Once you get past the hype, there's little chance for long-term gain with this stock.
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Chairman Ben Bernanke is unlikely to come up with a miracle plan that will jolt the economy, so stick to dividend-paying investments and gold.
We love to fool ourselves in this market, don't we? Monday people were buying futures as they "awaited" statements from Federal Reserve Chairman Ben Bernanke from the central bankers conference in Jackson Hole, Wyo. They are hoping for good news that will ignite "growth" and promote stability. No one wants to miss the "miracle" that Bernanke might have up his sleeve.
That's just like last week, when people stopped selling and started buying because of the potential for good news coming from the pending Merkel-Sarkozy meeting. Traders didn't want to miss good news that would ignite "growth" and promote stability. No one wanted to bet against a potential for the "credit miracle" and the "sovereign solution."
There was no miracle.
Watch out for the next leg lower
Enough is enough. The plunge in stocks returned last week with the S&P 500 dropped more than 4%. Bond yields sank and gold skyrocketed.
Something is truly amiss and I’m not talking about the standard bear fare of debt defaults or runs on banks in Europe. I’m talking about earnings.
The market sell-off that began in July is fast becoming a self-fulfilling prophecy. Consumers are rightly frightened with growth slowing, stocks losing value, home prices still crumbling and policy makers with little ammunition to change things.
The next step is for earnings to drop. At the moment Wall Street estimates are too high if indeed we slip into recession. The market is pricing in a recession, but the numbers many investors use to discount future cash flows has not.
In a market like this the cream will rise to the top. Other stocks are likely to fall as earnings performance falls short.
It may be late in coming, but I’m moving to a more conservative position with my ETF’s to buy this week by switching to the ProShares Short Russell 2000 (RWM).
We won’t know for a while whether the bulls have been truly slaughtered, so investors would do wise to wait for the near-term rally that will likely follow Friday’s down close.
Use earnings reports to capture gains long or short
What I like about trading stocks of companies about to report earnings is separating fact from speculation. At the moment we are in the midst of a massive speculative selling phase that has the market close to bear market territory.
When a company reports results, for a brief moment in time the shock of real news distracts market participants from the worry of the day. In an efficient market a stock is priced based on the discounting of future cash flows. Doing so requires using up to the minute available information to best accurately determine what those future cash flows will be.
That is why obtaining tangible information even if that information is looking backward, earnings reports allow the market to reset the price on a stock releasing profit numbers. On many occasions the inefficiency of a market has gotten that price so out of whack that the resetting of the price moves the stock in a big way.
Some are selling stocks into any rally. I’m making money for my subscribers buying stocks of companies reporting earnings. Last week at a time when the market was down significantly, I made 4 consecutive winning trades that made big profits for my subscribers. One of those trades was on graphic chip maker, NVIDIA (NVDA).
The investment world loves to pit value investing vs. growth investing. Good investors know that both should play a role in your portfolio.
Coke or Pepsi? Magic or Larry? The Beatles or the Stones? Life is full of such "either/or" questions. The investing world is no different, with perhaps the greatest being "growth, or value?" And, like most of those other debates, the growth or value question is misleading by its very nature, presupposing that you must embrace only one or the other -- not both.
For investors, such thinking can cost you a lot of money. That's because, as I've found after more than a decade of studying history's most successful investment strategies, the best approaches usually use a combination of value and growth criteria. As Warren Buffett has said, "growth is simply a component -- usually a plus, sometimes a minus -- in the value equation."
Of course, certain strategies will focus more on growth criteria, and others focus more on valuation criteria. But even so, there's no reason an investor should restrict themselves to one or the other. Look, for example, at James O'Shaughnessy, whose book What Works on Wall Street forms the basis for one of my best performing "Guru Strategies" (each of which is based on the approach of a different investing great). O'Shaughnessy back-tested a myriad of investment approaches, eventually landing on one growth-focused approach and one value-focused approach. Both strategies handily beat the broader market over time, but he found that he could build an even better portfolio (as judged by risk-adjusted returns) by using some stocks picked with the value model and some picked by the growth model.
It's a good time to buy.
By Dan Caplinger
Most of the news you've heard over the past couple of weeks has focused on how cataclysmic the big sell-off in stocks has been. But one group of investors should hope that the market keeps on dropping -- and be ready to swoop in to take advantage of the huge bargains that would result.
Steering clear of stocks? Not so much
Ever since the market meltdown in 2008 and early 2009, financial planners have had concerns about young investors staying away from stocks. The idea was that like those who grew up in the aftermath of the Crash of 1929 and the Great Depression, young investors who had only known the market's lost decade of the 2000s would conclude that stocks were a losing bet and avoid them in favor of other investments.
But recent research suggests that the impact on investors under age 40 hasn't been as big as once thought. On one hand, data from the Investment Company Institute shows that only 35% of those born between 1970 and 1979 own stocks, down from 55% 10 years ago.
A federal agency says the commission's practice of destroying records from closed investigations is wrong.
First there was a damning article in Rolling Stone detailing how the agency destroyed records of preliminary investigations once they were closed. The next day, the government's archives agency said that the SEC actions were improper and that the commission didn't have the authority to delete those files.
That has led to a grand debate over the SEC's actions. If the agency started an investigation and then decided there was nothing to it, what's wrong with destroying the file, some people ask.
But consider this: Those early investigations might have changed the course of history if something had come of them.
Investors who avoid panic selling could get a better exit point in the weeks ahead.
The goofy and sometimes creepy mascot is overthrown as part of the fast-food joint's rebranding efforts.
The nation mourned Friday after Burger King executives broke into the guarded top floor of the fast-food chain's corporate headquarters in Miami, Fla., and took out the King in a shocking coup d’état. Releasing a statement Friday morning regarding the deposition of the long-standing monarchy, senior marketing vice president Alex Macedo said, "People want a reason to go back to Burger King."
The King wasn't killed, but the masked mascot was indeed shown the door. Burger King is kicking off a new marketing blitz that looks to rebrand the restaurant as a distributor of healthier, mom-friendly menu items.
The overthrow of the king is more symbolic than anything else. The real story of whether Burger King has changed will be told by its new menu, including a centerpiece push that focuses on a California Whopper.
If you're looking for a contrarian bet, these shares might become too cheap to resist.
By Chris Stuart, TheStreet
The outlook for the housing market, as reported by the mass media, is not good. In case you've missed them, here are a few of the headlines from over the past several weeks:
"No recovery in sight for US housing market"
"July real-estate market fell short of expectations"
"Housing data show sector is still weak"
The stock plummets more than 20% as the company also announces a major strategic overhaul.
By James Rogers, TheStreet
Hewlett-Packard (HPQ), desperate to boost its margins, unveiled a major corporate and strategic overhaul Thursday, which will involve ditching its WebOS devices and potentially spinning off its PC business.
HP turned on a firehouse of announcements, reporting its preliminary third-quarter results and confirming the purchase of U.K. tech company Autonomy, which makes data analytic software.
Investors responded negatively to the slew of announcements and HP's weaker outlook, sending shares tanking 21.2% to $23.25 Friday morning.
After intense speculation about a possible HP breakup, the company confirmed that it wants to get rid of its PC business.
Until stocks fall to the point where the anarchy in Washington is fully discounted, we just have to presume prices are too high.
I was soul searching all day about whether the people in Washington, D.C., just have no idea what makes business tick or actually just don't care for business.
I say this because the disastrous NetApp (NTAP) call wasn't about low taxes -- what some people in Washington believe is the panacea -- it was about rancor and ugliness and the loss of confidence in our country.
I keep thinking back to a moment when I was on "Meet the Press" just a couple of weeks ago and said this brinkmanship could actually hurt orders, hurt business. I was hearing it anecdotally from execs.
It's no longer anecdotal. Now it is empirical.
Wasteful multibillion-dollar buyouts, no innovation, a lack of leadership and a bloated corporate structure plague this struggling tech giant.
By Jeff Reeves, Editor, InvestorPlace.com
The market had quite an ugly day on Thursday. But for a brief moment, Hewlett-Packard (HPQ) swam upstream on news that it is working out a massive $10 billion buyout of software company Autonomy. Of course, the gains were fleeting and Hewlett-Packard stock finished the day down, along with nearly every other stock on Wall Street. Some investors were fooled for about an hour, and then the profits evaporated. In premarket trading Friday, it was down 13%.
Thursday's news is a fitting example of how HP is trying to manage its business these days. The 10-figure buyouts. The claims that it is rethinking its role in the tech sector. The blatant flaunting of its massive cash stockpile at a time when companies claim to be suffering from the economic downturn.
Hewlett-Packard is everything that's wrong with corporate America right now, exhibiting stupidity, a lack of innovation, bloated operations and no leadership.
Recent data are gloomy enough to remind the financial markets of the dark days of 2008. But there is a plus side.
The Dow Jones Industrial Average ($INDU) and the Standard & Poor's 500 ($INX) have had a tough week.
US investors are wading back into equities and ETFs, even as the markets continue to sell off.
By Robert Holmes, TheStreet
Mutual fund data from research firm TrimTabs suggests that retail investors are bottom-fishing, dipping a toe into the pool of U.S. stocks. The data come as the major stock indices are plunging anew, with the S&P 500 down 4.5% Thursday and the Dow Jones Industrial Average ($INDU) also down close to 4% shortly before 3 p.m. ET.
TrimTabs says that preliminary figures show that U.S. equity mutual funds saw inflows of $6 billion on Aug. 15 and Aug. 16 after redeeming $41.8 billion in the previous 12 sessions.
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The Fed may start tapering in just a few months. Here are a few of the likely winners and losers.
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[BRIEFING.COM] A solid November employment report translated into a solid day of gains for the major averages. While there was some talk that the encouraging job growth raised the odds of the Fed announcing a tapering at its December meeting, the message of the markets today was either that it didn't believe there would be a tapering this month or that it doesn't fear a tapering this month.
It was just one day, yet there was ample meaning wrapped up in the connection that the 10-yr ... More
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