreet Staff Dec 3, 2009 5:10PM

TheStreet.comBy Andrea Tse, TheStreet.com

 

Shares of teen retailer Abercrombie & Fitch (ANF) took a beating Thursday after the company reported disappointing November same-store sales.

 

Abercrombie & Fitch, which operates Abercrombie Kids, Hollister and Ruehl, said same-store sales fell 17% in November from a year earlier. Total net sales decreased 8% to $245.7 million from a year ago. Hollister had the biggest decline at 23%.

 

Analyst Brian Sozzi of Wall Street Strategies says Abercrombie has been offering clothing that’s "counter-trend," against what's going on in the retail market. He calls its sweaters "a miss" this season. Sozzi has downgraded Abercrombie & Fitch to “sell” from “hold.”

 

Bing: More on Abercrombie & Fitch

 

Equipment auctioneer Ritchie Bros. isn't perfect, but it's a good pick for any kind of economic scenario.

By Jim J. Jubak Dec 3, 2009 5:02PM

Jim JubakThe perfect stock for the current economic uncertainties probably doesn’t exist. 


These shares would have to shine if the economy recovers in 2010 as strongly as optimists now think, do well if the recovery is only tepid, and even climb if the economy slid back toward recession in 2010.


You can certainly understand why I’d want to find such a stock, right?


Probably doesn’t exist, as I said. But that doesn’t stop me from looking. And I’ve found a stock that, while not perfect, gets me two-thirds of the way to an all-economic-weather buy.

 

The United Arab Emirates will soon buy Citigroup shares -- for $31.83 each

By Kim Peterson Dec 3, 2009 4:48PM
Citigroup (C) shares closed at $4.06 Thursday. But the United Arab Emirates will soon buy $7.5 billion in shares of the company -- for $31.83 each.

That's gotta hurt. The lesson here? Don't ink any deals right before the financial world falls off a cliff.

The UAE thought it was getting a great score in November 2007, according to The Wall Street Journal. Citigroup was in serious money trouble, and the Abu Dhabi Investment Authority (the UAE's sovereign fund) came to the rescue with a $7.5 billion check.

In return, Abu Dhabi agreed to receive an 11% annual dividend for about two years. After that, it would get its investment back in the form of Citigroup stock.  

The government can summit away. Capitalism is the real, and only, solution to job creation.

By InvestorPlace Dec 3, 2009 4:19PM

InvestorPlace MediaBy Jim Woods, InvestorPlace.com

 

As I write this, President Obama is presiding over what he's calling a "jobs summit." This is just a colorful way of describing a bunch of federal and state politicians, economists, business people and labor leaders getting together at the White House to jaw about putting people back to work.

 

Now, at the risk of sounding extremely disrespectful, this jobs summit is truly laughable. Not that the nation's 10.2% unemployment rate is any laughing matter, far from it. In fact, the sad state of employment in this country is something that makes my blood boil.

 

But what makes me even more furious is that the federal government has decided to take the lead in job creation, as if the government were the ultimate arbiter on jobs.

 

Model based on Warren Buffett's investment approach high on Exxon Mobil & Wal-Mart

By John Reese Dec 3, 2009 2:49PM

Warren Buffett. Image credit: © Chip East/ReutersGiven that I run a model portfolio based on Warren Buffett's strategy, I take a special interest when the Oracle of Omaha announces new purchases.


My Buffett-inspired model's picks don't always match up with his own buys -- the model focuses on the quantitative aspects of Buffett's approach that were disclosed eight years ago in the book "Buffettology," so non-quantitative factors (as well as possible evolution in Buffett's style since then) can make for some significant differences between my Buffett-based portfolio and Berkshire Hathaway's portfolio.

 

But there many times when a Berkshire buy will get high marks from my Buffett method, and that makes me sit up and take notice. And that was the case recently, when Berkshire announced its third-quarter holdings.

 

The disclosure revealed that Berkshire had taken a 1.28 million share stake in energy giant Exxon Mobil (XOM), and that it had almost doubled its stock in retail king Wal-Mart (WMT), adding about 18 million shares. And, according to Validea.com's Buffett-based Guru Strategy, Buffett was wise to do so.

 

Elizabeth Warren makes a thin connection between the disappearing middle class and the flawed banking industry.

By Kim Peterson Dec 3, 2009 2:16PM
Bankrupt © Hill Street Studios/Blend Images/Getty ImagesWe've heard a lot about the disappearing middle class in America over the years. Elizabeth Warren weighs in this week with her take, saying that many American families do all the right things yet still have no real security.

The wages of the average working man have been flat since the 1970s, writes Warrren, a Harvard Law professor who also chairs a Congressional panel overseeing the banking bailouts. But core expenses are going up.

Going to college and finding a good job no longer guarantee economic safety. Paying for a child's education and setting aside enough for a decent retirement have become distant dreams. Tens of millions of once-secure middle class families now live paycheck to paycheck...

Families spend less than they did a generation ago on flexible items, like clothes, furniture and appliances, Warren writes, but that isn't enough to keep many of them out of debt. 

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[BRIEFING.COM] The stock market finished a down week on a cautious note with small caps leading the retreat. The Russell 2000 lost 0.5%, widening its weekly decline to 2.6%, while the S&P 500 shed 0.3%. The benchmark index ended the week lower by 2.7%.

This morning, the market was provided a basis to rebound with the July employment report, which was just right for the policy doves (209K versus Briefing.com consensus 220K). It showed payroll growth that was weaker than expected, ... More


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