Geopolitical crises are taking a toll on stocks as we head into the seasonally weak month of August.
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Stock sales and bond purchases have been slowing in recent weeks, suggesting a trend that may continue in 2011.
By Jeff Kleintop, TheStreet
About $90 billion has been pulled from U.S. stock mutual funds since the flash crash on May 6, according to data from the Investment Company Institute. On that day, the Dow Jones Industrial Average ($INDU) experienced the biggest intraday point decline, 998.5 points, in its 114-year history.
During every week since the crash, investors have been withdrawing more money from U.S. stock mutual funds than they have been adding, while strongly favoring bonds with their investment dollars. This net selling took place despite strong gains over the past six months in the major stock market indexes.
Investors' recent period of selling U.S. stock funds while the stock market posted more than a 10% gain is unprecedented, and it follows two years of net selling in 2008 and 2009.
Take advantage of the lull, because the metal has yet to peak.
Time for a break for gold? After still one more astonishing performance, in keeping with the 10-year outperformance of the precious metal, it seems reasonable to think that gold can cool off for a bit. The gold stocks themselves are saying the same thing, taking a real breather for the past few weeks.
To which I say: Take advantage of the weakness if you haven't already, as we are hardly done with the run. Why? Because the one thing we know about 2011 is that currencies are suspect. Paper is suspect. There's too much being printed here. There's too much that's going to be printed in Europe. The stuff's worth less and less.
That means gold will be worth more and more.
As blue chips battle, this IT powerhouse will be the first place companies turn to for an edge.
By Jon Markman, InvestorPlace.com
If the first year of this decade was all about building a firm base of recovery, the second year will be about leveraging that success and fighting off newly resurgent competitors. That's why one of the best stocks to buy and hold in 2011 is tech stock pick Cognizant Technology Solutions (CTSH).
It's going to be a ground war in 2011. Companies that survived the financial crises and tech bust of the 2000s by addressing the needs of niche users in a unique and profitable way will now try to attract new customers by scratching, clawing and attacking their rivals. And here's how CTSH will make a difference:
Aixtron could see the pace of installation double for its chemical vapor deposition machines.
Evercore Partners is a Wall Street powerhouse that specializes in buyouts, which should be en vogue in 2011.
By Hilary Kramer, InvestorPlace.com
After a number of high profile buyouts and mergers in 2010, including Intel-McAfee and HP-Palm among others, it’s very likely that cash-rich blue chips will see an M&A buying spree again as we enter a New Year. If you’re looking for the best stocks to buy in order to cash in on this craze, you can take a gamble on some small-caps that are likely buyout targets … or you can take a sure thing in an M&A powerhouse, Evercore Partners (EVR).
If you’ve never heard of EVR, you’re not alone. Evercore is an emerging powerhouse on Wall Street that specializes in three of the highest- margin businesses in the entire corporate spectrum: mergers & acquisitions (M&A), restructuring (bankruptcy work) and asset management. And while this stock never makes a lot of headlines, it is a power player behind the scenes.
Here are three big reasons that Evercore could break out in 2011 and why investors should expect a surge of merger activity:
China National Offshore Oil Corp. is benefitting from powerful demographic, inflationary and business trends overseas.
By Robert Hsu, InvestorPlace.com
In 2009 and 2010, the best stocks to buy were clearly in emerging markets. China's economic growth was unmatched as the world economy reeled from the financial crisis. And looking ahead to 2011, many people think China's run is over. While it's true some Chinese companies may fall away, many well-run and profitable China stocks exist out there.
The best one of all, and my top China pick for 2011, is China National Offshore Oil Company (CEO), China's offshore exploration and production energy company and the most dynamic of China's Big Three state-owned energy giants. Let me tell you why I am so bullish in the new year via three simple reasons:
A contract dispute with Orbitz and Expedia kicks off what may be a testy year for the industry.
Those sites have stopped selling American's tickets. And the airline seems to be fine with that.
American has seen its contracts expire with Expedia and Orbitz and hasn't been able to renew the deals. That's because American wants to pay the sites less money and is asking them to connect directly to its own computers instead of going through intermediaries, the Financial Times reports.
But can American really do business when two of the largest travel websites are ignoring it?
Computerized high-speed trading accounts for most trades, experts say.
The average time a stock is held is 22 seconds. But that's an improvement from a year ago, when it was 20 seconds, according to analyst Michael Hudson, an economics professor at the University of Missouri.
It's all because of computerized split-second trading. "The financial sector is short term," Hudson said in an interview. "They talk as if they're long term."
We're still a long way from clearing through the nation's supply of distressed homes.
Now it will take 44 months, according to Standard & Poor's. Previously, the firm had thought 40 months was enough time. Builders such as Toll Brothers (TOL), whose stock is down 15% since April 2010, are desperate to see that supply tighten up.
What changed? The housing picture worsened in the third quarter, S&P says. The volume of distressed properties continued to grow, and by the end, the principal balance of those homes surpassed $450 billion.
The investment bank has reportedly pumped $450 million into the world's most visited website.
By Scott Moritz, TheStreet
Here's how the rich get richer.
Using its Wall Street clout and $450 million, Goldman Sachs (GS) has acquired an ownership stake in Facebook, giving the social-networking shop a potential value of $50 billion, according to The New York Times' DealBook blog.
Goldman has teamed with Russian investors Digital Sky Technologies, which chipped in $50 million in the deal, according to the report. Previously, Digital Sky initially acquired a 2% stake of Facebook for $200 million in 2009.
The move gives Goldman a potential quintuple treat, should Facebook's value continue to rise.
The burger specialist is under new management and primed for a buyout.
Rex Moore, Motley Fool Top Stocks editor
A stock that's way down from its five-year high, a product that customers swear by, lots of hidden value and activist hedge funds effecting improvements? That sounds like a recipe for gains. And that's what I think we have with the next purchase for my Special Situations portfolio: Red Robin Gourmet Burgers (RRGB).
With agriculture and emerging markets, investors hope to capitalize on themes that worked well in 2010.
By Don Dion, TheStreet
Here are five exchange-traded funds you should watch this week.
Rare-earth metals stole headlines last week after news that China was planning to pare back its export quotas in 2011. This industry has become exciting to watch, and REMX has had little trouble gathering an impressive following. Although it is only 2 months old, the fund already boasts an average trading volume of more than 400,000.
Rare-earth metals will likely become increasingly important because they are used to produce various components needed to power smart phones and other handheld gadgets. Risk-tolerant investors may find REMX an exciting product in the new year.
The professionals return to Wall Street. Which way will they take the market?
I've heard some people say that New Year's Eve celebrations are amateur hour. The same thing can be said about the last two weeks of trading in the stock market. Void of professional traders, stocks drifted this way and that with no real direction.
Well, now that the new year has begun, amateur hour is over. It is time to get busy. I know the pros will be back at it from day one. You need to be prepared for what is coming.
Most expect the market to go up in 2011. I have the same opinion, but a record December must give even the most optimistic investor pause. To me it looks like momentum is going to win and stocks are likely to gain right out of the gate.
While defensives lumbered into year's end, steel, oil and high-end retailers showed aggressive growth and look ready to keep it up.
Can it continue in 2011?
I think so.
Take four comeback stories of the last few weeks: Williams-Sonoma(WSM), Xilinx(XLNX), Occidental(OXY) and Nucor(NUE). The last public pronouncements of all of these stocks were regarded as disappointing. I stress the word "regarded" because many of us were happy to hear that things hadn't gotten worse!
It's a very simple form of market timing that has worked well for more than a decade.
By DAVID K. RANDALL, The Associated Press
It's one of the truisms of financial planning: Trying to perfectly time the market is a fool's errand. For long-term gains, the advice goes, you should buy index funds and hold them indefinitely. Warren Buffett likes to say that his preferred holding period is "forever."
But a very simple form of market timing has worked for the past 11 years. It involves owning the Standard & Poor's 500 stocks -- but only for the first day of every month.
An S&P report recently found that someone who invested $10,000 in the S&P 500 on Dec. 31, 1999, and left the money there until Dec. 1, 2010, would have just $8,209. An investor who was in the market only on the first day of every month over the same time -- for example, buying at the close on Dec. 31 and selling at the close of the first trading day in January -- would have $13,816.
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[BRIEFING.COM] The major averages have taken a turn lower since our last update with the S&P 500 now down 0.2%. Small caps, meanwhile, underperform with the Russell 2000 lower by 0.7%.
Interestingly, the small-cap index was in a position of relative strength at the open, but its outperformance could not trigger a sustained rally or improve the overall sentiment. Given its current standing, the index sits at its lowest level since late May.
The recent weakness in equities ... More
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