Is Obama a closet capitalist?
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It’s a huge day in the nation’s history. As with a couple of other great revolutions, America’s latest smack to the face of an overpowering government comes from Massachusetts.
Six months ago, few would have guessed one of the most left leaning of states would hold the fate of the nation’s healthcare and a super-majority in its hands. But disappointingly, I am far from convinced a GOP win means the end of Obamacare.
I take Pelosi and her cronies at face value when they say they will cram this legislation down our throats at any cost. (I’m paraphrasing her actual words, but we all know that’s what she meant).
I can picture her and Barney Frank feverishly pouring through 234 years of laws, looking for any loophole to twist to their advantage in case Brown receives a concessionary phone call later tonight.
Healthcare and all the ways it will affect your life will be a popular topic for months, if not years to come. The majority of the healthcare sector today is trading in positive territory thanks to the brewing storm in the Bay State. It’s a small prelude of the volatility that is to come.
It is sad to think we only have a couple of more days to cover it all in Notes.
Because we’re operating on borrowed time, I’m going to put off the speculation of healthcare for tomorrow when we know (or at least hope to know) Massachusetts’ decision.
For now, let’s stick with what we know for sure.
One thing that is 100% going to happen is, in just a few weeks, Obama is going to unveil his latest budget proposal. In it is going to be increased defense spending (which I’ve already covered) and also decreased fiscal dedications to NASA.
Instead of giving cash directly to the top space agency, Obama wants to embrace his capitalism roots (there’s a line you don’t see every day) and give the cash to the private sector.
Now that the space shuttle fleet is up for sale, NASA needs a new way to get its astronauts into orbit. Of course, the big recipients of NASA-based money, Washington cozies like Lockheed Martin, Boeing and Raytheon, are not so keen on the idea.
After all, if NASA outsources the shuttles duties, they stand to lose a long-producing cash cow.
But that’s not the case for companies like Orbital Sciences (NYSE:ORB), SpaceX and Rocketplane Kistler that could be the recipient of healthy government contracts as Obama puts a toe into the private sector.
Unfortunately, Orbital Sciences is the only publicly traded of the three, but with a Street value of less than a billion bucks, it offers investors a shot at a “smallish” space-industry up-and-comer.
There are a couple of arguments against Orbital Sciences.
First, its price tag is inflated. With a trailing P/E of nearly 25, investors have obviously priced in lots of growth potential. But if Uncle Sam starts writing the company a couple extra checks each year, the current bottom line will look paltry in comparison.
But then there are the naysayers that believe the private sector cannot compete with the deep pockets and industry experience of NASA. They cite factors like national security and safety.
While I believe safety and quality is almost always better in the private sector, security is an issue Obama must measure before he goes and cuts NASA’s budget. Space superiority has been a significant ingredient in the country’s defensive success over the last 50 years.
The bottom line is if you’re looking for a place to put some speculative dollars and get your tax dollars back where they belong – in your pocket – than the aerospace sector is worthy of an in-depth look.
Original source for this article: Contrarian Profits
Stimulus 2.0: Give a Penny, Take a Penny
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Andrew Snyder (Today’s Financial News):
Get ready for Stimulus Version 2.0. With unemployment in double-digit territory, credit still tight and consumers refusing to part with their cash, it’s obvious Washington’s first bailout did nothing but put the nation even further in debt and give China an even larger stake of the country’s financial future.
Instead of stepping back and searching for a viable solution (if there is any), Obama is jumping right back into the stimulus game.
But of course, the word stimulus is nowhere to be found. This is a jobs program.
Sure, it contains another $50 billion for roads, bridges and water projects… just like the first version.
Sure, green energy and “weatherization” is a strategic focus… just like the first version.
And of course, it promises to boost hiring across the country… just like the first version.
Unfortunately, we all know Stimulus Version 1.0 was a big, fat flop. It cost the nation nearly a trillion dollars, has put our triple-A credit rating at risk and, worst of all, was managed worse than the Detroit Lions.
Now, they want to do it again.
Well, Mr. President, when it comes to my hard-earned tax dollars, you don’t get a mulligan. There are no do-overs in the world of global economics. You do or you die.
The fact that $200 billion worth of TARP money is at stake is what scares me the most. It portrays this government’s reckless abandonment of the law. (Never mind the fact that some two-thirds of the original stimulus is still warming in some apparently forgotten account).
Lest we forget what TARP stands for: Troubled Asset Relief Program, not give a penny, take a penny.
Finally… the dollar. After a couple of weeks of doing his best to reassure China and other lenders that our national debt was not spiraling out of control, Obama is talking out the other side of his mouth today.
In his speech earlier today, the President said, “We are going to have to spend our way out of this recession.”
In the same speech he promised tax cuts for small businesses, an elimination of loan fees and – I can’t believe I am going to write this – the creation of a “Cash for Caulkers” program.
That can’t be good news for the dollar’s recent rally.
But really, the dollar story comes down to one thing, and it has nothing to do with politics or government programs. We all know the economy will naturally heal itself. Much of the progress Obama is claiming as his own is a result of this natural process.
If you think the American economy will strengthen on its own over the next year, you’re a dollar bull. If you think Obama’s spending will outweigh any economic growth, you’re a bear.
As for me, I’m a fan of the cycle. The hot-air machine in Washington can do whatever it can get away with and the natural economy won’t sway in one direction or the other.
We’re in a cyclical recovery and that’s good for the dollar. Unfortunately, as I said on Friday, that’s not good for the equities market.
It’s times like these it pays to be a contrarian.
Original source for this article: Contrarian Profits
When in doubt, buy booze, babes and bullets
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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
I’m not a sissy. Are you a sissy?
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Baltimore — (TFN): It’s like pulling off a Band-Aid. We can do it quick and get the pain over with, or we can torture ourselves with slow, steady, hair-ripping pulls that make us want to gouge our eyes out in pain.
Since I first scraped my knee chasing the neighbor’s cat across the street dozens of years ago, I have been a fan of the get-it-over-fast strategy. Rip the stitches, dry the tears and move on. Dilly-dallying is for sissies and I’m no sissy.
But the nitwits in Washington beg to differ.
After the first round of trillion-dollar stimulus failed to ignite anything but tempers, Congress is hitting us with a slow, but steady stream of economy-boosting spending. They won’t call it a bailout or stimulus, those terms have been politically wasted, but they continue to pour money into the economy like its water on a broiling fire.
They are pulling the Band-Aid off one painful follicle at a time. And I’m getting sick of it.
We’ve got homebuyer incentives. Business loans. Green tax incentives. Car interest deductions. And now more deadbeat homeowners are getting off easy as Obama takes more money from my wallet and gives it to some McMansion owner.
All this hoopla in Dubai proves the point the markets have no clue as to proper valuations. Given just one minor hiccup in the global economy, Wall Street was poised to sell off like never before. The over-leveraged, over-hyped Dubai World comes to the world on Friday and asks for a delay in paying its $60 billion obligations and pundits react like Iran launched “the bomb.”
Come on folks. Dubai’s financial situation is little removed from Donald Trump’s recent woes, including the funky head piece. That much leverage and something will eventually snap.
Even with this notion, the markets were ready to succumb with just one headline.
“Give me just one reason,” you could hear the investors muttering as their nervous finger hovered over the sell button. In the back of their mind, every investor is nervously awaiting the one final catalyst that sends this top-heavy market back where it belongs.
The words “double-dip recession” are on the tip of everyone’s tongue, even Obama’s, but nobody is ready, or politically willing, to call a spade a spade. They’d rather leave the Band-Aid in place for just one more day.
Instead, we are going to sit back, watch unemployment remain over 10% for the next eighteen months and let our government get away with murder. Just like G.W. used 9/11 as a springboard for his defense initiatives, this administration is using a nasty economy as an excuse to move us one mandate away from socialism.
And we are taking it. We are taking it like a herd of cattle take an invitation to a feed lot. This is not a free lunch, folks. Someday soon we’re going to get slaughtered.
*** Investors had better be prepared for what lies ahead. The swift reaction after the news from Dubai proves the markets are uncertain.
Uncertainty creates problems.
If I had to pick just one sector of the economy to be the model of uncertainty, it would be consumer spending. With Black Friday data looking lackluster at best, retailers have little idea what to expect going forward.
Instead of watching the six o’clock news for a hyped up version of the antics at the local mall, I fired up Ole Betsy and drove to a friend’s local shop. What I saw was far different than the frenzied lines at the local Best Buy.
Sure, there were sale signs everywhere, but two customers hardly form a line worth photographing.
When I asked how many of the big sale items were pulled off the shelf, the answer was a big fat goose egg. The big names may draw a crowd, but with razor thin margins they need crowds. To get a scaled-down view, take a look at the little guy.
That scene isn’t pretty.
But there is good news today. Early reports show that Cyber Monday traffic is up by more than 40%. While clicks don’t equal sales, buyers are at least scoping the deals.
That is good news for the online world and is part of the reason shares of Amazon hit new record prices this morning.
Before Jeff Bezos and his troops were celebrating, I was writing a piece for TFN that highlighted a company that will likely be a winner as cash-strapped consumers search out the best deals.
Here is a bit of what I wrote:
“One stock all traders should be aware of on this so-called “Cyber Monday” is ValueVision Media (NASDAQ:VVTV), the home of ShopNBC.
“As consumers cut back this holiday season, shoppers will diligently search for the best deals. One place they will find them is on the company’s home-shopping network and the ShopNBC web site.
“I have tracked ValueVision for numerous holiday seasons. It is a predictable, cyclical play with the holiday season the catalyst for strong swings in either direction.
“Historically, buyers that got in before the holiday season and got out early in the New Year made sizeable and reliable gains. But predictability kills Wall Street.
“Over the past several years, buyers that got in on December 1 and out on January 1 lost money. That’s because after years of predictable gains, the bandwagon become overloaded.
“But this year I am expecting another turnaround in the trend. We’re back to buy now and sell in January. You won’t get rich from the play (20% upside), but you will find a way to eliminate most market volatility and put weaker consumer spending on your side.
“ValueVision is a small, $107 million company. It has no long-term debt and is poised to rebound to positive cash flow this quarter.
“The real kicker to this stock, however, is its high beta score.” Keep reading here.
*** And now for a new feature this week. Over the past month (it’s been thirty days now since I took the helm), I noticed that Notes readers are incredibly unique. They don’t follow the herd. They think for themselves. And they have interesting insights.
My kind of people. I like it.
That’s why each week, I am going to toss out a “question of the week.” I trust I won’t even have to ask for your thoughts on the subject. Let me have it and we’ll discuss the varying opinions as the week goes by.
This week’s question: Is it a coincidence the weekly political roundtable programs air at the same time churches offer their weekly services?
Looking forward to your thoughts.
Original source for this article: Contrarian Profits
