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Indexes might not be in correction territory, but they're getting closer. Now's the time to consider what moves to make.

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It is important to understand that even a much-followed stock like Cisco will suffer from inefficiency.

By V.N. Katsenelson May 27, 2011 2:37PM
Markets are efficient, or so we’ve been told. I am not here to put a rebuttal to this academic nonsense, but let me give you one of the core reasons why markets are and will remain inefficient: because human beings are efficient.

 

To function in everyday life, our brains are used to simplifying complex problems, through pattern recognition.  We become accustomed to drawing straight lines when we see two points, and if we get a third or fourth point that fits the line, our confidence about the longevity (continuity) of the line increases exponentially.  We become excited, even certain, about prospects of the company we’ve invested in when its stock has gone up for a long period of time, while we often dismiss stocks that have declined or flat-lined, especially if that happened for a considerable period of time.

 

The bank pared holdings of more than half of its touted stocks, filings show.

By TheStreet Staff May 27, 2011 2:32PM

the streetBy Jake Lynch, TheStreet

 

A so-called Chinese Wall is supposed to exist between investment banks' research and asset-management divisions, but recent calls, especially coming from subprime-securities proponent Goldman Sachs (GS), warrant further scrutiny.

 

Goldman helped to catalyze the recent commodity sell-off as its researchers expected little upside when the economy hit a soft patch. Crude oil tumbled beneath $100 on that report. Then, three days ago, with few fundamental changes in the demand outlook, Goldman reversed its stance, advising clients to buy.

 

This flip-flopping from Wall Street's most closely followed researcher is being perceived by some as client-fleecing since the bank is able to trade in proprietary accounts before it releases research and the markets react, as they often do to Goldman's calls.

 

The BlackBerry maker faces a class-action lawsuit and shrinking market share as analysts cut their price targets on the stock.

By Kim Peterson May 27, 2011 2:30PM
The bad news just keeps piling on Research In Motion (RIMM). The company got hit with a new class action fraud this week. Analysts are holding their noses at the stock. The share price has plunged 37% since February.

This wasn't supposed to happen. RIM just launched the PlayBook tablet, its answer to the Apple (AAPL) iPad. And U.S. businesses are recovering and spending more, which should have been just the thing the BlackBerry maker needed.

Check out this analyst discussion about the stock, which one calls "a disaster." Post continues after video

After weeks of downward progress for stocks and other assets, renewed weakness in the greenback has resurrected bullish spirits.

By Anthony Mirhaydari May 27, 2011 2:22PM

To summarize the correction in risk assets over the past month, you could boil it down to a stronger dollar. It all started with the assassination of Osama Bin Laden on the night of May 1. Suddenly America seemed stronger and more secure, sending the greenback higher.

 

And as a result, hedge fund types who had borrowed dollars to bet on silver, crude oil and stocks scrambled to close their trades. The results were the mini-crashes in silver and crude, significant drops in foreign stocks and a slow bleed lower for U.S. equities. Adding to the pressure has been a steady march of poor economic data.

 

But things are changing now as the dollar wilts again, setting the stage for a multiweek rally before the reality of slowing economic fundamentals and the end of the Fed's $600 billion QE2 stimulus sets in. Here's why, along with a few recommendations to play the rebound.

 

AIG's IPO is 'an utter debacle,' Sony hackers go on a global rampage and Arianna Huffington oversells AOL in this week's round-up of business buffoonery.

By TheStreet Staff May 27, 2011 12:31PM

Here is this week's roundup of the dumbest actions on Wall Street.

 

5. AIG: The anti-LinkedIn IPO

 

Apparently, the words AIG and IPO don't get investors beating down the doors to get a piece of the action. Gee whiz, I wonder why?

 

This week's secondary offering of American International Group (AIG) shares was anything but a success for the U.S. Treasury and those unfortunate enough to have bought in. 

 

While closely monitoring market action for clues about what lies ahead, more aggressive traders can look to profit from ETFs tracking the tech sector and gold.

By MoneyShow.com May 27, 2011 11:22AM
By Tom Aspray, MoneyShow.com

The stock market was hit with many negatives this week, including weaker-than-expected durable goods and GDP numbers. 

Overseas developments were not much better, with continuing debt concerns in the Eurozone threatening to spread as the International Monetary Fund (IMF) has threatened to withhold its next payment on Greece’s bailout.

There are also further concerns over the state of the Chinese economy, as the Shanghai Composite has closed lower for the past seven days and was down over 5% this week.

As if this was not enough, crude oil is back over $100 per barrel and gas prices are uncomfortably close to $4 per gallon as we head into the Memorial Day weekend. After last year, the “Sell in May and go away” crowd is vowing not to be caught with too many stocks in their portfolios—like they had last year.

The technical outlook for the stock market is different from last year, considering that in April 2010, the weekly NYSE Advance/Decline (A/D) line had formed a bearish divergence, but this year, no divergences are currently evident. (See Market Timing 101 for more.) The daily A/D line made new highs in early May and has pulled back to stronger support this week.

I believe the market behavior on Wednesday and Thursday was especially important, as the stock index futures were under pressure in early trading, but on both days, stocks rebounded to close higher.
 

Not if you mix shareholder returns into the equation.

By Motley Fool Pick of the Day May 27, 2011 11:19AM

By Tim Beyers

 

CEO compensation is a hot topic, especially now that the Dodd-Frank Act requires say-on-pay votes. With CEO pay and performance seemingly disconnected at the following company, the Fool invites you to judge for yourself whether this business's boss actually deserves such a hefty paycheck.

 

Few things are worse for investors than owning a piece of an "oh yeah" tech company. These are the Rodney Dangerfields of their industries. They've been around forever. They've even done impressive work in years past. But lately, whenever their names come up in conversation, it's almost always with the caveat, "oh yeah, I forgot about them." Adobe (ADBE) has become that kind of company, but you wouldn't know it from CEO Shantanu Narayen's pay package.

 

By owning both cyclical financial stocks and steady consumer staples, the Oracle can perform well in any market.

By TheStreet Staff May 27, 2011 10:59AM

By Don Dion, TheStreet

 

As Warren Buffett has quipped, his favorite holding period for any investment is "forever." By sticking to a long-term time horizon when structuring his legendary investing portfolio, the famed billionaire has been able to weather numerous short-term shake-ups during his long career.

 

In examining his current holdings lineup, it is possible to uncover clues that will help retail investors mimic him and profit over the long run.

 

Buffett's portfolio taps into a wide range of market sectors, providing exposure to industries such as energy and health care. The largest chunks of the Berkshire Hathaway (BRK.A) portfolio, however, are dedicated to companies in the financial and consumer sectors.

 

These potential bargains could heat up.

By TheStreet Staff May 27, 2011 10:48AM

By Jamie Dlugosch, StockPickr

 

I live in the frozen tundra of Minneapolis, where we are slowly -- and I mean slowly -- emerging from a dastardly long winter and a spring that hasn't sprung. It is hard to believe that summer, as marked by Memorial Day weekend, is right around the corner.

 

While many market participants slow down their investment activity in summer, I think there is plenty of money to be made by staying active. In the current environment, stocks are exhibiting weakness. Sellers are dominating the action, and pessimism is rising.

 

This is actually quite bullish for stocks. Yes, many risks remain, but current fiscal and monetary policy is conducive to economic growth. It may not be the strongest recovery on record, but we are growing, and we're likely to continue to do so.

 

We may get an up day if Portuguese bankers and German finance officials can stay out of the headlines.

By Jim Cramer May 27, 2011 8:56AM

jim cramerthe streetThe rhythm of the European crisis seems to have taken a different turn.

 

Rather than waking every morning to a story about how some Portuguese banker is worried, or a Greek minister is fretting, or unknown Spanish and German finance officials are digging in their heels or alternately letting go of them, the continent seems to have gone silent.

 

It is almost as if they can turn it off and turn it on again.

 

Some of this could be that there is a pre-honeymoon lull for Christian Lagarde, as she is almost certain to get the International Monetary Fund job. Some of it is because China says it is willing to buy the bonds of some of these countries. And some of it is a recognition that the German banks, at least according to Fitch, can handle even a Greek default, and that was quite surprising.

 

Economists were surprised by sluggish growth in the first quarter. Is this a blip or a trend?

By Jim J. Jubak May 26, 2011 4:31PM
Jim JubakThere was a nasty surprise in this morning's revision to first-quarter U.S. gross domestic product numbers.

Not on the top line, really. Real (meaning after subtracting inflation) GDP growth for the quarter stayed at 1.8% in these revisions, exactly the same as in the last estimate. (All GDP numbers are estimates until the final reading comes in about a year after the quarter is over. Of course, nobody cares by that point.)

Economists had been expecting that the revision would take growth up to 2% for the quarter.

As economists had expected, increases in exports, nonresidential fixed investment, and inventories pushed the GDP growth figure upwards in this revision. And also as expected, an increase in imports took back some of those gains.
 

The Google Wallet system will let users pay for items simply by waving their phones at cash-register readers.

By Kim Peterson May 26, 2011 3:42PM
Would you feel comfortable storing credit card numbers and even your driver's license information on your cell phone? What if it gave you the convenience of paying by waving your phone at a cash register?

Those are questions Google (GOOG) will be asking people later this summer as it rolls out Google Wallet, a new mobile payment system. Go to McDonald's (MCD), for example, and pay by waving your phone in front of special readers, like the MasterCard PayPass reader already in place at the fast-food restaurant.

There are safeguards in place so that people can't steal your phone and go on a shopping bender. The system stays shut down, for example, until you enter your PIN number at the store counter.

Post continues after this video explaining more about Google Wallet: 

Recent selling in master limited partnerships (MLPs) has presented some low-risk entry points, allowing buyers to tap into sizable yields and attractive growth prospects.

By MoneyShow.com May 26, 2011 11:59AM
By Tom Aspray, MoneyShow.com

Master limited partnerships (MLPs) were hit by a sharp downdraft in early May, following concerns that the Treasury Department was considering making pass-through entities pay corporate taxes as opposed to passing tax liabilities to individual unit holders.

The Alerian MLP Index fell from a late-April high of 391.85 to a low on May 17 of 347.53. This was a drop of over 11%, but some of the less-liquid individual MLPs declined even more.

It seems unlikely that these new proposals will ever get through the Republican-dominated House, which begs the question of whether some MLPs have reached bargain-basement levels. (See related: Big Profits in Energy Pipelines.)
 

I'm officially tossing them into the "too hard" pile.

By Motley Fool Pick of the Day May 26, 2011 11:45AM

By Matt Koppenheffer

 

Am I a flip-flopper?

I had been seriously skeptical of Chinese small caps before the worst of the meltdown began. But then, as the short "hit" pieces flooded the Web and the group's stock prices got absolutely clobbered, the value investor in me started to get intrigued.

 

But now it's time to finally throw up my hands, pull out the ol' white flag, and simply say, "I give up!" And I can thank Longtop Financial (LFT) for bringing me to this conclusion.

 

Longtop's shares were halted last week, and earlier this week the company filed with the SEC that its accountant (Deloitte Touche Tohmatsu) is walking away and its CFO has offered his letter of resignation. That all sounds bad enough, but it gets much worse. Check out the reasons that Deloitte told Longtop to talk to the hand:

 

As we work through this bout of market turbulence, investors can use these funds to gain exposure to industry giants like GE or steady dividend payers like Chevron.

By TheStreet Staff May 26, 2011 11:09AM

Arrow Down Umbrella © Photographers Choice RF/SuperStockBy Don Dion, TheStreet

 

The investing environment has been shaken by the bloody political protests in the Middle East and Northern Africa, Japan's natural disasters, the commodities shakeup and most recently, the resurgence of the European debt crisis.

 

Although this rocky situation from these headwinds may prove too much to many, I advise against fleeing the marketplace at this time.

 

Rather, by making adjustments, it is possible for battered investors to weather current economic storms and prepare for clearer skies ahead.

 

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[BRIEFING.COM] The stock market finished the Wednesday session on an upbeat note with the Nasdaq (+1.3%) ending in the lead. The S&P 500 settled higher by 1.1% with all ten sectors posting gains.

The benchmark index spent the entire trading day in the green, rallying to new highs during the last hour of action. The tech-heavy Nasdaq, meanwhile, briefly dipped into the red during morning action, but was able to recover swiftly.

Stocks began the trading day with modest gains ... More


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