5 reasons the market is seeing red
5 reasons the market is seeing red

Geopolitical crises are taking a toll on stocks as we head into the seasonally weak month of August.

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Will all the rumors of a new tablet prove true? And what will that do to the company's stock?

By Kim Peterson Jan 26, 2010 2:18PM
The joyous day is almost here -- and by joyous day I mean the day that finally ends the relentless stream of rumors about Apple (AAPL) and its mysterious tablet.

Tech types have talked about nothing else for months. Apple is making an announcement Wednesday morning, and although the company hasn't confirmed anything, all bets are on the unveiling of a new tablet computer.

Some have joked that tablets haven't received this much attention since the Ten Commandments. We've seen fake pictures, lists of what the tablet will have or won't have and a list of victims the tablet will annihilate (Amazon's Kindle being at the top.)

Investors are anxiously watching to see how Apple's stock handles the news, and I have a prediction.  

Value investors seek companies with superior returns over the long haul, like McDermott International.

By Caps Editor Jan 26, 2010 1:47PM

By Matt Koppenheffer, The Motley Fool.

 

Investments that have been successful over the long term almost assuredly share at least one trait: growth. Few companies produce good returns for shareholders without reliably increasing their earnings.

 

Think about it this way: Dividends aside, investors reap their gains when a company's stock price goes up. The stock price is typically driven by two levers: earnings and the multiple that investors are willing to pay for those earnings.

 

Since earnings multiples tend to fluctuate within a certain range, long-term investors should have a keen focus on the company's ability to increase earnings.

Does that seem too simple? Maybe keeping it simple is sometimes a good plan.

 
Tags: CAPS

Even if you hate the guy, you want Bernanke to keep his job -- the bull market just might be hinging on his reconfirmation.

By InvestorPlace Jan 26, 2010 1:31PM

InvestorPlaceBy Jim Woods, InvestorPlace.com

 

It's become quite a clichéd phrase that "Wall Street hates uncertainty," but this oft-cited proclamation can indeed be true in many cases.

 

One such case is the kerfuffle surrounding the confirmation of Federal Reserve Chairman Ben Bernanke to a second term. The Fed chief's current term officially ends on Sunday, and this week the Senate votes thumbs up or thumbs down on his future as the head of the nation's central bank. 

 

But the president seems hellbent on rendering good earnings meaningless.

By Jim Cramer Jan 26, 2010 9:00AM
TheStreet's Jim CramerBy Jim Cramer, TheStreet

 

The earnings are pretty darned solid. Now if we can only get through the State of the Union speech without an assault on capital that includes Card Check -- to allow the unions to organize the banks and Wal-Mart (WMT) -- and cap-and-trade that demands a windmill or a solar panel in place of natural gas and nuclear, we may be in the clear.

 

The problem is that I don't know if we can get that given that we have a president who wants to be a great one-term rather than a mediocre two-term president -- and what defines "great" may mean a triumph of labor over capital.

 

 

The chairman of a little-known container company is raking in $1.5 million a year.

By Kim Peterson Jan 25, 2010 7:30PM
Cash © Jonathan Kitchen/Getty ImagesA chairman of the board making $1.5 million? Yes, when you're Jean-Pierre Ergas.

The Footnoted blog has uncovered this ridiculously high salary for Ergas, who is the chairman and former chief executive of Bway Holding (BWY). Never heard of Bway? You're not alone. The Atlanta-based company makes metal and plastic containers, including paint cans, ammunition boxes and various bottles and rums.

The share price is in the $17 range, about where it's lingered for the past six months. The company doesn't seem to have much news. But Footnoted author Michelle Leder says this is the highest director cash compensation she has seen in more than six years of combing through corporate regulatory filings.

Why should Ergas receive so much money?  

Platinum still sells far below its historical price ratio to gold. Will that gap soon close?

By Jim J. Jubak Jan 25, 2010 6:08PM

Jim JubakI'm going to take advantage of the selloff in emerging market stocks and global commodities on fears that China's government might slow China's economic growth to buy shares of Impala Platinum (IMPUY) for Jubak's Picks. (The stock is already a member of my long-term Jubak Picks 50 portfolio.)


My buy rests on three points.


First, despite a huge rally of more than 50% in 2009, platinum still sells far below its historical price ratio to gold. Right now an ounce of platinum buys 1.41 ounces of gold. That's about 23% below the ten-year average, according to Bloomberg. Recently commodity money has started to move from gold to platinum in a bet that the price gap to the historic average will close.


Second, while platinum is a physical store of value like gold, it is much more widely used in industrial processes.

 
Tags: gold

Two iconic apartment complexes in New York City are turned over to creditors after the owners miss a big payment.

By Kim Peterson Jan 25, 2010 2:09PM
Two massive New York City apartment complexes are so underwater on their mortgages that they might as well be renamed "Atlantis."

In what's considered the most expensive real-estate deal of its kind in recent history, the sister complexes -- 110 buildings and 11,000 units in all -- sold a few years ago for $5.4 billion.

Cue the enormous real-estate meltdown that hit New York particularly hard. And now, the apartment owners say they can't make a $16 million dollar loan payment and will have to turn the whole thing over to creditors, according to The Associated Press.  

The government is attacking large banks, making it very likely that smaller banks will thrive.

By Jamie Dlugosch Jan 25, 2010 12:18PM

Bank © Charles Smith/CorbisThe Obama administration proposed new regulations for large banks last Thursday. The news sent shares of large banks tumbling.

 

At the same time, astute investors pivoted to the community bank sector. The government, in concert with the Federal Reserve, is setting the table for little banks to thrive.

Names like Glacier Bank (GBCI), a small bank in Montana, FirstMerit Corp. (FMER) in Ohio, or First Niagara Financial (FNFG) in New York all jumped in value as investors acknowledged the shift in the competitive landscape. (In addition to small community banks, I really like these Top 10 Stocks for 2010.)

 

The rotation makes complete sense.

 

President Obama's 'Volcker Rule' will punish the wrong banks for the wrong crimes.

By Jim Cramer Jan 25, 2010 11:12AM
TheStreet

 By Jim Cramer, TheStreet

 

Nobody had more to do with breaking the back of inflation in this country than former Fed Chairman Paul Volcker. Thirty years ago, he stopped it in its tracks with higher interest rates. He was on top of his game in a way that many argue ultimately produced the great bull market that ended in 2000.

 

However, just as there are instances where other finance seers (as opposed to financiers) subsequently lost their way, especially Bob Rubin, a once revered Treasury Secretary, now known as presiding over a bank one-third owned by the federal government because of actions he approved, the question to ask is whether Volcker, an icon 30 years ago, still has a keen understanding of what went wrong in this banking crisis.

 

To wit, I cannot recall a single instance where proprietary trading, internal hedge funds, or private equity played a role in creating the banking mess that President Obama has decided to focus on with his much-ballyhooed "Volcker Rule."

 

 

The president thinks that if he demonizes banks and securities companies, it will lead to new jobs.

By Jim Van Meerten Jan 23, 2010 2:50PM
Every week after the market closes on Friday I go to Barchart and use the same methodology to gauge what happened to the market in the previous week and plan what my strategy will be for the next week.

Things started out fine early in the week, but then President Barack Obama dropped a bomb when he demonized the banks and everything on Wall Street.
 

Opportunistic short positions bring big returns.

By Anthony Mirhaydari Jan 22, 2010 8:55PM

MirhaydariStocks fell sharply this week on a combination of worries over credit growth in China, Obama's plan to clamp down on Wall Street, and the future of Fed Chairman Ben Bernanke.


The Dow lost 4.1% in what was its worst five-day performance since March. Volatility screamed higher as the CBOE Volatility Index ($VIX), or "fear gauge" that is calculated based on S&P 500 options trading, jumped 55% -- the largest weekly gain since the financial crisis went nuclear back in October 2008.

 

Complicating matters was the ongoing strengthening of the U.S. dollar -- something I've been expecting since I wrote a column on the subject back in November. With fear on the rise among global investors, many are abandoning risky positions in emerging-market stocks and bonds and moving cash into the safety of U.S. Treasuries. This bolsters the dollar, which was up 2% this week; unfortunately, it also exerts pressure on commodities. Crude oil fell more than 7%. Gold lost 4.4%.

 

Thankfully, my portfolio at Wall Street Survivor was perfectly positioned to take advantage of these trends.

 

A number of factors riled investors this week. But there's still plenty of money to be made in the current market, if you look in the right places.

By John Reese Jan 22, 2010 7:51PM

This week offered a mixed bag of economic data and political twists, and we saw some significant volatility return to the stock market. But I believe there's still money to be made in the current market environment, and several of the Wall Street gurus I keep an eye on gave their takes this week on where to look.

For example, David Herro -- who Morningstar recently named one of its fund managers of the decade -- told Bloomberg that he's high on some financial stocks, particularly asset management firms. Herro says they get hit hard in downturns but over the long run are good businesses. He also says Japanese markets are starting to look attractive.

 

Another guru finding values: Mario Gabelli. He told CNBC that two areas he's targeting are natural gas firms and auto parts companies.

 

It's not a question you'd expect to hear when ordering up some fast food at Burger King -- but that's about to change.

By InvestorPlace Jan 22, 2010 7:46PM

InvestorPlaceBy Jim Woods

 

Burger King (BKC) announced it would be serving beer at its new "Whopper Bar" located in the South Beach section of Miami, which it plans to open sometime in mid-February. The move is widely seen as an attempt to compete with casual dining restaurants in the tourist-packed area. 

 

This is also likely an attempt to go after a younger (but not too young) crowd at a time when the restaurant industry is struggling and people are looking for cheaper dining options.

 

Bank stocks are likely entering a period of prolonged weakness as official policy goes from supportive to highly restrictive.

By Anthony Mirhaydari Jan 22, 2010 4:45PM

MirhaydariEver since the collapse of Lehman Bros. in 2008, a Faustian deal was forged between Wall Street fat cats and the politicos in Washington: Political ideologies would be thrown by the wayside to prevent a meltdown of the American financial system and help the economy heal.

 

First the Bush administration swallowed its free-market credentials to take over Fannie Mae and Freddie Mac while handing the largest banks taxpayer cash to keep them afloat. Then the Obama administration resisted populist pressure to punish the bankers getting rich thanks to rising markets while unemployment continued to climb.

 

But that's changing now, and the attack dogs have been unleashed.

 

McDonald's delivers fourth-quarter earnings that beat analysts. European performance was key.

By Jim J. Jubak Jan 22, 2010 4:13PM

Jim JubakRonald McDonald delivered a big surprise Friday morning.


McDonald's (MCD) announced fourth-quarter earnings of $1.11 a share before the market opened. That was nine cents a share better than Wall Street had expected. 

In the fourth quarter of 2008, the company earned 87 cents a share. Revenue climbed 7.3% from the fourth quarter of 2008 to $5.97 billion. That, too, was above the Wall Street consensus (at $5.94 billion).


But the biggest surprise came

 

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[BRIEFING.COM] The S&P 500 (-0.7%) has slid to a new session low with dip-buyers showing reluctance to step in amid broad weakness that has only spared two countercyclical sectors-consumer staples (+0.8%) and utilities (+0.3%).

Meanwhile, all six cyclical groups hover in the red with top-weighted technology (-0.8%), financials (-1.2%), and energy (-1.3%) exerting significant pressure. The industrial sector (-0.7%) trades not far behind the broader market, but that has masked the ... More


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