The Best Ways to Invest Your Money
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If you want to save some cash and earn some money from it on a monthly basis, you should start investing. Money that lies in a drawer or a bank account is essential idle money and hence you should know how to invest so that you can start earning some money from it.Investing means that you should set for yourself some rules that you will follow. Some of the most important decisions like when to buy and sell can be made by means of using these rules. It also helps in making you stay calm and hold on to your holdings.
A lot of these rules come from past experiences which are a mixed bag of good and bad experiences. If you are an investor you should not lose heart but learn from past bad experiences.
Some people are seen to base their opinions on what other investors think and do. But it is better if you do your own research and then look at testing this out by analyzing the findings. With this you will be able to form firmer investment opinions too. It is always advisable to be guided by your own convictions and not by the convictions or opinions of others. This is why it is important that you learn various techniques of investing and then apply these quite strongly.
One of the best things is if you can guide yourself. The reason is that you will be able to base your opinion on past experiences. From his you will benefit as you will be able to know what the various phases of investment are. The first step is to do proper and vigorous research after which you need to invest and leave the rest to fate or chance.
It is important to believe in your own convictions. It is fine if others follow our recommendations but you should not follow them. After all, you do not know they rationale or way of thinking. If things do not turn out well, you would regret that you did not follow your own judgment and just followed others.
There are many programs that can help you in investing. It is possible to invest in property, gold etc where you can sell on appreciation. Investment in stocks and bonds is also essential. Buying and selling in the stock market is essential for which you need to learn speculation. This is like gambling where you can become hit or perhaps make money while trying the play in the market. If you learn the truck, you can invest in the safest way.
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Doug has been writing articles online since he was in middle school. Now he continues to write and build projects on a professional level, you can check out his latest advice on water softener pellets and also new information about water softener maintenance.
Original source for this article: Successful Investments
The three best stocks of the past decade
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Baltimore: If today’s action from the markets is any indication of what investors think about Uncle Sam and his Washington minions, the upcoming mid-term election is going to get interesting.
Nothing talks in Washington any louder than money. Today, the big spenders are betting against the land of the free and the home of the brave. But of course, if you’ve been paying attention, the action is no surprise.
If you invested in United States treasuries over the last year, you bought into the worst performing sovereign debt across the globe. Thanks to the Obama administration’s unending yearning to artificially pull the nation’s GDP into positive territory, investors are quickly raising their nose to the country’s ever-growing pile of debt.
In all of 2009, the Treasury Department received loans of $2.1 trillion from the world’s investors. It was an extraordinary year of borrowing that took the nation’s debt liability from $5.80 trillion to $7.17 trillion at the end of November.
Of course, with unemployment likely to show yet another rise later this week and some 45,000 businesses tossing in the towel over the last twelve months, Obama is not done spending yet.
Many experts believe 2010 will mirror the borrowing habits of 2009, when Geithner and the Treasury hit the auction market 79 times.
As we are seeing today, excessive borrowing can lead to strong market opportunities for well-positioned investors.
As long as Uncle Sam is spending more than he is pulling from the pockets of hard-working Americans, the value of the dollar will be at risk.
After a very strong December, the greenback is showing weakness today. It now trades at $1.4436 against the euro, a dip of more than a penny below the 2009 closing figure. A penny may not sound like much to the uninitiated, but a quick look at anything dollar-denominated tells a different story.
Oil is up, gold is up and the equities market is soaring. A turnaround in the dollar is just what we needed to get the pendulum swinging once again.
As I have said many times before, a falling dollar is good, but it can only drop so far before it turns out to be an utter disaster. Once the markets believe the bottom is going to fall out, it is all over for the security of the world’s top currency.
But that’s a problem we won’t have to deal with until the Fed pulls out of the game. Unfortunately, Bernanke’s likely to put the fiscal rejuvenation machine into reverse in the not-so-distant weeks ahead.
For now, however, it is time to make money while you can.
Any good contrarian investor loves the gold markets lately. I love it because we are raking in the gains over at TFN Strategic Trader thanks to recent swings in the precious metals market.
For nearly all of December, I took flak because of my gold-market pessimism. But folks that followed my advice saved themselves some big money as the shiny metal lost nearly 10% of its value.
But in the final week of the year, you may recall, I noticed the market was ready to change direction. On Thursday morning, with just a couple of trading hours left in the year, I made my move. I wrote my subscribers about a strategic option contract.
The move paid off. Thanks to gold prices surging by more than $26 per ounce today, the contract has soared by 44%. I am sure plenty of members are taking the one-day gains, but I’m holding out for more.
2010 will be the year of all years for currency and hard-asset traders. We are already proving it.
*** Here’s a question that will help you get the New Year off to a profitable start.
What do Medifast (NYSE:MED), Green Mountain Coffee Roasters (NASDAQ:GMCR) and Hansen Natural (NASDAQ:HANS) have in common?
The answer: They all make food or drinks designed to make you feel good. Even better, they comprise the three best performing stocks of the last decade.
Medifast, with its popular weight-loss diets, soared over 16,000% over the past ten years. Green Mountain, and its diverse coffee lineup, led investors to gains of 9,210%. And Hansen, the maker of a variety of popular drinks, is up by 7,022%.
Not bad figures for a time that most pundits are eager to call a lost decade. It is not surprising to see a decade that was so focused on consumer spending and short-term happiness to produce these kinds of figures.
Looking forward, however, into a decade when unemployment is creeping higher, discretionary spending is down and it is becoming hip to be frugal (finally, my time to shine), the three stocks listed above may give back plenty of their recent gains unless they reposition their product portfolio.
In ten years, it won’t be “fun” food we will be talking about. With the nation’s population growing by leaps and bounds, it will be staples like corn, wheat and water that dominate the headlines.
Don’t worry. We’ve got plenty of time to figure it out.
Original source for this article: Contrarian Profits
Control how much you pay and when you pay
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By Andrew Snyder, TodaysFinancialNews.com
Baltimore — (TFN): I have lived “off the grid.” That means I know what it feels like not to get an electric, phone, cable, Internet, water, gas or sewer bill every fourth week.
It’s natural. It’s liberating. And in a not-so-subtle way, it feels like you’re giving a single-finger salute directly to “The Man.”
But now that I’m back in the lower 48 and have presumed the life of “normalcy,” I am as wired as ever. Except, that is, for one thing. I refuse to buy into the monthly cable bill trap.
Why should I pay for something that wastes my time, numbs my brain and promotes a culture that none of us should be proud to live in? It is an especially dumb move when you realize you can get almost all of the programming for free.
If you have been a frequent Notes reader during the past two months, you know I am certain 2010 will be the year that changes the scene in the nation’s media industry. This time next year, who you pay and how much you pay for your boob-tube entertainment is going to change… drastically.
We are already seeing the first wave of industry movement. When Comcast announced its decision to get a majority stake in NBC, we heard the opening bell for round one of the fight.
Now that Rupert Murdoch and his troops at Fox are fighting to get paid for their now-free content, we are entering round two of what appears to be a no-holds-barred fight.
In case you didn’t hear, Time Warner is diligently fighting off an attack from Fox that would force it to pay the over-the-air broadcaster as much as one dollar for each of its cable customers.
That notion alone throws a wrench into the heart of the broadcasting industry. It means advertising revenues will no longer be the driving fiscal force. Subscriber levels will be. It also means folks like me, with an outdated TV and some rabbit ears may be forced to pay real soon.
But then again, this is a dynamic industry. What goes in one side the prism often comes out a different color.
In the other corner of this fight are online offerings like Netflix and even Murdoch’s Hulu. The former is doing its best to shake the industry’s foundations in hopes of climbing atop the ensuing pile of ruble.
In a nod to Murdoch’s a la carte programming idea, Netflix allows subscribers to stream fresh shows and movies to their desktop or Internet-enabled TV sets. If it can gain traction, your days of paying for a slew of unwanted, offbeat channels are over.
You will be able to pick want you want and pay what you want.
For contrarian investors, this is good news. When you ditch your cable bill, you can join me in the single-finger salute, avoid all those government-created taxes and fees and still find the entertainment you crave.
But best of all, the investment potential over the next year will be off the charts. Merger and acquisition action will hit new industry highs. And the stocks that few investors are willing to touch today will surge in value.
If you are a fan of buying when nobody else will, just as I am, now is the time to make your move.
*** Speaking of making a move, herds of investors are taking advantage of a horrible situation by investing in a handful of companies speculated to be winners as the nation’s airports beef up their security.
Because Christmas Day’s failed attempt involved a man getting an explosive device beyond multiple layers of airport security, domestic critics are calling for increased image-based screening.
The technology needed to peak beneath an air traveler’s clothes is already available and in use in some markets. Right now, the high-tech screenings are voluntary, just the way civil liberty advocates want it.
But that may be changing thanks to last week’s attack attempt.
Shares of L-3 Communication (NYSE:LLL) are up by about 4% since the attack as investors ponder the news that Uncle Sam intends to purchase another 150 of its backscatter imaging units at a cost of up to $160,000 each.
But for the big gains, you have to look beyond a massive $10 billion company. Shares of OSI Systems (NASDAQ:OSIS) are up by 17% on the week. And Icx Technologies (NASDAQ:ICXT) has surged by 60%.
Both companies develop and manufacture detection devices that could see hugely increased demand with just one stroke of Obama’s pen.
If you are a true contrarian investor, you’ve got to be thinking the situation is way overblown. After all, groups like the ACLU aren’t going to let screeners freely look under American blouses anytime soon.
There is a very good chance today’s share price momentum will turn around in the New Year. That means there is strong investment potential, especially for savvy options investors.
Earlier today, I told TFN Strategic Trader members to expect this week’s options play to be based on the situation playing out in the world’s currency markets. But given today’s action, we may just have to swoop in and take advantage of the cards we were dealt.
I am never one to fold when I’m holding four aces.
*** Currency trades have got to be drooling over the recent action. Even though many investors were betting against the dollar, a greenback that has rebounded this quickly and this strongly has created lots of investment potential.
One currency investors tend to be overlooking is the anemic British pound. As speculation of rising interest rates boost the dollar and eventually the euro, England’s central bank is likely to be the last low-rate holdout.
For currency traders, a sticky currency like this one opens arbitrage opportunities that should have any carry trade investors cracking a smile.
Finally, for you gold bugs, you know what I’m about to say. The precious metal is down once again. Today, an ounce of gold will cost you $5 less than yesterday, coming in with a price tag of $1,092 per ounce.
In the last month, gold has shed nearly 10% of its value. Get ready to move back into a buying mode.
Original source for this article: Contrarian Profits
The Eye of the Storm
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Louis James, Senior Analyst and Editor for Casey’s International Spectator, has compiled a year-end collection of the Casey Research team’s 2010 outlooks and offers them to Contrarian Profits readers.
Louis James (Casey’s International Speculator):
At a recent Casey Research editors’ meeting, the team took on the question of whether the somewhat steady recovery since last February’s washout bottom in the broader markets had any of us thinking that the recession might be over. The gathering of minds included: Doug Casey, Managing Director David Galland, CEO Olivier Garret, Casey Chief Economist Bud Conrad, Senior Energy Analyst Marin Katusa (my counterpart on the energy side), myself heading the metals division, and several other editors.
Doug’s guru-vision remains locked on the disaster channel. The U.S. economic problems, he says, remain so profound and, if anything, have been worsened by the government’s actions, that Americans are headed for a significant lowering of their standard of living.
As this reality unfolds, it will send out shock waves that will impact much of the world: the Greater Depression.
And the next step, Doug believes, will be a change in interest rates. The Bright Boys in DC will resist doing this, but while they seem willing to let the dollar slide to ease their mounting debts, they don’t want it to crash. They may soon be forced to raise interest rates. When that happens, Wall Street usually moves in the opposite direction – which could be the end of the “Things Aren’t as Bad as We Thought” rally of 2009.
Bud Conrad – in proper, responsible chief economist-style – considered the question carefully and conceded that there do indeed seem to be many “green shoots” now, but still concluded that conditions will continue deteriorating. He sees the government deficits in the driver’s seat, the main variable to keep a watch on.
As the U.S. government persists with its spending spree, valiantly dousing the deficit fire with more debt-gasoline, it will continue destroying the dollar, and that will push ever more people into gold.
A year ago, Bud predicted that gold would top $1,150 by year-end 2009. His call was bolder than most forecasters’ – but he was right. Looking at the numbers today, Bud’s new baseline 2010 forecast is for gold to top $1,450. He sees a “possibility of further international instability or currency debasement as adding to that baseline.” In plain language, Bud’s confident that resource stocks of all sorts will, on average, benefit greatly from the demise of the U.S. dollar.
Somehow, I can’t shake the image of Bud singing Don’t Fear The Reaper with Blue Öyster Cult for back-up… but that’s really more like something Marin would do.
Speaking of Marin Katusa, he commented that there is money to be made in the current rebound environment, but speculators should be extremely cautious: “You should know you’re dancing with the devil in the pale moonlight. You need to make sure you know the dance steps: get in early and exit before you get the dip by the devil at the end of the song.” (Marin not only has made huge amounts of money for our subscribers, he sings in a rock band, so he knows what he’s talking about.)
My own thinking has evolved into seeing 2009 as being like the eye of a monstrous storm.
The sky has cleared substantially, and the sea looks amazingly calm, given what we’ve just been through. But it’s not over yet; the trailing edge of the storm always delivers the most damage, and that’s yet to come. Anyone fooled into abandoning shelter is taking a terrible risk.
This doesn’t mean we should stay huddled in our huts, however – it makes more sense to go out, restock supplies, repair what damage we can, and get ready for the deluge to come. The renewed fury of the storm will sink many more ships, but it will also make vast fortunes for those who invest in the ships that survive and even thrive in the tumult.
Essential strategy: For the near term, buy only an initial “tranche” (portion of your desired position) in the most storm-proof (cash-rich) companies you can find – ideally with great discovery or development stories that will deliver exciting news regardless of market conditions – and hold a good chunk of cash in reserve for the next big buying opportunity.
Nothing goes up in a straight line, as share prices over the last month have amply demonstrated. There are some great picks that have been heading up all year that are now paused in their advances. Any more correction in precious metals could put them on sale, temporarily, offering great buying opportunities with a lot of the technical (e.g., discovery) risk removed from the plays. You’ll kick yourself if you don’t have any cash on hand to take advantage of them – and kick twice as hard if you paid too much for a large whack of something that goes on sale.
Worried about sitting on cash with the U.S. dollar in a death spiral? Remember: gold is also cash, highly liquid, and with terrific speculative upside to boot.
With gold having just corrected sharply (as I predicted it would in Casey’s International Speculator), gold is unquestionably the best investment we can recommend right now – fluctuations aside, it has nowhere to go but up for quite some time. Perhaps as long as a decade.
That, plus our essential “eye of the storm” strategy as above is what we’re recommending to all our subscribers – and indeed to all investors around the world who want to not only survive the trailing edge of the financial storm still to come, but thrive because of it.
While gold has gone up 38% since last December, junior gold stocks can provide even greater gains than the yellow metal itself. Currently, for example, Louis is following eight juniors that have all the right conditions to become takeover targets by gold majors… which would drive share prices through the roof. If you want to get in early, this is the time: with our special holiday offer, you’ll save $400 on a one-year subscription of Casey’s International Speculator – but only until midnight, December 18. Hurry up and click here to learn more.
Original source for this article: Contrarian Profits
Gold and Oil – getting ready for a surge in 2010
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Lee Lowell, Stock and Commodity Options Specialist with Investment U, evaluates the commodities market – specifically the demand drivers of gold and oil, and how to play them.
Lee Lowell (Investment U):
If you’re looking for some calm during the market’s ongoing storm, don’t expect to find much in the commodities sector.
Not that this is a bad thing.
If you know what you’re doing, commodities offer some of the most lucrative and potentially explosive profits anywhere in the investment world. And because simple supply and demand is the key driver for many of these everyday products, it’s a sector ripe for volatility and speculation from hedge funds and large institutions.
Heck, you only have to look at the oil market to see that in action.
It’s not uncommon to see prices cycle from highs to lows and back to highs again in a relatively short time. And it’s this rapid-fire, rollercoaster movement that causes many would-be commodities investors to park themselves on the sidelines, rather than risk their cash.
But this is often a mistake – particularly since there are some quick and easy ways that investors can take advantage of the world’s commodities. So let’s see what 2010 has in store…
Why The Price of Oil Is Headed Back to $100
It wasn’t long ago that oil prices blasted to all-time highs around $147 a barrel (July 2008, to be exact).
But they then set off on a remarkable decline that culminated with the price sinking to lows around the mid-$30 level by early 2009 – a full $115 or so lower than the record high, which equates to a staggering $115,000 move in equity on just one contract.
But as the chart below illustrates, oil has spent most of 2009 busily clawing back a sizeable chunk of the downward move – and I expect that trend to continue in 2010.
Click here for both the oil trends chart and the rest of Mr. Lowell’s article on Investment U.
Original source for this article: Contrarian Profits
I can’t believe this is not bigger news
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By Andrew Snyder, TodaysFinancialNews.com
Baltimore — (TFN): It’s not an award I would want. First Putin, then Obama, now Bernanke. Big Ben is not joining the best of company with his “Person of the year” award. If history is an indication, the Fed boss’ approval rating will be significantly lower in the next twelve months.
As if being the master of the secret domain known as the Federal Reserve isn’t a hard enough job to handle, Time goes and slaps Bernanke on the cover and tells us the award is due not because of where Bernanke got us today, but because of where we have not ventured.
In other words, it’s like giving out a Nobel Prize to a guy with big plans for humanity, never mind the fact the goal of world peace is further away than ever before and Iran proved today it is just a step away from nuking Israel.
I am not sure what Time’s policy is on awarding this title posthumously, but it may be something worth investigating. After all, the true ramifications of letting one, unelected politically motivated man in charge of a great nation’s monetary future isn’t a near-sighted event. It could be a while to we learn Bernanke’s true merit.
Who knows, this time next year, China’s president, Hu Jintao, could be gracing the glossy’s cover as we hail his decision to extend our debt obligations for just a couple more years while we get things back on track.
I am not saying Bernanke didn’t do a decent job. I’m saying we should wait before sending him any praise. Last I checked, one out of every ten of my fellow Americans was in the unemployment line and currency risk is rising across the globe.
But that can’t have anything to do with free money flowing from the Fed, can it?
*** By now, you’ve got to know my thoughts on gold… sell the stuff. I was all about the precious metal this time last year, but that was a different situation and time. Now, you can’t turn on the radio, TV or open the newspaper without hearing some pitchman’s take on the stuff.
Remember the contrarian motto: when everybody else wants in, you want out.
For those of you that are viewers of late-night cable news parodies, I am a huge fan of Comedy Central’s Colbert Report. When trends get out of control, his dry humor has a way of bringing things back to Earth.
That’s why when Colbert talked about the sudden rush to the gold markets this week, I knew we were in trouble.
Here’s what I told TFN readers this morning:
“Finally an up day for gold. After sliding for nearly two weeks, the precious metal is moving far enough into positive territory today to bother noting it.
“Did Glen Beck up his marketing? Did Rush bring on a few more listeners? Or is this yet another example of the Colbert bump?
“Does it even matter? Nope, when gold is getting this much attention, the only thing that matters is how quickly you dump your position.
“Gold is supposed to be the safest investment around. Just as real estate investors love to say, there is only so much of the stuff. Unfortunately, we all know how well the real estate folks are doing these days.
“Back in the day when gold actually backed the nation’s debt and played an integral role in the monetary system, a horde of gold made sense. But today, when it’s only value comes from the fact we say its valuable, gold’s no different than a fiat currency.
“If the economy collapses like so many gold bugs are sure is about to happen, wouldn’t you rather have something of tangible value? Colbert is right. Sheep are the way to go. Better yet, follow the natives and take advantage of a buffalo’s ability to provide food and shelter.
“While I’m pushing the argument over the top, many investors are using similar logic in their bullish pursuit of gold. It has created a micro-bubble that is ready to burst.
“That is not good news for the investors that have piled into the junior gold miner sector.”
Keep reading to learn why.
*** I cannot believe this is not getting more press. If you think a handful of bank failures dealt a blow to your portfolio, wait until you see what happens when a few heavy-hitting governments begin to drop.
The good-old-boy network is alive and well on Wall Street. Just about every major financial firm has some vested interest in its “competition.” But it is nothing like the international scene where friendships and rivalries date back centuries and nuclear weapons are used as bargaining tools.
Less than a month ago, Dubai started the default-scare trend. Since then, we’ve heard from Greece, Austria and Spain. Earlier this week, Mexico made the list when Standard and Poor’s cut our southern neighbor’s credit rating.
This is not good news. It proves that, although the dollar looks weak, it’s stronger than its competition. In all things financial, value is relative.
Over the next few weeks, the dollar is going to strengthen, the Dow will drop and gold bugs will wonder what all the hoopla was about.
With most investors working on polishing their year-end portfolio, now is a good time to get in position to take advantage of the upcoming action. Come January 1, it’s a whole new game.
Original source for this article: Contrarian Profits
What Likely Lurks Around the Corner
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Doug Casey and the editors at Casey Research are very skeptical that we are experiencing any sort of economic recovery. In our opinion, too many economic indicators are based on faulty data and optimistic assumptions. Our research suggests that a recovery isn’t sustainable yet. And with that, we lack the foundation needed to support the rapidly rising stock markets.
Jeff Clark (Casey Research):
In the short term, a catastrophic deflation is quite possible. But in the long term, extremely high levels of inflation are now inevitable. The situation is very serious. Gold is the best hedge against both of these things. The better part of your financial assets should be in gold, augmented by well-thought-out speculations. Doug Casey, November, 2009.
Doug Casey and the editors at Casey Research are very skeptical that we are experiencing any sort of economic recovery. In our opinion, too many economic indicators are based on faulty data and optimistic assumptions. Our research suggests that a recovery isn’t sustainable yet. And with that, we lack the foundation needed to support the rapidly rising stock markets.
Among the many reasons for our doubt is this standout:
Over the next two years, the so-called Alt-A and Option ARM loans face massive resets. Even with today’s low mortgage interest rates, most of these home loans, currently enjoying ultra-low teaser rates or pick-your-own-monthly-payment schemes, will see their monthly payments adjust higher – far higher. The result: loan losses and write-downs will balloon for banks, and mortgage holders will get hit with another wave of homeowner defaults. We just don’t see any way for the economy and markets to escape the fallout.
Even the Fed’s perpetual public smiley face can’t hide what’s happening. In their own statement last month, they said, “Household spending appears to be expanding but remains constrained by ongoing job losses, sluggish income growth, lower housing wealth, and tight credit.” A clear and present danger remains in the system.
What does this mean for our favorite sector? Following the market lows in March, gold and gold stocks have, with some exceptions, mirrored the market’s moves both up and down. If the markets correct again, whether mild or severe, gold and gold stocks could get taken down as well.
There will come a point when gold stocks separate from the movements of the general markets, and we look forward to that day. But for now they’re still holding hands.
In the meantime, our view of the big-picture outlook hasn’t changed. Rising inflation and a falling dollar are baked in the cake. Price inflation follows monetary inflation, and governments around the globe have pursued an unprecedented and unsustainable policy of inflating the money supply. Monetary inflation + time = price inflation. It’ll come, and when it does, it will wipe out those who are unprepared.
But in the near term, current economic uncertainties mean heightened risk and call for caution. In other words, this isn’t the time to be aggressive with stock purchases.
So, how does one invest in this kind of environment? Is there a way to hedge your exposure against price fluctuations?
Yes! The secret lies in asset allocation.
Achieving good portfolio performance is possible without overexposing yourself to stocks. The strategy involves playing defense as well as offense.
The following tables compare the returns an investor could expect using different asset allocation models under three hypothetical market scenarios, and assumes a starting portfolio of $10,000.
*All returns exclude commissions and taxes
*Cash return for 1 year of 1.55% based on use of money market account; higher rate possible with a CD, but access to your cash is restricted, and it involves fees and penalties for early withdrawal.
You can see that you’re giving up only 6.6% in gains in Scenario #1 by apportioning your portfolio in equal thirds vs. being overweight stocks. But if stocks decline while you’re overweight that category, as shown in Scenario #2, you stand to lose 16.8%.
If you don’t elect a defensively positioned portfolio at this point, and gold stocks indeed get sucked into the vortex of a general market sell-off, you’ll wish you had that extra $2,300 in cash – which buys well over 100 shares of Kinross at today’s price. And when KGC likely doubles in a couple years, as we expect, remorse may be knocking on your door.
By allocating your investments in a more defensive mode, you’re making a small sacrifice for possible profits over the next six months without sacrificing long-term returns.
You can continue to follow the thinking of the editors at Casey Research — and get specific recommendations for solid, secure gold investments — with an inexpensive subscription to Casey’s Gold and Resource Report. It comes with a free report called The Three Best Ways to Invest in Gold, and until December 18, you’ll get a free subscription to Casey’s Energy Opportunities — all for only $39. Click here to find out more.
Original source for this article: Contrarian Profits
Put your hand under the cash waterfall
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By Andrew Snyder, TodaysFinancialNews.com
Baltimore — (TFN): We all have a friend like him. For me it’s a guy named Greg. He has some great ideas and his entrepreneurial spirit runs deep, but for some reason, his plans never seem to make it to fruition. Somewhere from the drawing board to the production line, he runs into a debilitating snag.
Most of the time, it’s money.
He’s got great ideas but nary a penny to his name. That’s why I told him to ring up old Uncle Sam… collect. Washington’s handing out all sorts of dollars these days. He might as well put his hand under the waterfall.
According to the Wall Street Journal, the Department of Energy is handing out some $40 billion just to the so-called “clean energy” sector. Greg needs to paint a tree on his latest invention, call it organic and break into 21st century politics, er, business.
From here on out, it’s not what you know, it’s who you know. With Obama acting as economic maestro-in-chief, it’s a whole new world for us business folks.
Which brings me to a sore subject. You see, I recently told Hot Stock Confidential members to buy shares of a tiny little up-and-comer named Raser Technologies (NYSE:RZ).
Now, before I go any further, I don’t want to hear any complaining that I only talk about my winning plays in Notes, because this one was a loser. A big fat flop. Right now, we’re down 45%. It was one, if not the worst recommendations I made this year.
But I’m not selling. Even though I got plenty of heat from internal and external “forces,” I am still not ready to suck it in and lock in the loss.
I’m not holding out because the company’s got a breakthrough product or is about to get bought out. I’m holding on because Uncle Sam is ready to cut Raser a big ole’ check.
When I initially recommended the company in late August, headlines were abuzz with “green” spending. But then, just as suddenly as it started, it stopped. Congress switched gears to healthcare and Raser shareholders were left in the dust.
But Washington never stays in one place too long. It makes for an easy target. So once again, the clean energy industry is heating up. The article in today’s Journal proves it.
With Stimulus 2.0 ready to be released and the DOE spending like an eighteen-year-old who just unlocked his trust fund, this is a fantastic time for Raser and its geothermal electricity production.
After all, just last week it announced it was applying for a Treasury Department grant that could put $33 million into the company’s coffer.
For a firm with a market value of just $90 million, $30 million can do great things.
This play may not have followed a traditional route and is certainly a move that would make any financial advisor soil his suit, but in today’s financial environment, when the government acts as the lender of choice, traditional rules are out the window.
While fundamental investments still have long-term merits, for us short-term traders and especially us contrarians, some of the best investment opportunities can be uncovered by following the White House press pool.
*** Speaking of money, how about Exxon’s big deal today? For us contrarians, the $31 billion, all-stock deal proves the world’s largest oil producer believes its stock is overpriced and ready to fall.
If you’ve read my work for any length of time, you likely know that I am a big fan of signaling theory. According to the common-sense notion, Exxon’s unwillingness to use any of its massive pile of cash is a sign that company executives feel a $69 share of the company is worth less than $69 in cash.
It is no wonder we are watching shares drop by more than 4.7% today. In the long run, today’s news will boost Exxon’s performance. But in the short term, investors have an awful lot to think about.
By far, the biggest news surrounding this story is not what it will do for Exxon or XTO shareholders, but what it will do to the natural gas market.
It’s exciting stuff, especially for those of us that just racked up triple-digit gains thanks to the industry’s recent meanderings. I’m talking to you TFN Strategic Trader members.
Here’s what I wrote for the TFN site today:
“You don’t become one of the world’s largest and most profitable companies by making dumb moves. Exxon Mobil (NYSE:XOM) proves it once again.
“The Street is buzzing today thanks to news that Exxon is printing some $31 billion worth of new shares in order to purchase XTO Energy (NYSE:XTO), one of the nation’s natural gas producing giants. It’s a major deal that has hearts skipping across a variety of sectors.
“Of course, nobody is as excited as XTO shareholders. They woke up to news of a buyout worth a 17% premium to Friday’s closing price.
“Shares of the oil and gas producer slipped by double-digit proportions over the past few months as natural gas prices slide. But now that demand is rising and gas prices are following suit, Exxon officials saw it was time to make their move. With XTO prices reaching short-term lows, Exxon made its move.
“Now that a major non-conventional gas player is making headlines, investors have their eyes on all sorts of potential buyouts. It’s almost impossible to find a company in the energy industry not trading in higher territory today.
“Two stocks you will hear a lot about over the next couple of weeks are Chesapeake Energy (NYSE:CHK) and Range Resources (NYSE:RRC).
“So far today, Chesapeake is up by over 6%, with shares trading close to $25.50 each. The company, with major holdings in all of the popular shale regions, has been a long-term target of buyout rumors. Maybe this time the speculators will be right.
“But my money is on Range Resources. It is a major player in the Marcellus region that just happened to announce significant expansion in the area this morning. Coincidence? Doubt it. It looks more like advertising.
“Range is the right size for a buyout. With a current market value of $7 billion and another $3 billion or so in debt, a buyout could come with a price tag of just over a third of Exxon’s purchase. Whoever decides to grab the company (think Shell or BP) would automatically get more than 180 Mmcf of daily gas production out of the Marcellus region.
“Of course, this is a long-term play. With gas prices plunging to ultra-low territory in recent months, any company purchasing gas assets now has a long-term outlook. With non-conventional plays hotter than a barroom pistol, major producers like Exxon are flocking to the sector in hopes of finding larger profits than their current low-margin deepwater prospects.
“For all of you fans of deepwater drilling, that is bad news, even horrid.”
Read why here.
*** Hey, lookie there. Gold’s up today. With word that Congress is ready to budget yet another couple trillion bucks, the dollar’s a tad bit weaker today.
As I write, gold is up by $3.70 per ounce and the dollar’s down just $0.0019 against the euro. Doesn’t look like buyers of either asset have much conviction.
Today’s just a short-term turnaround in the recent trend. Expect more strength from the greenback and more weakness from the gold market. By the time we sing Auld Lang Syne in a couple of weeks, gold will be trading for $1050 per ounce. That’s when you should be a buyer again.
Original source for this article: Contrarian Profits
How to Predict the Price of Gold
Latest News about traditional investments.
Jeff Clark, Editor of Casey’s Gold & Resource Report, discusses the techniques of trending and trading gold.
Jeff Clark (Casey’s Gold & Resource Report):
Long-term readers know that gold moves inversely to the dollar, meaning if the dollar drops, gold tends to rise (and vice versa). This happens with about 80% regularity. But what many gold writers haven’t acknowledged is the leveraged movement our favorite metal has demonstrated this year to the world’s reserve currency.
The U.S. dollar index, a six-currency gauge of the greenback’s value, has dropped 7.8% so far this year (as of December 3). Meanwhile, gold is up 38.7% year-to-date. In other words, for every 1% drop in the dollar index, gold has risen 4.9%. If that approximate percentage holds over time, one can begin to estimate what the gold price might be if you know what the dollar might do.
While the dollar is likely to bounce at some point, making gold correct, the long-term fate of the dollar has already dried in cement. If the dollar were simply to return to its March 2008 low of 71.30 next year – a 4.6% drop from current levels – this would imply a rise in gold of 22.5% and a price of about $1,478 an ounce.
The long-term scenario is more dramatic. If you believe the dollar will lose half its value from current levels, this would imply a gold price around $4,164. If you believe it will lose 75% of its value, gold would reach about $5,642. Doug Casey has called for a $5,000 gold price; if he’s right, guess what that implies for the dollar?
And think about this: these calculations ignore what else might “show up,” such as when price inflation shows up in the economy, the greater public shows up to buy gold, or the Chinese don’t show up at an auction. Could $5,000 gold be too low?
Unless you think the dollar’s problems are solved, its eventual demise is gold’s eventual glory. Prepare, and invest, accordingly.
And keep up on the gold and precious metals markets in Casey’s Gold and Resource Report. Each month I’ll bring you the best research and investment recommendations in the business. And until December 18, you can get a subscription for 50% off the regular price and receive a free gift worth $79. Click here to learn more.
Original source for this article: Contrarian Profits
When in doubt, buy booze, babes and bullets
Latest News about traditional investments.
By Andrew Snyder, TodaysFinancialNews.com
Baltimore — (TFN): As we get older, the list of regrets grows. It’s natural. The more days we put in, the more mistakes we make. Hopefully, the list of successes grows even faster, but today’s about the mistakes.
We’ll say it’s in honor of Tiger Woods, the last celeb to bit nibble the forbidden fruit.
We all have regrets. The house we should have bought. The car we shouldn’t have sold. The girl we should have taken to prom. Or the pilot we shouldn’t have trusted.
And of course, there are the stocks we should have bought and the one’s we never should have touched. The more you invest, the longer your list will grow.
For a good friend of mine, one of those stocks was JLG. Don’t ask you broker to try to find it. It was bought out a long time ago for a sizeable premium.
My good buddy found out about the company’s profit potential from a colleague at the office. It was one of those elevator-type conversations. Most of them never amount to a hill of beans, but every once in a while, they explode.
Of course, my friend, a conservative Depression-era penny pincher, never pulled the trigger. Instead, he watched for months as the stock climbed and climbed.
His pain was over the day OshKosh (NYSE:OSK) announced it would pay a sizeable premium for JLG. He lost out on triple-digit gains, but at least the old timer didn’t have to watch the action any longer.
I’ve been doing the work for him.
I first started covering OshKosh for TFN back in December, when shares were going for just $5.75 or so. Today, those same shares are going for over $40, an increase of 600% over the past year.
Why the big climb? Like a lot of things this year, you can blame Uncle Sam.
As a heavy-equipment manufacturer, OshKosh was in the right place at the right time when it came time to dump money into the fight in Afghanistan.
The Wisconsin-based company has scored hundreds of millions worth of military contracts over the last year.
And thanks to last week’s decision by the nation’s top commander, there’s a very good chance that action will continue through the next year, maybe longer. After all, thanks to the weekend’s political bantering, Obama’s 18-month plan for troop withdrawal has now turned into a three- or even four-year plan.
That’s good news for war suppliers.
The action brings me back to one of my long-time investing philosophies. When it doubt, buy booze, babes and bullets. There’s always a market somewhere.
Right now, investors are preparing for yet another “war bump,” taking advantage of the nation’s plans to take the war in Afghanistan to a new level. That means company’s like OshKosh and the plethora of defense-industry firms are worthy of a look.
As the nation sets its eyes on a recovery, contrarian investors have their eyes on defense. Throughout the country’s history, some of the best investing opportunities have come on the heels of major military moves.
*** Gold continues its downturn today. Although the dollar has weakened a bit this afternoon, gold speculators can’t find enough reasons to stop the bleeding on the bullion market. If you are holding an overweight position in gold and want out (can’t blame you), wait a day or two before you make your move.
We’ll see a couple or three days of positive action – just enough to dupe the markets – then the real selling will begin. As the world enters the New Year, portfolio shuffling and rebalancing are going to create all sorts of contrary phenomenon.
Gold’s downturn will be on the list.
*** Need to know when to unload your gold or any other asset? No problem. Stick with a tried-and-true stop-loss plan and you’ll see higher gains and smaller losses. It’s as close to a sure thing as you can get on Wall Street.
I wrote about the notion of volatility and stop-losses this morning on the TFN site. Here’s a bit of what I wrote:
“When it comes to investing, there are almost as many profit strategies as there are stocks to invest in. Everybody’s got their opinions, and many of them will make you money. But nothing is more agreed upon than the notion of a stop loss.
“Except, here at TFN headquarters.
“Last week, Christoph, Laura and I got into what turned out to be an hour-long discussion of our various exit strategies. It was interesting, to say the least.
“Of course, our opinions are highly biased. As marketers, portfolio managers and trading-service operators, our actions sometimes stray from our philosophies. I won’t bore you with the details of our discussion, but I will let you in on our conclusion.
“In this top-heavy, data-sensitive market, stop –losses are more important than ever.
“The basic notion of a stop-loss, setting a firm sell point, has been beaten to death amongst financial pundits. There isn’t an editor or advisor out there that has not written about or discussed the subject. But what many folks fail to tackle is how and when to set stop-losses. This was a vital topic of our discussion last week.
“I will let the others fill you in on their opinions. For now, I will give you the details of how I manage the idea of how to get out and when.
“There are two uses for a stop-loss, protecting an investor from significant losses and locking in gains in case a position turns around and heads south.
“Whether you use a plain-vanilla stop-loss or a dynamic trailing stop doesn’t really matter. What matters is at what price your exit is set to take place.
“For many investors, 15% is a popular stop-loss for conservative plays, with 20% or even 25% used for more volatile plays.
“With any stop-loss, volatility is an important, if not the most important variable. That’s why I propose a stop-loss strategy with volatility as the key determinant.”
Continue the article, here.
*** Finally, your question of the week: Should Ben Bernanke get another term or has he done more harm than good?
Original source for this article: Contrarian Profits
