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This earnings trade worked well. Here's why.

By Jamie Dlugosch Jul 14, 2011 5:57PM

The market is in disarray. One week we go up, the next week we go down. Buy and hold investing has become beyond aggravating.

 

No wonder individual investors are sitting on the sidelines. The perception is that if they commit capital today it will most likely be gone tomorrow.

 

What if there was a way to make money irrespective of the daily fluctuations in stocks?

 

Over the last year I have taken lessons learned from 20 years in this business to develop a stock trading system predicated on exploiting market inefficiencies caused by companies releasing earnings reports.

 

I’ve had great success putting this system to work identifying big winners during the 8-10 weeks of earnings season. I kicked off 2nd quarter earnings with a trade last week: Helen of Troy (HELE)

 

Investors are nervously watching Congress for signs that the debt ceiling will be raised. But the budget problem won't be solved unless runaway health care costs are addressed.

By Anthony Mirhaydari Jul 14, 2011 3:07PM

All that seems to matter to the stock market these days is what's happening with the U.S. Treasury's debt ceiling. Will it be raised? Will America default on its debt? Can President Barack Obama and the Republicans actually come to an agreement?

 

So far, despite all the political posturing, a short-term solution still seems to be in the cards. Failure to act simply isn't an option. Obama knows that. The Republicans know that. The corporate lobbyists have done their job. And Wall Street has already sounded the alarm, with credit analysts at Moody's and Standard & Poor's casting doubt on the nation's creditworthiness.

 

For all the talk of spending cuts, tax hikes and short-term solutions versus big fixes, there is one fundamental truth that isn't getting a lot of play: Runaway health care costs are bankrupting the country. And while that's been great news for investors in the health care sector in recent months, with the Health Care SPDR (XLV) outperforming the broad market by more than 11% since February, it jeopardizes the debt ceiling debate, the fate of the economy and the very future of the country.

 

Who knew it could be so easy?

By Motley Fool Pick of the Day Jul 14, 2011 2:22PM

By Morgan Housel

 

No one in Washington can agree on how to narrow the budget deficit. Not even balance. Just narrow.

 

The debate over next year's budget alone has been ongoing for months. Progress is obnoxiously difficult. One person wants this, another calls it "sacred" and says "cut that," any number of thinktanks say both are wrong, and Paul Krugman thinks everyone's a moron.

 

Tough problems, these. But as Berkshire Hathaway quote machine Charlie Munger said recently, "It's amusing to see someone spend 1 million man-hours on something I can solve with my left hand."

 

With only partial seriousness, I'm going to do just that, balancing next year's $1.1 trillion budget deficit in three easy steps.

 

The retailer is expected to start selling a device that is cheaper and has fewer bells and whistles than the dominant iPad.

By Kim Peterson Jul 14, 2011 1:45PM
The worst-kept secret in technology this year is Amazon's (AMZN) new tablet computer. The company won't confirm it, but everyone already seems to know about it.

The tablet gets an unofficial coming-out party this week in The Wall Street Journal, which says Amazon will sell the device by October. It will have a 9-inch screen and no camera, unnamed sources tell the newspaper. Instead of developing its own software, Amazon will use the Android platform developed by Google (GOOG).

With its tablet, Amazon essentially wants to take its Kindle experience and kick that up a notch. The company has had great success with the Kindle e-reader, which has become its best-selling device. It sells more Kindle books than hardcover and paperback books combined.

But why stay in the realm of books?  

CEO Jamie Dimon signaled Thursday that investors should expect more dividends and share buybacks from the nation's second-largest bank.

By TheStreet Staff Jul 14, 2011 12:55PM

By Shanthi Bharatwaj, TheStreet

 

U.S. banks are going to have so much extra capital over the 12 months, they are not going to know what to do with it, JPMorgan Chase (JPM) CEO Jamie Dimon said Thursday, signaling investors should expect more dividends and share buybacks from the nation's second-largest bank.

 

"We are going to have a lot of extra capital," Dimon said during the analyst conference call, adding that the bank will apply to the regulator to allow it to increase dividend "when appropriate".

 

While the CEO wasn't explicit about dividend plans, he emphasized that the board was in favor of returning excess capital to shareholders. "The board is still the primary driver of capital decisions,"said Dimon. "It is still America. Capitalism is still alive," he said.

 

Technical indicators suggest that the commodities correction may be over, and now is a good time to establish positions in broad-based or more specialized commodity ETFs.

By MoneyShow.com Jul 14, 2011 12:12PM
By Tom Aspray, MoneyShow.com

Silver’s sharp reversal in May caused selling in many of the commodity markets, so it was not surprising that Barclay’s Capital estimated that $6.5 billion came out of the commodity markets in May. Further outflows in June means the rate of outflows is almost as much as what moved out of the commodity funds in late 2008.

Of course, this was at the height of the financial crisis. The open interest in many of the individual commodities has also dropped sharply, as fewer are willing to hold long positions. For example, the open interest in coffee and copper were both down over 70%.

On May 5, I suggested that “The Commodity Bull Market Isn’t Over.” At the time, my analysis suggested that “A deeper correction and a significant retracement of the recent gains should be an opportunity to establish either 1) long positions in a broad-based commodity vehicle, or 2) targeted positions in a specific commodity market.”

The commodity markets have firmed over the past two weeks, suggesting that the correction may be over. The added pressure on the US dollar over the widening concern over the debt ceiling is also a positive for the commodity markets, and so too are China’s recent growth numbers.
 
Tags: goldoil

These funds offer different ways to capitalize on the nation's rebound from its tragic earthquake and tsunami.

By TheStreet Staff Jul 14, 2011 11:29AM

Image: Japan (© Stockbyte/SuperStock)By Don Dion, TheStreet

 

Although the devastating earthquake and tsunami that tore through Japan during the opening half of 2011 cast a thick fog of uncertainty over the nation's markets, some of the doubts circling this nation have been lifted in recent weeks.

 

As we move into the second half of the year, Japan is showing signs that it is gathering steam, and investors with a tolerance for risk may find this recovering corner of the globe to be an attractive option to keep on the radar.

 

Evidence of Japan's increasing strength can be seen in the recent performance of the iShares MSCI Japan Index Fund (EWJ) compared with that of broader global products such as the iShares MSCI EAFE Index Fund (EFA) and the Vanguard Total World Stock ETF (VT).

 

Four of the 10 worst carriers are some of the biggest in the world, signaling an urgent need for changes.

By InvestorPlace Jul 14, 2011 10:18AM

Image: Airline (© Christie & Cole/Corbis)By Susan J. Aluise, InvestorPlace.com


Fuel price volatility and a sluggish economic recovery have dampened investors' hopes that the airline sector will recover the altitude lost during the Great Recession.


Now here's one more sign of turbulence: consumer satisfaction with airlines is sinking. In the most recent survey by the American Customer Satisfaction Index (ACSI), airline passenger satisfaction dropped 1.5% to a mediocre score of 65.


As a group, airlines registered the lowest satisfaction score of any of the 47 industries included in the survey. That average score of 65 means airlines are tied with newspapers for the sector with which consumers are least satisfied -- even below the federal government (65.4).

 

Moody's threatens to lower the United States' credit rating as a deal on the debt ceiling remains elusive.

By Jim Cramer Jul 14, 2011 9:42AM

the streetthe streetBuy the news? Because it isn't news yet?

 

That's kind of how I feel about this potential downgrade of U.S. debt by Moody's, because this has been one of the most telegraphed potential downgrades around.

 

The agencies are just doing their jobs when they threaten to lower the U.S.’s credit rating. Think about it: You have a president who is talking about social security checks in jeopardy and a Federal Reserve chief talking about a huge financial calamity.

 

That said, if the real deal happened -- if there were no budget deal, and we did get an actual downgrade because the debt ceiling wasn’t raised -- then I could see the market losing its gains for the year.

 

HSBC wants to be a major US corporate bank, but a developing-economy financial may be a better investment.

By Jim J. Jubak Jul 13, 2011 5:55PM
Jim JubakWhat to do about HSBC (HBC)? It’s one of the great global franchises in banking, with strength in exactly the part of the world -- developing Asia -- that you want in a bank stock over the next decade.

But over the last decade, the bank lost its way, I’d argue.

The most obvious sign of that was the bank’s acquisition of Household International, the second-largest U.S. subprime-mortgage lender, for $15.5 billion in 2002 -- just in time to catch the U.S. mortgage crisis. By the time the bank had wound up that business, losses just about equaled the original acquisition price.

That deal wasn’t just a bit of bad timing, though. It represented a curious, decade-long quest to grow the bank in the world’s developed economies through acquisitions in France, the United States, and the United Kingdom.
 
Tags: hsbc

Federal Reserve Chairman Ben Bernanke tells Congress that another round of quantitative easing is an option. Here's why it won't happen.

By Anthony Mirhaydari Jul 13, 2011 4:13PM

Markets snapped their eurozone-induced stupor on Wednesday, thanks to dovish comments from Federal Reserve Chairman Ben Bernanke in his semiannual testimony to Congress. He told  House members that although short-term policy rates have been near zero since 2008 and the central bank just finished a second $600 billion round of long-term  bond purchases, the Fed could still provide more policy stimulus if needed.

 

Investors love the idea of more cheap cash coming from the Fed. But here's the thing: It's not coming. Nor is this a bad thing.

 

Not only did Bernanke couch his remarks by saying a QE3 would happen only if the economy stalls (I'm still looking for a re-acceleration) and if the deflation threat returns (no risk of that now) -- there simply isn't justification for QE3 now. And internally, Fed policymakers are divided on the issue.

 

The daily deals site tries to expand into bigger-ticket items as it heads to a public offering.

By Kim Peterson Jul 13, 2011 4:00PM
One of the biggest criticisms of Groupon's business model is that it's too easily copied by competitors. And as the company heads to an IPO, it needs to prove those critics wrong.

And so Groupon is taking its business to the next level with bigger-ticket items. This week, it offered its first coupon deal for a car: Pay $199 and get $500 off of a vehicle at a Detroit dealership.

Quite a leap for a company more comfortable with $20 off a $40 Mexican food dinner. Groupon has also recently offered a $500 discount for real-estate closing costs, Reuters reports. And a partnership with Expedia (EXPE) is touting a $1,000 voucher for a Tahiti vacation.
 

How the Oracle gleans insights about the economy and markets.

By Motley Fool Pick of the Day Jul 13, 2011 2:13PM

By Alex Dumortier, CFA 

 

"In my whole life, I have known no wise people who didn't read all the time -- none, zero. You'd be amazed at how much Warren reads -- and at how much I read."

 

That's a Charlie Munger quote (Munger is Warren Buffett's right-hand man at Berkshire Hathaway (BRK). There is little question in my mind that there are few if any activities that can help you improve as a person, and an investor, more than reading. Here are two investor letters that Buffett reads as soon as they are released:

 

Jamie Dimon's shareholder letter
On Friday, Buffett told Bloomberg that "Jamie Dimon is a fabulous banker and probably writes the best annual report in America. I grab his report when it comes in, and my friends do, too."

 

Rebekah Brooks steps down as the head of News International, which will apologize for the phone hacking that sparked the furor. In the US, the FBI examines claims that 9/11 victims' phones were hacked.

By TheStreet Staff Jul 13, 2011 1:56PM

Image: Printing press (© James Hardy/Getty Images)By Frank Byrt, TheStreet

 

Updated at 8:50 a.m. ET, July 15

 

Rebekah Brooks has resigned as CEO of News International, News Corp.'s (NWSA) U.K. newspaper unit, as the media company battles phone hacking allegations. Brooks will be replaced by Tom Mockridge, the CEO of News Corp.'s Sky Italia operations.


And James Murdoch, who heads international operations for the giant media group, said Friday that the newspaper group will apologize to Britain for the phone hacking. While News Corp.'s stock has dropped nearly 8% this week, shares were flat at $15.44 Friday.


Brooks' resignation follows Thursday's reports that the Federal Bureau of Investigation is looking into claims that News Corp. might have tried to hack into phones belonging to victims of the Sept. 11 terrorist attacks.

 

Former CEO Ken Lewis' decision to buy Countrywide in 2008 has been bleeding the nation's largest bank -- and its investors -- ever since.

By TheStreet Staff Jul 13, 2011 1:51PM

By Philip van Doorn, TheStreet

 

Reports that New York Attorney General Eric Schneiderman may challenge the recent $8.5 billion settlement by Bank of America (BAC) for bad mortgage securities inherited from Countrywide Financial underscore what a disaster the 2008 acquisition has been for the nation's largest bank.

 

Under the reign of its acquisitive former CEO Ken Lewis, Bank of America completed its acquisition of Countrywide in July 2008 in an exchange of shares valued at $4.2 billion, although the real cost of the deal at that time included the cancellation of $2 billion Countrywide preferred shares, purchased by Bank of America in August 2007.

 

When the acquisition was completed, Countrywide's mortgages were written down to fair value by $9.8 billion, and its mortgage servicing rights were written down by $1.5 billion. But those write-downs didn't address the bleeding that Bank of America would suffer from a seemingly endless array of mortgage repurchase demands from investors.

 

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[BRIEFING.COM] The stock market finished an upbeat week on a mixed note. The S&P 500 shed less than a point, ending the week higher by 1.3%, while the Dow Jones Industrial Average (+0.1%) cemented a 1.7% advance for the week. High-beta names underperformed, which weighed on the Nasdaq Composite (-0.3%) and the Russell 2000 (-1.3%).

Equity indices displayed strength in the early going with the S&P 500 tagging the 2,019 level during the opening 30 minutes of the action. However, ... More


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