Cash Equivalent - Education, Investment Company, Market News: Cash Equivalent

Pimco Total Return cuts mortgages securities to near 4-year low

ridodirected@gmail.com (RIDO) — Sat, 10 May 2014 00:26:00 +0000

BY JENNIFER ABLAN
Posted on Fri May 9, 2014 6:52pm EDT
Article from http://www.reuters.com/

(Reuters) - The Pimco Total Return Fund, the world's largest bond fund, cut its holdings of U.S. mortgage securities for a third straight month in April to its lowest level since July 2010 on continued bets that the Federal Reserve will conclude bond purchases this year, data from the firm's website showed on Friday.

The fund, which has $230 billion in assets and is managed by Pimco co-founder Bill Gross, cut its mortgage holdings to 19 percent last month from 23 percent in March. The fund kept its holdings of U.S. government-related securities unchanged in April at 41 percent, Pimco said on its website.

Newport Beach, California-based Pacific Investment Management Co said its holdings of U.S. government-related securities may include nominal and inflation-protected Treasuries, Treasury futures and options, and interest rate swaps.

On March 7, Gross tweeted that investors should, "Sell what the Fed has been buying because they won't be buying them when Taper ends in October" In his latest Investment Outlook report, Gross said investors should "look to different areas of risk taking if you need higher returns."

The Federal Reserve, which has been buying mortgage-backed securities and U.S. Treasuries in order to drive down long-term borrowing costs and spur economic growth, on April 30 voted to pare its monthly asset purchases to $45 billion, in its fourth straight $10 billion cut.

Pimco Total Return's asset allocation is important because Pimco manages $1.94 trillion and is one of the world's largest bond managers. Pimco is a unit of European financial services company Allianz SE.

Pimco increased its U.S. credit holdings to 12 percent in April from 10 percent the previous month and increased its emerging markets holdings to 7 percent last month from 6 percent in March.

The fund has increased its non-U.S. developed market holdings all year, with its stake at 11 percent in April. Pimco's "other" securities category -- which the firm said may include municipals, convertibles, preferreds, and Yankee bonds -- remained at 5 percent of the portfolio's allocation.

Perhaps the most dramatic change to the Pimco Total Return Fund last month was its reduction in its effective duration to 4.73 years in April from 4.97 years in March. Duration is a measure of a bond's price sensitivity to yield changes. Effective duration stood at 4.71 percent in February.

In his April letter to investors, Gross emphasized underweighting duration and maintained his position on favoring shorter-maturing debt. He said fixed-income securities maturing in five to 30 years are "at risk" given reduced bond buying from the Federal Reserve.

Gross said: "While PIMCO agrees with Janet Yellen that such normalization will be a long time coming (the 12th of Never?), probabilities suggest that as the Fed completes its Taper, the 5-30 year bonds that it has been buying will have to be sold at higher yields to entice the private sector back in."

Pimco Total Return showed 5 percent exposure to money market and net cash equivalents in April, unchanged from the previous month. It defines the class as liquid investment grade securities with duration of less than one year.

(Reporting by Jennifer Ablan; Editing by Chizu Nomiyama and Leslie Adler)

JENNIFER ABLAN
Posted on Fri May 9, 2014 6:52pm EDT
Article from http://www.reuters.com/

What Questions Should Be Asked of Berkshire This Year?

ridodirected@gmail.com (RIDO) — Sat, 03 May 2014 05:29:00 +0000

Berkshire Coverage

Morningstar's Gregg Warren, who will be on the analyst panel at this year's meeting, details the questions he hopes Buffett and Munger will address.

By Greggory Warren, CFA | 05-02-14 | 06:00 AM

Article from http://news.morningstar.com/articlenet

The main focus of Berkshire Hathaway's (BRK.A) (BRK.B) annual meeting is the question-and-answer segment that Warren Buffett and Charlie Munger hold, where the two men have for a number of years fielded questions from a trio of financial journalists and from shareholders themselves (via a lottery). Starting in 2012, Berkshire included in the Q&A segment a panel of three sell-side insurance analysts who cover the company's stock.

The analyst panel remains in place, but has been tweaked in subsequent years to include just one insurance analyst from the sell-side--which is Jay Gelb of Barclays this year--one generalist analyst from the buy-side--with Jonathan Brandt of Ruane, Cunniff & Goldfarb, the investment firm behind the Sequoia (SEQUX) fund, returning this year--and what was supposed to be an analyst/investor who is bearish on Berkshire. As Buffett was unable to find an "accredited bear" this year, an invitation was extended to Morningstar in its capacity as an independent research firm. We continue to favor the inclusion of the analyst panel in the Q&A segment (and not just for purely selfish reasons), as we believe that it helps to focus the discussion during the meeting on more company-specific topics.

While we reserve the right to hold some of our questions closer to the vest, as we are likely to get six to eight questions in during the Q&A segment. As we need to have a bevy of questions ready in the event that other panelists (or shareholders) touch on topics we are hoping to address, we thought we would preview some of the questions that are likely to be brought up this year.

Future Acquisitions and Investments

Acquisitions have historically been a major part of Berkshire's business and value creation, a trend that we expect to continue. Given that the company has a meaningful amount of cash on its balance sheet, which is currently generating near-zero return, we believe it is imperative that Berkshire puts capital to work in more profitable investment opportunities. Furthermore, as the firm grows ever larger, acquisitions will need to be large enough to move the needle in terms of maintaining a lower cash position overall, as well as being additive to profitability.

With the equity markets trading at/near their all-time highs (which has an impact on valuations for both publicly traded and private companies) where are you seeing the most value right now?
Do you expect to keep diversifying away from insurance, and is the trend of acquiring more cyclical businesses (like BNSF, MidAmerican, Marmon, and Lubrizol) going to continue?
Do you still prefer acquiring privately held business over public companies? Are there more or fewer private owners looking to sell their businesses now that the economy has stabilized? Are private companies large enough to move the needle for a firm as big as Berkshire?
Do you expect future acquisitions to be more like the Heinz deal, where Berkshire lent its name and capital to the transaction rather than taking the lead position from an equity perspective?
Do you expect bolt-on deals, which were meaningful in 2013, to become more prominent in the years ahead, limiting the amount of cash that works its way up to Berkshire for reinvestment?
Given the difficulties that you (or your successors) may face finding deals that not only add value but are also large enough to be meaningful, should Berkshire be broken up at some point?

Investment Portfolio, Style and Responsibilities

The investment portfolio in Berkshire's insurance operations is rather substantial, composed of $115.5 billion of equities, $42.6 billion of cash and cash equivalents, $28.8 billion of fixed-income securities, and $12.3 billion of other investments, which include the preferred stock of Wrigley, Dow Chemical (DOW), and Bank of America (BAC), as well as the warrants to purchase Bank of America's common stock. The company's investment in Heinz, which includes a 50% equity stake in the now-private firm, as well as $8 billion worth of 8% preferred stock, is accounted for on the equity method, but still remains an important investment for the firm.

Since Buffett started to transfer responsibilities for the investment portfolio over to his two lieutenants (Ted Weschler and Todd Combs) the two have gone from managing around $3 billion each in early 2012 to managing more than $7 billion each earlier this year. While this represents just 10% of Berkshire's equity portfolio, we feel that it does not reflect the contribution that both men have made to the firm in just the past couple of years--more than we had even envisioned a few short years ago. Their investment performance, from what we can tell, has also been pretty good since they came on board, and we believe that Buffett has also included the two managers in some of Berkshire's nontraditional investments lately, like the firm's dealing with Media General, as well as the partnership with 3G Capital to purchase Heinz. That said, what their full responsibilities end up being, and how much flexibility they ultimately have with the large legacy positions that Berkshire holds in names like Wells Fargo (WFC), Coca-Cola (KO), American Express (AXP), and IBM (IBM) remains to be seen.

From an individual-style perspective, we've heard that Combs is more like Munger and that Weschler is more like Buffett. Can you point to instances where this is the case, and perhaps highlight areas where your investment styles might differ?
Based on reports we've seen in the papers over the past couple of years, it looks like both Weschler and Combs have been involved in transactions at Berkshire that go beyond the scope of portfolio management. What roles to you expect the two men to fill longer-term, and how much will those responsibilities overlap with the capital-allocator-in-chief role that the next CEO is expected to fill?
As Combs' and Weschler's responsibilities continue to grow and evolve, do you foresee a time (before you retire) when they will be managing the entire insurance portfolio? Will they be allowed to touch large legacy positions like Wells Fargo, Coca-Cola, American Express, and IBM?
What inferences can we make about Berkshire's decision to abstain from the vote on Coca-Cola's controversial equity compensation plan, even though Buffett is on the record saying that the plan was excessive? Is this a sign that Berkshire will be less confrontational than it has been in the past with management teams (with the best example of this type of intervention being Buffett's push to keep Coke from buying Quaker Oats, the maker of Gatorade, back in 2000)?
How should investors think about the tax liability that is embedded in the large unrealized capital gains that currently in its stock portfolio? Should those be deducted from Berkshire’s valuation?
Berkshire has been willing to take a nontraditional approach in some of its investment decisions of late, partnering with 3G Capital to buy Heinz and swapping assets with both Phillips 66 (PSX) and Graham Holdings (GHC) in tax-advantaged deals. Should we expect more deals like this, given that the markets are trading at/near all-time highs and Berkshire's portfolio chock full of holdings with meaningful unrealized capital gains?

Excess Cash on the Balance Sheet

Berkshire's sizable cash position continues to grow through the normal course of its business, and despite making investments and funding acquisitions through the course of the past two years the firm still closed out 2012 and 2013 with more than $45 billion in cash and cash equivalents on its books. While Buffett does like to keep $20 billion on hand as a backstop for the insurance business, which we believe is prudent, the firm is still carrying more than $20 billion in excess cash, earning relatively little in an environment of historically low interest rates. If the firm cannot find a better use for the cash, we believe that Buffett should rethink his policy of retaining all of Berkshire's earnings and perhaps pay out a one-time dividend. While Buffett laid out his thinking on (as well as his opposition to) a dividend in last year's annual letter, we expect questions on his thinking during this year's meeting.

In the past, you've alluded to keeping around $20 billion in cash on hand as a backstop for the insurance business. What is the level of cash Berkshire should feel comfortable holding beyond that level? In your view, how much excess cash does the company currently have?
Is it better for investors to think about this excess cash as being allocated to potential future deals--or to use a private-equity phrase, as "dry powder"--rather than as capital that can readily be returned to investors? And, if so, what is the opportunity cost to Berkshire and its shareholders for keeping so much cash on hand?
Critics argue that with Berkshire's large cash balances earning near zero returns in a historically low interest rate environment, and the firm having trouble allocating all of its excess cash into value- enhancing deals, that the firm should return the capital to shareholders. While Berkshire does have a share repurchase program in place, the stock is nowhere near the levels that would satisfy Berkshire's repurchase criteria. Although your thoughts on dividends are fairly well known, should Berkshire reconsider its policy of retaining all of its earnings and perhaps pay a one-time dividend? Couldn't Berkshire institute a dividend in order to soak up some of the excess cash flow even if most of the cash can be used for profitable investments?
What factors went into the decision to finally repurchase shares of Berkshire Hathaway? Does this signal to investors a relative lack of alternative investment opportunities?

Succession Planning

With Buffett turning 84 later this year, and Munger passing his 90th birthday at the beginning of 2014, succession has become an increasingly important concern for long-term investors. Buffett has stated that he wants his three roles--chairman, CEO, and investment manager--to be split upon his retirement from the firm. He has previously announced that his son, Howard, would likely become nonexecutive chairman, and we gained a little more clarity into the plan for the investment side of the business when Combs and Weschler were hired, with both men taking on responsibility for managing an ever-increasing portion of the portfolio. That said, questions still remain about who will step into the CEO role, with Buffett only noting that Berkshire's board of directors has a candidate in mind to replace him as chief executive, and that this person is "an individual to whom they have had a great deal of exposure and whose managerial and human qualities they admire." Buffett has also noted that the board has "two superb back-up candidates" in mind, in the event that the first pick for the CEO role is not available.

What is the timeline for CEO succession? Will the next chief executive be named before you step down or be announced concurrently with your departure?
What characteristics should the ideal replacement CEO possess? What is the board doing to ensure that the three candidates you've mentioned in the past get the exposure they need to Berkshire's operating companies to handle the responsibilities of the job once you depart?
Will the next CEO be limited in the decisions he/she can make? Are certain actions likely to be completely off the table? Will he/she be allowed to break up the company if he/she feels it is in the best interests of shareholders?

Thoughts on the Economy and Regulation

While not economic prognosticators in the traditional sense, Buffett and Munger are typically probed for their opinion on the state of the U.S. and global economies. Following Buffett's well-publicized bullish stance on stocks and the U.S. economy during the depths of the financial crisis--including an editorial in The New York Times about "buying American," in mid-October 2008--the Oracle of Omaha has been solidly behind the long-term viability of the U.S. economy. Given where we are today, we'd like to see if his thesis has evolved. We would also note that many of Berkshire's noninsurance businesses are economically sensitive, and are exposed to a fair amount of regulation, so getting their take on key issues is always valuable.

Could you summarize your view of the current economic climate based on the results you're seeing from Berkshire's operating subsidiaries? More specifically, what are you hearing from the managers of the "Powerhouse Five"--BNSF, MidAmerican, Iscar, Lubrizol, and Marmon--that runs contrary to what we're seeing in the headlines?
Is the so-called reregulation of railroads the greatest threat to the industry, or is this just a perpetual threat to industry pricing power that investors have to learn to tolerate? How did you get comfortable with this dynamic before you invested in a U.S. railroad?
Distributed generation, a method of generating electricity on a small scale from renewable and nonrenewable energy sources, has been described as the largest threat to utilities. MEHC owns three large regulated utilities--MidAmerican, PacifiCorp, and NV Energy. Do you perceive distributed generation as a meaningful threat to the utility business model and utility moats? How will utilities need to adapt? How will MidAmerican adapt?
What is the more serious threat to long-term economic growth: inflation or deflation? Do you believe either of these states are enough of a concern in the near- to medium-term that investors should start taking action now to avoid a potential fallout down the road?
Have your expectations for inflation changed much over the past year? If so, has that change entered into your own capital allocation plans or the decision-making at Berkshire's subsidiaries?
How do you view the prospects for the domestic economy versus international markets? How does that view change when we split the discussion between developed and emerging markets?

Greggory Warren, CFA | 05-02-14 | 06:00 AM
Article from http://news.morningstar.com/articlenet

Ringgit in Longest Losing Streak Since March on U.S. Taper Bets

ridodirected@gmail.com (RIDO) — Tue, 22 Apr 2014 10:00:00 +0000

By Elffie Chew April 22, 2014
Bloomberg News

Malaysia’s ringgit dropped for a third day, its longest losing streak in a month, as improving U.S. data added to speculation the Federal Reserve will end stimulus this year.

The Bloomberg U.S. Dollar Spot Index, which tracks the greenback against 10 major counterparts, reached a two-week high before data tomorrow that economists forecast will show new home sales in the world’s largest economy rose last month. A report yesterday showed the Conference Board’s index of leading indicators posted the biggest advance in four months in March. The ringgit was the worst performer among Asia’s 11-most traded currencies today after the Indonesian rupiah.

“Recent data showed the U.S. economy is improving and that has reinforced expectations that the Fed may end its bond purchases this year,” said Wong Chee Seng, a currency strategist at AmBank Group in Kuala Lumpur. “That has also helped lift sentiment on the dollar.”

The ringgit depreciated 0.4 percent to 3.2640 per dollar as of 11:50 a.m. in Kuala Lumpur, according to data compiled by Bloomberg. It touched a two-week low of 3.2644 earlier and is headed for its longest period of losses since March 21.

One-month implied volatility, a measure of expected moves in the exchange rate used to price options, climbed 15 basis points, or 0.15 percentage point, to 6.64 percent.

Bond Risk

The Fed started to trim its bond-purchase program this year in $10 billion increments as the U.S. economy picks up. The nation’s gross domestic product will increase 2.8 percent this year, more than the 1.9 percent pace in 2013, according to April estimates from the Washington-based International Monetary Fund.

The cost of insuring Malaysian sovereign bonds fell to the lowest level since April 10. Five-year credit-default swaps retreated one basis point to 99.6 yesterday, according to data provider CMA. The contracts pay the buyer face value in exchange for the underlying securities or the cash equivalent should a borrower fail to adhere to its debt agreements.

Malaysia’s 10-year government notes were little changed, with the yield on the 4.181 percent securities maturing in July 2024 at 4.09 percent, data compiled by Bloomberg show.

To contact the reporter on this story: Elffie Chew in Kuala Lumpur at echew16@bloomberg.net

Story: Pimco's Bill Gross Picks Up the Pieces

To contact the editors responsible for this story: James Regan at jregan19@bloomberg.net Simon Harvey, Amit Prakash

3 Reasons Why You Can't Compare Collectibles To Other Investments

ridodirected@gmail.com (RIDO) — Mon, 20 May 2013 06:58:00 +0000

Kathryn Tully, Contributor
2/26/2013 @ 12:24PM
Article from http://www.forbes.com/sites/

This weekend, Teresa Levonian Cole wrote in the Financial Times about an upcoming report by real estate company Knight Frank that charts the investment performance of different luxury collectibles, such as fine art, watches, stamps, wine and classic cars, global real estate markets and other assets. The report’s findings are accompanied by an impressive FT graphic, which shows, among other things, that if you had owned classic cars in the 10 years up to the third quarter of 2012, you could have made 395%. Says Cole:

“With an astonishing growth of 395 per cent (according to the HAGI Classic Car Index), that sector has outperformed any other investment, with the single exception of gold (434 per cent).”

Cole says that high-net-worth buyers are supporting these collectibles markets, who typically invest less than 4% of their portfolios, hopefully after they’ve got their retirement covered. Nevertheless, listing the investment potential of different collectibles alongside global real estate markets, and the gold market no less, suggests that they are some sort of equivalent investment.

Here are three reasons why they are not:

1) Gold is a commodity and my gold is worth exactly the same as your gold. If an investor wants to sell gold right now, he or she can do so, at the spot price offered by an exchange. By contrast, the collectibles markets mentioned in this report are neither liquid or uniform, while some objects are unique and like no other.

So how much, for example, a 1oo-year-old ruby and diamond brooch can be sold for depends, among other things, on current tastes, its condition, its history and how many buyers are interested in that particular item, if at all. Is a collector that sells his or her estate jewelry collection today going to make anything like a 140% return over 10 years? Maybe or maybe not.

2) The collectibles indices on which this report’s results are based include a selection of data about these markets, but not all the data, mostly because these aren’t transparent markets where all the sales information is available. Instead, indices are based on the successful sales of the most coveted items among those collectibles, or even more dubiously, on the appraised value of the most expensive items in that market, which tells you nothing about realized investment gains at all. In some cases, they represent just a tiny subsection of the overall market.

Of course, plenty of bond or equity indices also track sub-sectors, but that’s a lot more useful when the information is readily available for you to compare the performance of an index with the rest of the market. In the case of many collectibles, no one knows how the whole market performs, and when you only focus on the strongest part of any market, you are likely to skew the results.

The FT article acknowledges that these statistics about collectibles ‘can easily be skewed by anomalites’, but the anomalous example given here is that the investment return on classic cars could be misleading because classic cars were particularly cheap in the 1970s, not the fact that many of these indices are based on a fraction of the transactions in that market.

3) The comparisons in this report between the markets for various collectibles and luxury residential real estate markets such as Paris, London and New York appear more meaningful on the face of it. After all, real estate is also an illiquid and pretty singular investment that can involve high transaction costs, maintenance and taxes. But real estate transactions are publicly recorded, so all the data is available here. Meanwhile, the scale of the high-end residential real estate market, like commodities, is huge compared with many of the collectibles markets listed here. Someone who is looking for investment diversification by selling his or her New York apartment, for example, is not going to be able to reinvest that cash in rare stamps.

Perhaps this last point is obvious, but put all this together and you can see why comparing niche collectibles to real estate or commodities really is astonishing, but not remotely helpful to investors.

Kathryn Tully, Contributor
2/26/2013 @ 12:24PM
Article from http://www.forbes.com/sites/

J.C. Penney analyst on Q1 earnings: 'We knew it was bad'

ridodirected@gmail.com (RIDO) — Fri, 17 May 2013 07:51:00 +0000

DBJ Confidential
Danielle Abril
Staff Writer-
Dallas Business Journal
Article from http://www.bizjournals.com/dallas/blog/
May 16, 2013, 6:14pm CDT

While there were no major surprises in J.C. Penney Co. Inc.’s first quarter earnings released May 16, analysts said there are indicators that the retailer’s financial situation could improve.

“If management can execute, there is cash to make it to the end of the year,” Morningstar Inc. analyst Paul Swinand said about the leadership team, including CEO Mike Ullman. “Hopefully the third and fourth quarters pick up.”

“They’re in a much better position than just a few weeks ago," said Rick Snyder, senior retail analyst at New York-based Maxim Group LLC.

J.C. Penney (NYSE: JCP) reported a $348 million loss in the first quarter, with sales down about 16.4 percent. Total debt was reported at $3.83 billion.

This comes after the Plano-based retailer spent $1 billion to rebrand the company under ousted CEO Ron Johnson and drew $850 million from a revolving line of credit.

“The earnings are slightly worse (than expected)," Swinand said. “But we knew it was bad.”

J.C. Penney also reported an operating cash flow of $752 million and investing cash flow of $196 million. The company’s cash and cash equivalents were reported at $821 million.

“They borrowed $850 million, and they had $821 million on the balance sheet,” Snyder said. “That’s pretty easy math. They literally ran out of cash.

“They need to turn cash flow positive very quickly,” he said, adding that it’ll be interesting to see how they handle stocking stores for back to school and the holidays.

Snyder believes the second quarter will be much more telling about the retailer’s future. Regardless of the numbers, he sees some hope.

“One thing I see is customers coming back,” said Snyder, who visits the store weekly, “but … how deeply do they have to discount to bring customers back? What is the gross margin, and how do sales taxes offset gross margin?

“This is just a fascinating case study in history.”

J.C. Penney will hold a shareholders meeting May 17.

Danielle Abril
Staff Writer-
Dallas Business Journal
Article from http://www.bizjournals.com/dallas/blog/
May 16, 2013, 6:14pm CDT

Debt fears dog solar power suppliers

ridodirected@gmail.com (RIDO) — Wed, 15 May 2013 07:20:00 +0000

Renewable energy companies must repay US$3.5 billion this year, giving investors worries about another default in the sector

Wednesday, 15 May, 2013 [Updated: 05:58]
Article from http://www.scmp.com/business/companies/article/

Renewable energy companies from the mainland and Hong Kong need to repay US$3.5 billion of debt this year, prompting global investors to fret that another issuer will follow Suntech Power into default.

Solar, wind, hydro and nuclear companies also have the equivalent of US$5.3 billion of notes due next year. The 2014 yuan bonds of LDK Solar, which failed to fully repay US$23.8 million of convertible notes last month, slid to a seven-month low of 34 yuan (HK$43) per 100 yuan face value this week, pushing the yield to 220 per cent.

The debt pile includes US$766.5 million of dollar-denominated convertible bonds in solar companies whose shares have slumped 88 per cent from their 2007 high, making the equity option unattractive for investors.

Suntech, once the world's biggest solar panel maker, defaulted on a US$541 million equity-linked bond in March, while LDK Solar must settle a US$240 million loan unless it spins off a subsidiary by June 3, filings show.

Bryan Collins, a fixed-income portfolio manager at Fidelity Worldwide Investment, said: "For the solar companies, it's a function of too much debt and poor market dynamics leading to an inability to refinance.

For the more experienced and conservative companies, they will refinance well in advance but, for convertible bonds especially, I think they issue on the hope some will be converted to equity

"For the more experienced and conservative companies, they will refinance well in advance but, for convertible bonds especially, I think they issue on the hope some will be converted to equity."

While shares of the biggest solar companies have rallied 43 per cent this year as near-zero interest rates in the United States, Europe and Japan burnish the appeal of riskier assets, they plunged for four of the past five years.

Suntech's stock has slid to 63 US cents from a high of US$47.81 in August 2008 after the bonds were sold. The Chinese solar issuers with dollar convertibles maturing this year all booked losses last year or are expected to have done so.

JA Solar's shares have fallen 95 per cent since the company sold its notes in 2008, while China Sunergy slid 93 per cent and Trina Solar lost 58 per cent of its value.

JA Solar, whose convertible bonds mature today, is prepared to repay the debt, its chief operating officer Xie Jian has said. The company had 3.03 billion yuan of cash and cash-equivalent assets at the end of last year.

China Sunergy had US$183 million of cash or near cash assets as of December 31 last year, and is slated to repay US$1.5 million of convertible debt on June 15.

The company's bonds were quoted at 71.9 cents on the dollar as of May 13, according to BCP Securities.

Trina Solar, based in Changzhou, owes US$83.6 million and had US$807 million in cash at the end of last year. Its chief financial officer, Terry Wang, said this week that it, too, would tap its cash pile to pay off the debt.

This article first appeared in the South China Morning Post print edition on May 15, 2013 as Debt fears dog solar power suppliers

Wednesday, 15 May, 2013 [Updated: 05:58]
Article from http://www.scmp.com/business/companies/article/

The Experts: Should You Keep Cash in Your Portfolio?

ridodirected@gmail.com (RIDO) — Mon, 13 May 2013 07:56:00 +0000

May 9, 2013, 12:20 p.m. ET
Article from http://online.wsj.com/article/SB10001424127887324744104578471740280677464.html

Besides keeping some in an emergency fund, should the average investor have an allocation to cash and cash equivalents in an investment portfolio? The Wall Street Journal put this question to The Experts, an exclusive group of industry and thought leaders who engage in in-depth online discussions of topics from the print Report. This question relates to a recent article that discussed the merits of keeping cash in a stock fund's portfolio and formed the basis of a discussion in The Experts stream on Wednesday, May 8.

The Experts will discuss topics raised in this month's Wealth Management Report and other Wall Street Journal Reports. Find the finance Experts online at WSJ.com/WealthReport.

Also be sure to watch three wealth-management thought leaders—Morningstar's Director of Personal Finance Christine Benz (@Christine_Benz), American Association of Individual Investors Vice President Charles Rotblut (@CharlesRotblut) and Portfolio Solutions Founder Rick Ferri (@Rick_Ferri)—speak about succeeding as a do-it-yourself investor in a video chat that aired on Monday, May 6.

Michelle Perry Higgins: In a Word, Absolutely.

In my opinion, absolutely. My rule of thumb for investors is that if you think you may need the funds within the next three years, then those dollars should probably be left in cash or cash equivalents. For example, if you plan to tap into your portfolio within the next few years for a home purchase, college or income needs, my advice would be to keep the funds in cash and call it a day. You can't afford to risk losing money in the stock or bond market with dollars you might actually need to have in hand within a few years. The stock market is notoriously good at tempting you to move out of cash and up the risk curve.

Michelle Perry Higgins (@RetirementMPH) is a financial planner and principal at California Financial Advisors.

Matt Hougan: In a Word, No.

No. Put your money to work.

Matt Hougan (@Matt_Hougan) is president of ETF analytics and global head of editorial for IndexUniverse LLC.

Tom Brakke: Cash Lets You Respond to Opportunities

For investors who take a fully passive approach, it's probably not necessary. I think everyone else should have higher levels of cash today than they generally do.

That may seem counterintuitive given the low rates on cash, but cash provides flexibility during times when markets come under pressure. Being fully invested sounds great, but it prevents you from responding to opportunities.

Central banks around the world have driven the returns on cash to zero, and have caused distortions in the prices of more volatile assets. No one knows whether those policies will lead to nirvana or catastrophe, although we will undoubtedly end up somewhere in between those extremes. Sacrificing a little upside by holding extra cash right now is a good trade for having a cushion if this grand experiment goes awry.

(If you want to read a longer article on this topic, check out "Cash as Trash, Cash as King, and Cash as a Weapon," from the CFA Institute.)

Tom Brakke (@researchpuzzler) is a consultant, writer and investment adviser who specializes in the analysis of investment decision making and the communication of investment ideas.Rick Ferri: Cash Doesn't Earn a Thing

Cash isn't a good investment because after taxes and inflation, it doesn't earn anything. Today, it's actually a bad investment because inflation is higher than the return on cash.

Cash outside an emergency fund is useful if you have a large liability coming up. For example, your high-school senior is heading off to college and you're footing the bill. Personally, I'm stashing cash this year to pay higher taxes next April.

The only other reason to hold cash is if you're trying to time the markets. Good luck with that. I don't do it, which is one reason I have enough money to pay my taxes.

Rick Ferri is founder of Portfolio Solutions LLC and the author of six books on low-cost index fund and ETF investing. His blog is RickFerri.com.

Rafael Pardo: Liquidity Will Keep You From Robbing Peter to Pay Paul

Yes. As its name suggests, your emergency fund is intended (and should only be used) for emergencies, such as covering living expenses after the loss of a job. Once you deviate from this principle and begin raiding your emergency fund for nonemergency purposes (robbing Peter to pay Paul, as it were), you could find yourself in a heap of trouble. For example, an unforeseen investment opportunity is not an emergency, and yet that opportunity may be too good to pass up. To avoid the dilemma of foregoing the opportunity (and thus missing out on a potential gain) or seizing it (and thus potentially and irreversibly depleting your emergency fund), an allocation to cash in your investment portfolio will give you the liquidity to avail yourself of such an opportunity. And in doing so, you won't compromise the cushion you have built with your emergency fund to safeguard against unforeseen contingencies.

Rafael Pardo is the Robert T. Thompson professor of law at Emory University, where he specializes in bankruptcy and commercial law.

George Papadopoulos: You Need Some Cash for When Opportunity Knocks

I always like to have some cash lying around to take advantage of opportunities that may arise suddenly. Market corrections will always occur; you just never know when. With dividends and capital-gain distributions taken in cash and new cash added to portfolios, we find there is usually at least 5% sitting in cash. This cash came in handy in late 2008, of course. It is always easier to rebalance portfolios when you have available cash as it reduces or eliminates your need to sell a position, which increases transactions costs. The last thing we will do is make market timing calls and "go to all cash."

George Papadopoulos (@feeonlyplanner) is a fee-only wealth manager in Novi, Mich., serving affluent individuals and families.

Sheryl Garrett: Don't Think of Cash as an Investment

Put cash in your saving account and investments in your portfolio. The only cash that you may need in your investment portfolio is money to fund distributions, to enable you to take advantage of opportunities, or maybe you've simply met your objective or it's matured and you're awaiting reinvestment. Otherwise, cash is not an investment, and should not be included in your investment portfolio.

Sheryl Garrett (@SherylGarrett) is founder of the Garrett Planning Network Inc.

Greg McBride: Cash Becomes More Important With Age

An allocation to cash makes sense for many investors, regardless of age, as a way to diversify your portfolio, but is increasingly important as investors get closer to retirement. Particularly now, investors may opt for a little more cash at the expense of fixed income, given the nosebleed valuations in government bonds. Even for ultra-aggressive investors, a modest cash allocation gives you some investing ammunition when short-term market volatility reveals attractive bargains.

Greg McBride (@BankrateGreg) is a senior financial analyst and vice president for Bankrate.com, providing analysis and advice on personal finance.

Manisha Thakor: Keep Cash If You'll Use It Within the Next Seven Years

Whether or not you should be holding cash depends upon how you define your "investment portfolio." My personal rule of thumb is that money you know with certainty that you'll need to spend in the next seven years should not be invested in stocks or bonds. Rather it should be parked for safe keeping in cash equivalents (money-market funds, CDs, T-bills, etc.). The reason is that this frees you up to take full advantage of the risk/reward characteristics inherent in equity investing. In plain English, you can swing a little harder because you know you have a cash safety net. So if your definition of your "investment portfolio" is the sum total of funds that you have at your disposal to save and invest, then yes, there absolutely is a place. I also think cash is a fine parking place while you are trying to decide what you want to do, as rushed decisions can easily backfire.

However, if by contrast you are referring to your IRA or your 401(k) as your investment portfolio and you are not within seven years of planning to take distributions, then I prefer to see portfolios fully invested. The way I would temper the inevitable volatility that comes with investing is to take my "risk" on the equity side and using high quality municipals or treasurys (not corporates) on the fixed income side as a buffer. The idea of keeping some "cash on the sidelines" to put to work when opportunities arise to me sounds an awful lot like market timing—something that I view as strikingly close to gambling given it's long statistical history of failure.

Manisha Thakor (@ManishaThakor) is founder and chief executive of Santa Fe, N.M.-based MoneyZen Wealth Management LLC.

Larry Zimpleman: Leave Your Allocation at 5% or Less

Unless you are a very conservative investor, I would keep the allocation to cash and cash equivalents to a modest amount—say roughly 5% or less. The primary reason for keeping a cash allocation would be to try to move into and out of the market (i.e. market timing). Studies show consistently that market timing is rarely, if ever, successful. The best approach is to set a long-term asset allocation strategy and stay true to that (unless either your time frame for drawing on the assets changes or your tolerance for risk changes).

Larry D. Zimpleman is chairman, president and chief executive of Principal Financial Group.

Eleanor Blayney: Why and Where You Should Keep Cash

Yes and no. As we CFP professionals love to say, "It depends."

It depends on why and where you are holding this nonemergency cash. It also depends on what else you may be holding—namely, debt.

Take the "why" first. Many of us have short-term financial goals, like saving for a significant vacation in three years, or putting a deposit on a home in the next two years. These kinds of goals—assuming a time frame of five years or less—are suitably held in cash or equivalents in an account separate from emergency money. Keep the two separate so that you can be religious about never tapping the emergency fund except for bona fide, "oh-crap" emergencies. If you mingle the short-term money with the emergency money, before you know it you'll be raiding the emergency fund for things like new furniture or that pesky annual insurance premium you forgot to budget into this month's cash flow.

Now for the "where." It makes little sense to hold cash or cash equivalents in your qualified retirement portfolio, assuming you are not close to retirement or in the withdrawal stage. The primary reason to hold cash is for its liquidity. When you know you're going to need X-dollars in the near future, you want to be invested in something certain to be nominally worth X dollars at that time. Cash in a qualified retirement account loses all the benefits of its liquidity when you cannot withdraw it without paying a penalty.

Finally, consider your liabilities. It rarely makes sense to hold cash at today's negligible interest rates, when you have debt at rates that are more than 2% or 3% of what the cash is earning. If the cash is not needed in the short term (see "why" above), then the smarter investment move is to pay down or off the higher rate debt.

Eleanor Blayney (@EleanorBlayney) is consumer advocate of the Certified Financial Planner Board of Standards.

Charles Rotblut: Think About Your Time Frame

The answer depends on when you intend to spend the cash. If you have a big purchase (e.g. a house, a car, college tuition, etc.) within the next few years, then holding cash or a cash equivalent makes sense. It can also make sense for retirees to hold a few years of anticipated withdrawals in cash to fund withdrawals.

Money not needed for the long term should be allocated to a mixture of stocks and bonds. If a security or fund is sold and you are hoping to reinvest the proceeds at lower prices, set a deadline for doing so. For example, if you think stock prices will dip over the summer, set a deadline to invest the cash no later than Aug. 31. This gives you some flexibility, but will prevent you from staying in cash too long.

Charles Rotblut (@charlesrotblut) is a vice president with the American Association of Individual Investors.

Terrance Odean: How's Your Tolerance for Risk?

Besides the emergency fund, most investors should not hold a large portion of their investment portfolio in cash for liquidity purposes. Investors with higher risk aversion or shorter investment horizons may want to hold a portion of their portfolio in low-risk or risk-free assets (e.g., T-bills).

Terrance Odean is the Rudd Family Foundation professor and chair of the finance group at the Haas School of Business at the University of California, Berkeley.

May 9, 2013, 12:20 p.m. ET
Article from http://online.wsj.com/article/SB10001424127887324744104578471740280677464.html

The One Safe Investment and Why You Never Hear About It

ridodirected@gmail.com (RIDO) — Sat, 11 May 2013 06:22:00 +0000

BY: ZVI BODIE
Making Sense -- May 10, 2013 at 4:40 PM EDT
Article from http://www.pbs.org/newshour/rundown/2013/05/the-one-safe-investment-and-why-you-never-hear-about-it-from-financial-advisors.html

Economist Zvi Bodie, perhaps the country's foremost expert on pension finance, insists that every American at least consider an investment that financial advisors almost never mention.

Photo by Peter Gridley/Getty Images.

A note from Paul Solman: Zvi Bodie has influenced my thinking about financial economics for 20 years. He has also been my trusted -- and extremely wise -- financial advisor for most of that time. And we have featured him often in stories about America's pension crisis on PBS NewsHour: corporate pension sleight-of-hand and public pension mismanagement, though my favorite Bodie appearance came when he helped us explain the housing Crash of '08, many months before the eventual Lehman collapse.

I regularly beseech Zvi to contribute to this page. Occasionally, he deigns to do so. Today is one of those occasions.

Zvi Bodie: Recently, Paul Sullivan wrote in his Wealth Matters column about financial advisors' increasing interest in technology. He raises two questions about expanded use of technology: Will it help advisers do their job better? And will it be better for clients or confuse and frustrate them? A friend asked me how I would answer those questions. I thought Making Sense readers might be interested too.

Remember the old saw about computer forecasting models? GIGO -- Garbage In, Garbage Out. Technology can make good advice more accessible and less costly, but it cannot turn bad advice into good advice. If the technology is designed to pitch some investment service that is not in the best interest of clients, employing sophisticated technology and interactive software will only serve to deceive the client more efficiently. Fancy software is not a substitute for trustworthiness and good science.

Let me give an example to make clear what I mean. As many of you know if you've read earlier posts of mine on I Bonds or how to pick a financial advisor, I recommend that for people concerned about preserving the purchasing power of their savings, an investment program should start with the purchase of US Treasury Series I Savings Bonds, of which you can purchase up to $10,000 per year per person.

To quote the Treasury Department's write-up online, which I urge everyone to read in full:

"You can cash them in after one year. But if you cash them in before five years, you lose the last three months of interest. (If you cash in an I Bond after 18 months, you get the first 15 months of interest.)"

I Bonds provide the ultimate in long-run liquid financial security to residents of the U.S. An investor in these bonds cannot lose any money or any purchasing power for up to 30 years, despite either inflation or deflation. They provide a return at least equal to the rate of inflation and, often, have paid a "premium" of interest above and beyond inflation.

At the moment, because of historically low interest rates, that premium is zero, but it is reset every six months. If, in September (or the following March or a year from September, etc.), new I Bonds do offer a premium, you can sell the current ones and use the money to buy the new ones. The U.S. Treasury started issuing I Bonds in 1998, and over the intervening 15 years technological improvements have made it easier than ever for people of modest means to purchase them online through TreasuryDirect.gov and keep track of their increasing value, a value that by the terms of the bonds keeps pace with inflation.

You might wonder why a bond that pays, at the moment, only the rate of inflation, is a good investment. The answer is simple. Compare it to an equivalent investment, issued by the very same U.S. Treasury, that is not inflation-protected. The equivalent would be a six-month Treasury "bill." It is paying less than 1/100th of a percent at the moment. Since inflation is running at 1.8 percent right now and an I Bond automatically pays you the inflation rate, the I Bond would seem to be rather obviously the debt instrument of choice.

Yet despite their clear value as a safe and liquid anchor for any investment portfolio, few clients of investment advisors even know of the existence of I Bonds. Bona fide advisors who are truly fiduciaries serving the best interest of their clients would inform them about I Bonds, direct them to the U.S. Treasury's TreasuryDirect.gov website, and assist them in setting up accounts for themselves and their children. To the best of my knowledge, no major investment advisory firm in the U.S. does this.

When the chief financial officer of a West Coast nonprofit followed my counsel on this page (see "How to Find a Financial Advisor, Step by Step") he asked the several financial advisors he auditioned if I Bonds were part of their advice. He told Paul Solman that not one of the advisors said they were. That is not a function of their mastery -- or lack of mastery -- of technology. It can only be explained in terms of self-interest or ignorance. There is no profit margin in advising clients to purchase I Bonds. And of course, if you don't know about them, how can you suggest them?

Instead of practicing prudence, however, investment advisors tend to deploy the latest innovations in digital technology to promote the products of those with an even greater incentive to steer you wrong -- members of the financial services industry. That industry specializes in pushing the product with the highest profit margin, stocks. The content of financial services materials is often deceptive and in some cases flatly contradicts what financial economists recommend as sound.

As I have shown repeatedly on this website and Making Sense broadcasts, no matter how broadly diversified a portfolio of stocks, conventional bonds, and cash may be, it cannot offer the protection afforded by I Bonds. The proposition that the risk of stocks diminishes with the length of one's time horizon is a fallacy, as is the notion that stocks are a hedge against the risk of inflation. I figure it's about time for every American to be told -- or in the case of the Making Sense audience, told again -- about I Bonds.

Zvi Bodie appeared in this 2011 story on assumptions used for public pension funds.

Zvi Bodie is a professor of management at Boston University. His books include "The Future of Life Cycle Saving" and "Investing and Foundations of Pension Finance." For more, see his website. Zvi's videos are on his YouTube Channel.

This entry is cross-posted on the Rundown- NewsHour's blog of news and insight.

ZVI BODIE

Making Sense -- May 10, 2013 at 4:40 PM EDT

Article from http://www.pbs.org/newshour/rundown/2013/05/the-one-safe-investment-and-why-you-never-hear-about-it-from-financial-advisors.html

Edward Jones column: Investors can learn from swimmers' diets

ridodirected@gmail.com (RIDO) — Thu, 09 May 2013 06:14:00 +0000

Published: May 8, 2013 9:04 PM
From: http://www.stevenspointjournal.com/article/

Summer isn’t here yet, but it’s getting close. And for many people, the arrival of summer means it’s time for swimming at the local pool or lake. If you’re just a casual swimmer, you probably don’t have to adjust your diet before jumping in. But that’s not the case with competitive swimmers, who must constantly watch what they eat and drink, particularly in the days and hours preceding their races. While you might not ever have to concern yourself with your 400-meter individual medley “splits,” you can learn a lot from swimmers’ consumption patterns — particularly if you’re an investor.

For starters, to sustain energy and stamina for a relatively long period of time, competitive swimmers need to eat easy-to-digest carbohydrates such as whole wheat, whole grains, apples and bananas. When you invest, you want to build a portfolio that is capable of “going the distance.” Consequently, you need investments that provide carbohydrate-type benefits — in other words, investments with the potential to fuel a long-term investment strategy. Such a strategy usually involves owning a mix of high-quality stocks, bonds, government securities and certificates of deposit. By owning these vehicles, in proportions appropriate for your risk tolerance and time horizon, you can help yourself make progress toward your financial goals — and lessen the risk of running out of energy “mid-stream.”

Of course, competitive swimmers have to be diligent not just in what they do eat but also in what they don’t. That’s why they avoid sweets, such as sodas and desserts, when it’s close to race time. These items do not provide lasting energy — in fact, they actually sap energy once the sugar wears off. As an investor, you, too, need to avoid the temptation of “sweets” in the form of high-yield or “hot” investment vehicles. You might find some of these investments to be alluring, but you will need to carefully weigh the extra risks involved. For many people, these types of investments might not provide the long-term stability needed to help maintain a healthy, productive investment portfolio.

While what swimmers eat, or don’t eat, is important to them, their drinking habits are also crucial. The competitive environment — warm pool water, high air temperatures and high humidity — can quickly lead to dehydration, so swimmers need to drink sizable amounts of water and sports drinks before and during practice. And you, as an investor, need your own type of liquidity, for at least two reasons. First, you need enough cash or cash equivalents to take advantage of new investment opportunities as they arise; without the ability to add new investments, your portfolio could start to “dehydrate.” Second, you need enough liquid investments — specifically, low-risk vehicles that offer preservation of principal — to create an emergency fund, ideally containing six to 12 months’ worth of living expenses. Without such a fund, you might be forced to dip into long-term investments to pay for unexpected costs, such as a major car repair, a new furnace or a large bill from the dentist.

So the next time you see competitive swimmers churning through their lanes, give a thought as to the type of diet that is helping propel them along — and think of the similarities to the type of “fueling” you’ll need to keep your investment strategy moving forward.

This article was written by Edward Jones for use by your local Edward Jones financial adviser. Glenn Helminiak of Edward Jones Investments can be reached at 715-344-0337, or visit his office at 2817 Post Road, Suite A, Whiting.

Published: May 8, 2013 9:04 PM
From: http://www.stevenspointjournal.com/article/

TCS, Infosys, Wipro & HCL Tech build $8 billion cash chest

ridodirected@gmail.com (RIDO) — Tue, 07 May 2013 06:02:00 +0000

PTI Apr 21, 2013, 02.08PM IST
From http://articles.economictimes.indiatimes.com/

NEW DELHI: The country's four top IT firms -- TCS, Infosys, Wipro and HCL Technologies -- have seen their combined cash chest swell to a whopping $ 8 billion (Rs 43,200 crore), even as the overall business trends remain sluggish for the entire sector.

While TCS and HCL Tech managed to post strong financial numbers for the quarter ended March 31, 2013, the results were mostly disappointing from Infosys and Wipro.

However, all the four companies have maintained a strong cash balance as on March 31, 2013.

Tata group's IT arm, N Chandrasekaran-led TCS ( Tata Consultancy Services) closed the latest fiscal with total cash and cash equivalents of USD 1.24 billion with an increase of USD 100 million during the year ended March 31, 2013.

Its closest rival, S D Shibulal-led Infosys also saw its cash balance soar by $300 million to a humongous $4.34 billion at the end of fiscal year 2012-13.

Azim Premji-led Wipro, which posted slowest sequential growth in revenues in the quarter ended March 31 among the four companies, also managed to end the fiscal with cash and cash equivalents of $1.56 billion.

HCL Technologies, the country's fourth largest IT firm, ended January-March quarter with cash and cash equivalents, (including deposits) of $762 million, a sharp rise from $398 million at the end of March, 2012.

TCS has posted annual revenue of more than Rs 50,000 crore for 2012-13, as against about Rs 39,000 crore of Infosys and Wipro's Rs 34,500 crore.

HCL Tech follows a financial year of July-June and its total income in the last fiscal ended July 30, 2012 stood at about Rs 9,000 crore. In the quarter ended March 31, 2013 -- the third quarter of the current fiscal 2012-13, it posted total income of over Rs 3,000 crore.

PTI Apr 21, 2013, 02.08PM IST

From http://articles.economictimes.indiatimes.com/

The Best Portfolio Balance

ridodirected@gmail.com (RIDO) — Thu, 12 Apr 2012 17:25:00 +0000

Greg McFarlane, provided by

Wednesday, April 11, 2012

Article from San Francisco Chronicle

There isn't one. Wasn't that easy?

In the same manner, there isn't one diet that fits everyone. Depending on your body fat makeup and what you're trying to accomplish (increasing endurance, building muscle, losing weight), the proportions of protein, fat and carbohydrates you should consume can vary widely.

Balancing Act

Thus it goes for balancing your portfolio. A former client of mine once stated that her overriding investment objective was to "maximize my return, while minimizing my risk." The holy grail of investing. She could have said "I want to make good investments" and it would have been just as helpful. As long as humans continue to vary in age, income, net worth, desire to build wealth, propensity to spend, aversion to risk, number of children, hometown with its concomitant cost of living and a million other variables, there'll never be a blanket optimal portfolio balance for everyone.

That being said, there are trends and generalities germane to people in particular life situations; many investors don't balance in anything approaching the right mix. Seniors who invest like 20-somethings ought to, and parents who invest like singles should, are everywhere, and they're cheating themselves out of untold returns every year.

Fortune Favors the Bold

If you recently graduated college - and was able to do so without incurring significant debt - congratulations. The prudence that got you this far should propel you even further. (If you did incur debt, then depending on the interest rate you're being charged, your priority should be to pay it off as quickly as possible, regardless of any short-term pain.) But if you're ever going to invest aggressively, this is the time to do it. Yes, inclusive index funds are the ultimate safe stock investment, and attractive to someone who fears losing everything. (The S&P 500's minimal returns over the last 13 years is a testament to its "safety.") Still, why not incorporate a little more unpredictability into your investments, in the hopes of building your portfolio faster?

So you put it all in OfficeMax stock last January, and lost three-quarters of it by the end of the year. So what? How much were you planning on amassing at this age anyway, and what better time to dust yourself off and start again than now? It's hard to overemphasize how important is to have time on your side. As a general rule of life, you're going to make mistakes, and serendipity is going to smile on you once in a while. Better to get the mistakes out of the way early if need be, and give yourself a potential cushion. "Fortune favors the bold" isn't just an empty saying, it's got legitimate meaning.

Retirement Years

Fortune doesn't favor the reckless, however. If you're past retirement age and think that going long on mining penny stocks on the TSX Venture Exchange will make you wealthy beyond measure, well, hopefully at least one of your children has a comfortable couch for you to sleep on.

Start with the three traditional classes of securities - in decreasing order of risk (and of potential return), that's stocks, bonds and cash. (If you're thinking about investing in esoteric like credit default swaps and rainbow options, you're welcome to sit in on the advanced class.) The traditional rule of thumb, and it's an overly simple and outdated one, is that your age in years should equal the percentage of your portfolio invested in bonds and cash combined. (Which is why George Beverly Shea has -3% of his portfolio in stocks.)

It's unlikely that there is someone on the planet who celebrates his birthday every year by going to his investment advisor and saying, "Please move 1% of my portfolio from stocks to bonds and cash." Besides, life expectancy has increased since that axiom first got popular, and now the received wisdom is to add 15 to your age before allocating the appropriate portion of your portfolio to stocks and bonds.

That the rule has changed over the years should give you an idea of its value. The logic goes that the more life you have ahead of you, the more of your money should be held in stocks (with their greater potential for growth than bonds and cash have.) What this neglects to mention is that the more wealth you have, irrespective of age, the more conservative you can afford to be. The inevitable corollary might be less obvious, and more dissonant to cautious ears, but it goes like this: the less wealth you have, the more aggressive you need to be.

The Bottom Line

Investing isn't a hard science like chemistry, where the same experiment under the same conditions leads to the same result every time. Investing's most exciting chapters are still being written, and the one that states that there are exactly three possible portfolio components needs to be put through the shredder. Real estate is neither stock, bond nor cash equivalent, and the same goes for precious metals. The former can increase your wealth rapidly with sufficient leverage, and the latter can maintain your wealth regardless of whether inflation or deflation besets the underlying currency that you conduct transactions in. As for the best portfolio balance, it's the one that fits the criteria you determine, but only when you assess your unique situation and regard your capacity for risk and reward with the utmost frankness.

Article from San Francisco Chronicle

Be aware of potential Fed policy issues

ridodirected@gmail.com (RIDO) — Tue, 10 Apr 2012 21:06:00 +0000

11:00 PM, Apr. 7, 2012

Article from Daily World

On March 26, Ben Bernanke, Federal Reserve chairman, reaffirmed the Fed's desire to continue to keep interest rates low for the foreseeable future.

Annual price inflation is currently about 3 percent and 90-day Treasury Bills yielding about 0.10 percent, it appears investors will continue to confront negative real returns on cash equivalent investments for some time.

The Fed has a dual mandate: maximum employment and price stability.

Based on recent actions, the Fed has clearly chosen to pursue maximum employment at the expense of investors who rely on cash and cash equivalent assets: Treasury Bills, CDs and money market accounts.

Sarah Raskin, who serves on the Fed's board of governors recently said in a speech that —» Instead, the bulk of household wealth is held in stocks, retirement accounts, business equity and real estate" and that "for these other types of assets, rates of return depend primarily on the strength of the economy and how fast the economy is growing.

Thus, these returns should be supported, over time, by the accommodative monetary policy that we have in place."

To put the quote in context, she said in the speech that less than seven percent of household assets were in short-term instruments.

To translate her quote, "Don't worry, buy stocks." It appears Ms. Raskin is not very concerned that stocks, business equity, and real estate are much riskier than cash equivalents.

It is true that these assets have provided rates of return that have outpaced inflation over time; however, they have done so with more volatility.

In essence, the Fed is trying to encourage (force) savers to speculate with their savings.

Economic research shows that 15 percent annual price inflation is not unlikely by 2014, depending on monetary velocity and future Fed policy.

Therefore, as bad as low interest rates are for savers, it could get worse.

Current Fed policies have left investors with a trade-off — accept negative real returns on cash equivalent securities or take a chance by increasing portfolio allocation toward stocks.

It is prudent to have domestic stocks, foreign stocks, real estate, and gold (riskier assets) in one's portfolio.

However, these more volatile asset classes should be offset with short-term bonds and other cash equivalents, which are intended to provide a hedge against short-term price inflation.

Investor's best defense against price inflation remains a portfolio allocated across various asset classes according to needs, risk tolerance, and investment horizon.

One should be careful to reach for yield by overweighting high yielding stocks or below-investment-grade bonds.

Craig C. Le Bouef, MBA, CPA/PFS, CFP, Shareholder of Going, Sebastien, Fisher, & Le Bouef, LLP, Certified Public Accountants, Registered Investment Advisors, and Consultants, 2811 South Union, Opelousas, LA. Website: www.goingcpa.com. E-mail: craig@goingcpa.com

Article from Daily World

Eurasian Minerals Announces Agreement to Sell the Sisorta JV Gold Property in Turkey for Gold Bullion and a Royalty Interest

ridodirected@gmail.com (RIDO) — Sat, 07 Apr 2012 07:42:00 +0000

April 03, 2012 14:32 ET

Article from Market Wire

VANCOUVER, BRITISH COLUMBIA--(Marketwire - April 3, 2012) - Eurasian Minerals Inc. (TSX VENTURE:EMX)(NYSE Amex:EMXX) (the "Company" or "EMX") is pleased to announce the execution of an Option Agreement (the "Agreement") with respect to the Sisorta gold property located in north-central Turkey. The Option Agreement is between EBX Madencilik A.Ş. ("EBX Turkey"), a Turkish corporation that controls the Sisorta property pursuant to a joint venture between its owners ("Sellers," described below), and Çolakoğlu Ticari Yatirim A.Ş. ("Çolakoğlu"), a privately owned Turkish company. EBX Turkey is a joint venture owned 51% by a subsidiary of ASX listed Chesser Resources Limited ("Chesser") and 49% by a subsidiary of EMX, and they are the "Sellers" under the Agreement. The obligations of EBX Turkey and the "Sellers" under the Agreement will be guaranteed by Chesser and EMX.

The Sisorta JV project, located in the Eastern Pontides mineral belt, is a volcanic-hosted, near-surface, epithermal gold deposit with a NI 43-101 mineral resource at a 0.4 g/t cutoff of 91,000 indicated gold ounces from 3,170,000 tonnes averaging 0.89 g/t, and 212,000 inferred gold ounces from 11,380,000 tonnes averaging 0.58 g/t (please see Company news release dated June 16, 2009). Near-surface, oxide mineralization represents 76% of the indicated gold ounces, and 73% of the inferred gold ounces, thereby establishing the property's potential for a small scale, open pit mining operation.

The Agreement requires Çolakoğlu to make an up-front payment of 100 troy ounces of gold bullion, or its cash equivalent, and to undertake a US $500,000 work commitment over the first year. After the first year, Çolakoğlu can exercise an option to purchase the property for an additional 7,900 troy ounces of gold, or its cash equivalent, with the payments binding on exercise of the option, but staged over a period of four years after option exercise. In addition to the gold payments that will total 8,000 troy ounces, the Sellers will also receive a 2.5% Net Smelter Return (NSR) royalty for any production from the property.

Overview of Commercial Terms. Upon Çolakoğlu's execution of the Agreement and initial payment of 100 troy ounces of gold bullion or its cash equivalent, the Sellers shall grant Çolakoğlu an option to purchase all of the Seller's shares in EBX Turkey. Çolakoğlu has the right to exercise its option during a 60-day period after the first anniversary of the Agreement subject to the following terms: 1) spend US $500,000 in exploration work on the property within the option year, 2) deliver notice that it will exercise the option to purchase the shares, and 3) deliver 900 troy ounces of gold bullion, or its cash equivalent, to the Sellers. Once the option is exercised, and in consideration for the shares in EBX Turkey, Çolakoğlu will:

Grant to the Sellers a 2.5% NSR royalty from the Sisorta property;

Agree to reconvey the shares in EBX Turkey or the Tenement to Sellers or their designees if Çolakoğlu decides to abandon the Sisorta property; and

On the first through third anniversaries of option completion, make guaranteed payments to the Sellers of 1,500 troy ounces of gold bullion, or its cash equivalent, and on the fourth anniversary guarantee the delivery of 2,500 troy ounces of gold bullion, or its cash equivalent.

In summary, after Çolakoğlu has fulfilled all of the option agreement obligations to acquire the Sisorta property, it will have paid 8,000 troy ounces of gold bullion, or the cash equivalent, timed over a period of five years. Further, Çolakoğlu shall pay EBX Turkey a 2.5% NSR royalty from any production on the property. EMX's share of this will comprise 3,920 troy ounces of gold bullion and a 1.225% NSR Royalty.

EMX and the Prospect Generation Business Model. The Sisorta property is an excellent example of EMX's execution of the prospect generation business model. EMX's in-country exploration expertise in Turkey allowed the identification and timely acquisition of Sisorta in early 2004. Later in 2004, EMX entered into a joint venture with Barrick Gold Corporation ("Barrick") that included cash payments and exploration expenditures that added value to the Sisorta project. Barrick exited the joint venture prior to earning-in, and subsequently a "Farm-In Agreement" was executed with Chesser in October, 2007. Chesser earned a 51% property interest in 2009 by spending US $4 million, paying EMX a total of US $400,000, and issuing 3 million Chesser shares to EMX. Chesser's exploration expenditures advanced the project through drill delineation of the NI 43-101 resource, and set the stage for the deal with Çolakoğlu. The Çolakoğlu Agreement is structured to develop further value with the initial in-ground spending requirements, and to provide an on-going revenue stream denominated in terms of gold ounces over the next five years, as well as providing an organically generated royalty asset to the benefit of EMX.

About Eurasian Minerals Inc. Eurasian Minerals is a global gold and copper exploration company utilizing a partnership business model to explore the world's most promising and underexplored mineral belts. EMX currently has projects in ten countries on four continents, and generates wealth via grassroots prospect generation, strategic acquisition, royalty growth and merchant banking.

Dr. Mesut Soylu, P.Geo., a Qualified Person as defined by National Instrument 43-101 and consultant to the Company, has reviewed and verified the technical information contained in this news release.

Forward-Looking Statement

Some of the statements in this news release contain forward-looking information that involves inherent risk and uncertainty affecting the business of Eurasian Minerals Inc. Actual results may differ materially from those currently anticipated in such statements.

The NYSE Amex, TSX Venture Exchange and the Investment Industry Regulatory Organization of Canada do not accept responsibility for the adequacy or accuracy of this release.

Contact Information

Eurasian Minerals Inc.

David M. Cole

President and Chief Executive Officer

(303) 979-6666

dave@eurasianminerals.com

www.eurasianminerals.com

Eurasian Minerals Inc.

Valerie Barlow

Corporate Secretary

(604) 688-6390

(604) 688-1157 (FAX)

valerie@eurasianminerals.com

Article from Market Wire

2nd UPDATE: Devon: No Interest In Acquisitions, Despite Abundant Cash

ridodirected@gmail.com (RIDO) — Wed, 04 Apr 2012 21:00:00 +0000

April 4, 2012, 2:54 p.m. ET

Article from The Wall Street Journal

--Devon plans to prioritize oil projects development over acquisitions

--Company expanding footprint in new U.S. shale oil regions

--Possible new joint venture could include assets in Cline Shale in West Texas

(Updates with analyst comment in the seventh paragraph and additional information about expected new joint venture in the 11th paragraph)

By Isabel Ordonez

Of DOW JONES NEWSWIRES

HOUSTON (Dow Jones)--Devon Energy Corp. (DVN) is not planning to make acquisitions, despite having an abundance of cash, the company's top executive said Wednesday.

"People think we need to do an acquisition to grow. We don't," Chief Executive John Richels told analysts in a presentation. "We have no interest in acquiring assets."

Richels spoke in an effort to soothe concerns of some investors who believe the company is likely to make a dilutive acquisition with the $7.1 billion cash it has in hand. Richels said he and his management team haven't thought "for five minutes" to make a large acquisition, he added.

Devon plans to invest its cash in ways that make financial sense for the company, such as increasing its capital expenditure for production and exploration projects that have significant potential to yield oil, Richels said.

Oklahoma City's Devon said it plans to spend $6.1 billion to $6.5 billion this year, up $1 billion from its original budget. The company expects to spend $7.8 billion in exploration and production projects by 2016.

Devon also expects a compound annual production growth for oil from 2012 to 2016 between 16% and 18%. Oil and gas output is expected to increase to 340 million barrels of oil equivalent from the 255 million barrels of oil equivalent it expects to produce in 2012, the company said.

Oil and natural-gas liquids are expected to represent half of Devon's production by 2016, said Jon Wolff, an analyst at International Strategy & Investment Group.

The company's projections assume WTI oil prices of $105 a barrel and natural gas prices of $2.75 a million British thermal units this year. Devon assumes WTI crude prices will be around $95 a barrel and gas prices at $4.40 a MMBtu by 2016.

On the exploration side, Devon said it has identified a number of new promising shale oil areas where it plans to increase its footprint. The company said plans to drill 15 wells in the oil-rich Cline Shale in West Texas where it has 500,000 acres. Devon is also building a "significant" position of 250,000 acres in an additional undisclosed shale oil formation, the company said.

Devon expects an additional joint venture transaction in 2013 that will be about half the size of the deal it recently announced with China Petroleum & Chemical Corp. (0386.HK), better known as Sinopec. In February, both companies entered into a $2.5 billion deal for a one-third stake in five U.S. shale oil and gas fields.

Potential areas that could be included in the new joint venture would be the Devon's assets in the Cline shale as well as Devon's undisclosed oil play, the company said.

Devon's shares were recently up 27 cents at $71.44.

-By Isabel Ordonez, Dow Jones Newswires; 713-547-9207; isabel.ordonez@dowjones.com

Article from The Wall Street Journal

Four Oaks Fincorp, Inc. Announces 2011 Fourth Quarter and Annual Results

ridodirected@gmail.com (RIDO) — Mon, 02 Apr 2012 20:22:00 +0000

April 2, 2012, 1:42 p.m. EDT
Article from Market Watch

FOUR OAKS, N.C., Apr 02, 2012 (BUSINESS WIRE) -- Four Oaks Fincorp, Inc. FOFN -20.51% (the (eqnx:)Company(eqnx:)), the holding company for Four Oaks Bank & Trust Company (the (EQNX::leftdoublequotation)Bank(EQNX::rightdoublequotation)), today announced the results for the fourth quarter and year ended December 31, 2011. The net loss for the fourth quarter and twelve months ended December 31, 2011 was $3.1 million and $9.1 million, respectively, compared to $22.1 million and $28.3 million for the same periods of 2010, respectively. The provision for loan losses for the twelve months ended December 31, 2011 of $11.4 million was less than the $31.7 million for the same period in 2010. The Company had $12.4 million in net charge-offs recognized during the year ended December 31, 2011 as compared to $25.3 million in net charge-offs recognized for the year ended December 31, 2010. Nonaccrual loans increased to $60.1 million at December 31, 2011, from $51.5 million at December 31, 2010. Increased levels of nonperforming assets, elevated charge-offs, and a lack of improvement of the local economy led us to increase our allowance for loan losses (ALLL) as a percentage of gross loans to 3.51% or $21.1 million at December 31, 2011 as compared to 3.24% or $22.1 million as of December 31, 2010. 34.8% or $7.4 million of the December 31, 2011, ALLL represents specific reserves on impaired loans as compared to 38.0% or $8.4 million at December 31, 2010. Management believes the December 31, 2011 allowance for loan losses is adequate to absorb probable losses inherent in the loan portfolio. The charge-offs and nonaccrual loans result from strengthened internal controls related to the identification and valuation of impaired loans put in place during 2011.

The Bank is adequately capitalized with total risk based capital of 9.75%, tier 1 risk based capital of 8.47%, and leverage ratio of 5.40% at December 31, 2011, as compared to 9.77%, 8.50%, and 5.88%, respectively, at December 31, 2010. The Company had total risk based capital of 10.31%, tier 1 risk based capital of 6.97%, and leverage ratio of 4.41% at December 31, 2011, as compared to 10.42%, 7.36%, and 5.17%, respectively, at December 31, 2010. Strategies employed during 2011 to preserve capital, including the consolidation of our two Garner locations and staff reductions, resulted in minimal reductions in our capital ratios even with a net loss for 2011 of $9.1 million. We continue actively assessing our alternatives for preserving and improving capital, which may include increasing tangible common equity and regulatory capital, reducing our balance sheet, or other strategies.

Asset Quality:

After reaching $74.2 million at September 30, 2011, total nonperforming assets were $72.4 million or 7.89% of total assets at December 31, 2011, as compared to $61.2 million or 6.37% of total assets at December 31, 2010. At September 30, 2011, nonaccrual loans totaled $63.5 million and declined to $60.1 million at December 31, 2011, which represents an increase of $8.6 million compared to $51.5 million as of December 31, 2010. Accruing loans 90 days or more past due decreased by $886,000 to $60,000 at December 31, 2011, compared to $946,000 as of December 31, 2010. The increase in nonaccrual loans was primarily attributable to construction/land development loans, 1 to 4 family residential loans, and commercial real estate loans. Foreclosed assets totaled $12.2 million at December 31, 2011, up from $8.8 million at December 31, 2010, due to $11.3 million of additions, $4.9 million of sales (which resulted in the recognition of a net loss of $390,000), and $2.3 million in write-downs due to declining real estate valuation. Troubled debt restructurings (TDRs) totaled $44.7 million at December 31, 2011, and are comprised of $33.9 million which were included in nonaccrual loans and $10.8 million which were performing loans. This compares to total TDRs at December 31, 2010 of $51.5 million comprised of $30.9 million non-performing TDRs which were included in nonaccrual loans and $20.6 million which were performing loans. We are in substantial compliance with the written agreement in place with our regulators, which calls for the Company to reduce problem assets and concentrations of credit, while also increasing capital.

Net Interest Income and Net Interest Margin:

Net interest income after the provision for loan losses totaled $4.3 million and $14.5 million for the three months and twelve months ended December 31, 2011, respectively, as compared to net losses of $4.5 million and $1.0 million for the same periods in 2010. Net interest margin annualized for the quarter and twelve months ended December 31, 2011 was 2.67% and 2.87%, respectively, compared to 3.07% and 3.41% as of December 31, 2010. Our net interest margin declined during the twelve months ended December 31, 2011 due to the decrease in gross loans, elevated levels of nonaccruing loans, and lower yields on investments. The effect of these factors more than offset the benefit of lower interest expense which declined to $3.3 million and $14.1 million for the fourth quarter and twelve months ended December 31, 2011 as compared to $3.8 million and $15.3 million for the same periods ended December 31, 2010.

Non-Interest Income:

Non-interest income for the fourth quarter and twelve months ended December 31, 2011, respectively, decreased $786,000 and $3.1 million, respectively, to $1.1 million and $5.4 million from $1.9 million and $8.5 million for the same periods ended December 31, 2010, primarily due to lower gains from sales of investment securities.

Non-Interest Expense

Non-interest expense totaled $8.5 million and $28.9 million for the fourth quarter and twelve months ended December 31, 2011, respectively, as compared to $8.7 million and $29.7 million, respectively, for the same periods in 2010. Our full time equivalent employees decreased to 194 at the end of 2011 from 205 at the end of 2010. Reduction of staff and other cost cutting initiatives resulted in lower expenses during 2011. Further cost cutting efforts are underway for 2012, such as in May 2012, we plan to close our Sanford Office.

Balance Sheet and Capital

Total assets of $916.6 million at December 31, 2011 decreased 3.26% compared to $947.6 million at December 31, 2010. Net cash, cash equivalents, and investments of $284.8 million at December 31, 2011 increased 19.99% compared to $237.3 million at December 31, 2010. Net loans of $581.1 million at December 31, 2011 decreased 11.98% compared to $660.2 million at December 31, 2010. Total deposits of $745.9 million at December 31, 2011 decreased 3.03% compared to $769.2 million at December 31, 2010. Total shareholders(eqnx:) equity was $29.7 million at December 31, 2011, a decrease of 16.25% compared to $35.5 million at December 31, 2010. Book value per share at December 31, 2011 was $3.87 as compared to $4.70 at December 31, 2010.

Chairman, President, and Chief Executive Officer, Ayden R. Lee, Jr. states, (eqnx:)As our 100th anniversary celebration begins, positive economic trends are beginning to gain sound footing. We are cautiously optimistic concerning the outlook for 2012 while we remain focused on serving our customers(eqnx:) financial needs. We recently contracted with Oceancrest Financial Services to enhance our efforts to eliminate problem assets from our balance sheet. We expect this proactive approach to prepare us for better times to come.(eqnx:)

With $916.6 million in total assets as of December 31, 2011, the Company, through its wholly owned subsidiary, Four Oaks Bank & Trust Company, offers a broad range of financial services through its seventeen offices in Four Oaks, Clayton, Smithfield, Garner, Benson, Fuquay-Varina, Wallace, Holly Springs, Harrells, Sanford, Zebulon, Dunn, Rockingham, Southern Pines, and Raleigh, North Carolina. Four Oaks Fincorp, Inc. trades through its market makers under the symbol of FOFN.

Information in this press release may contain forward-looking statements. These statements involve risks and uncertainties that could cause actual results to differ materially, including without limitation, our ability to comply with the Written Agreement we entered with the Federal Reserve Bank of Richmond and the North Carolina Office of the Commissioner of Banks in May 2011, the effects of future economic conditions, governmental fiscal and monetary policies, legislative and regulatory changes, the risks of changes in interest rates on the level and composition of deposits, the effects of competition from other financial institutions, our ability to raise capital and continue as a going concern, the failure of assumptions underlying the establishment of the allowance for loan losses, our ability to maintain an effective internal control environment, and the low trading volume of the Company(eqnx:)s common stock. Additional factors that could cause actual results to differ materially are discussed in the Company(eqnx:)s filings with the Securities and Exchange Commission, including without limitation its Annual Report on Form 10-K, its Quarterly Reports on Form 10-Q, and its Current Reports on Form 8-K. The Company does not undertake a duty to update any forward-looking statements in this press release.

SOURCE: Four Oaks Fincorp, Inc.

Four Oaks Fincorp, Inc.

Ayden R. Lee, Jr., 919-963-2177

Chairman, President, and Chief Executive Officer

Nancy S. Wise, 919-963-2177

Executive Vice President and Chief Financial Officer

Article from Market Watch

Enegi Oil, Fluormin, Rare Earth Minerals, Solo Oil and others feature in Fox-Davies Newsflash

ridodirected@gmail.com (RIDO) — Sun, 01 Apr 2012 09:08:00 +0000

Fri 10:15 am

Article from Proactive Investors United Kingdom

Mining News

Orsu Metals Corp (TSE:OSU) has released its Annual Results for the Year Ended December 31, 2011. Key during the year, although actually post year end in February, was the successful completion of the Karchiga Definitive Feasibility Study, which was made available on the company's website last night. The project aims to produce a total of 149kt copper over an 11.5 year mine life. The Company expects to receive the necessary construction permitting approvals from the Kazakh authorities by the end of 2Q'12.Cash and equivalents at year end was $10.3m and the company will need to raise finance to fund the US$115m capex for Karchiga.

Fluormin PLC (LON:FLOR) released its interims and reported a loss of £4.323m. The company is struggling with weaker acid grade fluorspar and rising costs at its Witkop mine in South Africa, which also suffered from water shortages, power outages, unplanned plant maintenance, lower than expected feed grade and higher than expected stripping ratios during the period. The company is looking at options to reduce costs and, in particular, an upgrade of ore feed into the Witkop mill through the use of ore sorting technology. Subsequent to the period end, the Company has disposed of its 20% interest in Kenya Fluorspar Company Limited in order to secure additional funding for the Company pending the outcome of on-going sorting technology trials. These trials, if effective, would lower the operational costs of the Witkop mine by increasing the ore feed head grade to the milling circuit. The economic viability of the mine will be determined by the outcome of these trials. The net loss for the six months includes an impairment charge of £8,434,000 against the non-current assets of Witkop. At the end of the period the company had cash and cash equivalent holdings of £8,197,000, trade and other receivables of £1,249,000 and inventories of £4,172,000. The company believe that the immediate and mid-term market outlook for fluorspar is negative with substantial inventory reported at Chinese ports.

Kibo Mining PLC (LON:KIBO) has released its final year results to September, 2011. The company which has three projects in Tanzania - Haneti (nickel, platinoid elements and gold), Morogoro (Gold) and Lake Victoria (Gold) closed the year with cash and equivalents of £937,084.

Rare Earth Minerals PLC (LON:REM) released its final results for the 15 months to December, 2011. The group reported a £1.3m loss due to increased legal, administrative and due diligence as it closed the year with total assets £2.123m including cash and equivalents of £243k. Assets included the company's investments in Greenland Minerals and Energy Ltd, Western Australian Properties and the Cup Lake Rare Earth Project in Canada.

Rio Tinto PLC (LON:RIO) has become a member of the new China Beijing Metals Exchange (CBMX), which will allow Rio to sell non-contracted iron ore directly into China through the electronic trading platform.

Serabi Gold PLC (LON:SRB) the gold exploration company with assets in Brazil released its Audited results to the end of December, yesterday afternoon. The company closed the year with cash and equivalents of US$1.4m, but raised an additional £2.7m in January. These additional funds will allow the company to conduct an independent Preliminary Economic Assessment (PEA) on re-establishing operations at Palito. To this end the company has appointed NCL Ingenieria y Construccion SA (NCL) of Santiago, Chile to undertake the PEA. NCL have prepared the company's previous technical reports and have also prepared 43-101 reports for other companies active on the Tapajos region. NCL's personnel visited Palito during March 2012 to undertake their field evaluation and gather the required data for their study which the company hope will be completed at the end of May 2012.

Oil & Gas News

Parkmead Group PLC (LON:PMG) - The End of the Beginning: These results mark the end of the Company's journey from investment vehicle to junior E&P. these results are not about the reserve base, which is small, or the income, which is negligible (this year), but about the fact that the with ~$13mm in the bank, and the 2012 appraisal and development programme funded, all the ingredients for near-term growth are now in place.

• Nearing completion of the workover on the PAP#1 well

o Data suggests well could be flowed continuously

• Potential for Shale play across assets (Green Point)

• Agreement with Advanced Buoy Technology

o Applying for licenses in the UK North Sea under the 27th Seaward Licensing round

o Targeting marginal / stranded gas reserves

• Executing early stage prospecting programme (County Clare, Ireland)

• Strengthened management team and Board

o Technical and financial credentials bolstered

Serica Energy PLC (LON:SQZ) - On to the next phase. Equity Funding on the agenda?: 2011 has seen Serica complete its migration away from Asia, towards the UCS and Atlantic margin, and the near-term development of Columbus will herald the start of the new phase of growth. While past costs will be refunded by BP's farm in to its Namibian acreage, we believe that the scope for dramatic improvements in free cash flow are limited (cost cutting will have an impact at the margins), its yearend cash balance of $20mm in the context of its and its indicated programme of exploration, appraisal and development, means that the likelihood of an equity financing is likely as a means to supplement debt and other contractual financing arrangements in meeting the funding gap.

• Promising 2011 fiscal performance:

o Revenue of $27.1mm

o Cash from operations $7.5mm

o Cash position of US$20 million

o No debt

• Columbus field development in 2012:

o Negotiations concluded with BG for export via Lomond platform, subject to final documentation, partner and Board approvals

o All engineering and design studies completed

o NSAI estimate 11.2mm boe gross reserves in Block 23/16f

• Wells planned for Doyle and South Otter subject to farm out

• Two further UK licences awarded at year end

• 85% Namibia's interest in central Luderitz Basin blocks (offshore)

o Large structures identified

o Secured farm-out with BP.

o BP will carry full cost of 3D seismic survey and past costs (earns 30%)

• Six new blocks awarded in Irish Rockall Basin, Serica operator

o Three large prospects mapped: Muckish, Midleton, West Midleton

o Farm-out campaigns commenced for licences in the Slyne and Rockall Basins

• Farm-out underway prior to drilling first well in Morocco

Solo Oil PLC (LON:SOLO) - 2011 results shows steady expansion: 2011 has been a good year for the Company, as it now has a portfolio which offers balance between near term and long term drilling activities spread across its operating regions (Tanzania and Canada). In addition to these areas, and in keeping with the Company's desire for a diverse portfolio of direct and indirect interests a range of assets at throughout the spectrum of the development cycle, the Company is also looking at further investment in East Africa as well as North and South America. With this approach, and the existing asset base, we believe that the Company is well placed to grow in 2012. While there is no doubting the portfolio's potential, we believe that further resources will be required for the Company to unlock and test this potential. In this news:

• Solo strategically increased its holdings in the Ruvuma PSA in Tanzania from 12.5% to 18.75% in the period and to 25% subsequently

• The Ntorya-1 well, in the Mtwara block Tanzania was spudded on 22 December 2011.

• The Ntorya-1 drill is currently on-going. The well will be flow tested as a gas discovery at 2,600 metres once suitable equipment can be mobilised.

• Solo converted its participating loan with Reef Resources Limited in Canada to a working interest in the Reef's Ontario properties, including the Ausable and Airport South fields.

• A General Conveyance and Assignment Agreement was completed in July 2011 and Solo obtained a 23.8% working interest for the conversion of its existing loan and additional payments.

• Solo also obtained the option to acquire a further 14.3% for a further payment once Reef had raised at least that level of independent third party finance.

• In December 2011 Reef completed a CDN$1.96 million financing. Subsequently, Solo is currently completing arrangements to take up the additional percentage interest and expects to complete that transaction in the 2nd quarter 2012.

• The Company also commenced evaluation of a new exploration opportunity in Argentina under a Heads of Agreement with Obtala Resources Ltd

• Post period, a new exploration well; Airport North #1 was spudded in Canada. The well should be completed in early April.

Enegi Oil PLC (LON:ENEG) - Building on opportunities: Today's results mark the close of a year of transition for Enegi, and progress can finally be made on unlocking the value within its assets. In addition to building a portfolio of opportunities which offer potential for the Company to grow from alternate revenue streams number of sources, most notably the strategic partnership with Advanced Buoy Technology, there is also the Company's more conventional development portfolio. We believe that with ~$550m in cash, an ambitious future development programme and limited revenue generation, in the near-term, there will need to be either a scaling back of the development programme, or a combination of farmouts and / or disposals, or as is more likely, a financing to accelerate the opening up of the asset base. In the news:

• Nearing completion of the workover on the PAP#1 well

o Data suggests well could be flowed continuously

• Potential for Shale play across assets (Green Point)

• Agreement with Advanced Buoy Technology

o Applying for licenses in the UK North Sea under the 27th Seaward Licensing round

o Targeting marginal / stranded gas reserves

• Executing early stage prospecting programme (County Clare, Ireland)

• Strengthened management team and Board

o Technical and financial credentials bolstered

Subsea 7 (SUBC) Subsea 7 announced today the award of a SURF contract valued at approximately $175 million from ATP Oil & Gas/Bluewater, the operator on the Cheviot Field, situated 120km East of Shetland. The Cheviot Field development will use a moored floating process facility which will import oil and gas from four satellite drill centres, allowing oil to be exported via shuttle tankers and gas to be exported to a third party host facility.

The contract scope includes the transportation and installation of the client provided flexible flowlines and risers, control umbilical's, the 4.2km 14" flexible oil export pipeline and the 48km 10" rigid gas pipeline, together with the fabrication and installation of associated subsea structures. Offshore operations are due to begin in 2014.

Article from Proactive Investors United Kingdom

Invest Hindustan Zinc, says SP Tulsian

ridodirected@gmail.com (RIDO) — Fri, 30 Mar 2012 04:14:00 +0000

Published on Wed, Mar 28, 2012 at 09:58 | Source : CNBC-TV18

Updated at Wed, Mar 28, 2012 at 11:04

Article from Money Control

Hindustan Zinc is looking good for investment at current level, says SP Tulsian, sptulsian.com.

Tulsian told CNBC-TV18, "Hindustan Zinc is the largest integrated producers of zinc and led in the world plus also a significant player of making silver in the world. If you see their capacity, zinc has a capacity of 8.8 lakh tonne per annum and led has 1.85 lakh tonne per annum and silver 200 tonne per annum."

He further added, "If you see the company's fundamentals, out of net worth of about more than Rs 27,000 cr they have cash and cash equivalent of more than Rs 17,500 cr and the share is now ruling at a P/E multiple of close to 9 if I take the present financials of the company and if I take an EPS of about Rs 13.50 or maybe Rs 14 for FY12 extrapolating the first nine months' results."

"The stake sell or the residual stake sell which is being contemplated by the government. If you see - as I said - out of net worth of Rs 27,000 crore in cash and cash equivalent of Rs 17,500 crore, cash works out to Rs 42 per share and I don't think that it will be prudent on the part of the government when they have been so miser in selling their residual stake via auction route at such a high price that means they are expecting premium."

"I don't think that what is the reason for the government not asking for a premium of maybe 15-20% or maybe 25% from the current prevailing market price because as I said if you have Rs 42 cash lying in the books of the company, that is your entitlement, you are holding about 30% stake to be precise 29.5% and if you take the core operations, it results into an EPS of - even if I knock off the income being earned on the investments the core operations are giving an EPS of close to about Rs 11. So work out a P/E multiple of maybe 12-13 in case of a residual stake sell, so that gives you a value of maybe about 140-145. So in total if you take the value in my view works out to at about Rs 165-180 per share."

"I don't think that there is any reason for the government to divest this stake below this rate. That is the situation. If you now take the case of 65% held by the Vedanta Group and 30% held by the government, 95% makes it also a delisting candidate, I don't know what will be the situation in that case whether the Securities and Exchange Board of India (SEBI) will be agreeing for delisting of the company to take care of the interest, to protect the interest of 30,000-35,000 retail shareholders."

"So combination of the fundamentals plus the residual stake sell, how it pans out gives lot of opportunity in the stock even in the short run though I have taken a target of about Rs 160 in 12 months that is purely on fundamentals. But if the developments on the residual stake sell pans out faster, I think share can see that level of Rs 160 maybe in next three-four months. So from both the angle, the share looks quite a good investment at the current price."

Disclosure: No holding or interests in above stock.

Article from Money Control

NZVIF guilty of ignoring mandate

ridodirected@gmail.com (RIDO) — Tue, 27 Mar 2012 21:09:00 +0000

TOM PULLAR-STRECKER Last updated 05:00 28/03/2012
Article from stuff.co.nz

OPINION: Trial by media is not a real prosecution, no-one gets to defend themselves and the verdict can't be enforced. But judgment is swift.

The Charges: The New Zealand Venture Investment Fund stands accused in the court of public opinion of:

Ignoring its mandate in partnering with United States billionaire Peter Thiel to set up a $40 million venture capital fund.

Wasting taxpayer dollars by co-funding Thiel's multimillion-dollar investment in Xero.

Misrepresenting the deal in a media statement.

Doing a deal that was generally a bit rubbish.

The Facts: The Crown-owned New Zealand Venture Investment Fund (NZVIF) is contributing $20m to a venture capital fund, Valar Ventures LP, that will be run by Peter Thiel's company Valar Ventures.

Other New Zealand private investors are chipping in $5m.

Thiel's $15m commitment comprises about $6m of investments he has made in software firms Xero and BookTrack and in subsea cable company Pacific Fibre, and about $9m of uninvested cash.

The fund's private investors can exercise an option to buy out NZVIF's original investment in five years, paying a low interest rate that is equivalent to the five-year government bond rate. If the buy-out clause isn't exercised, for example because the fund's investments tank, NZVIF retains its half share of the fund.

Case For The Prosecution:NZVIF was set up in 2002 to help develop New Zealand's venture capital industry and provide easier access to capital for high-growth firms, such as young technology companies, not to develop overseas fund managers and help rich foreign investors buy stakes in Kiwi firms.

The buy-out clause means private investors, such as billionaire Thiel, can effectively get a subsidy from New Zealand taxpayers for doing that, if their investments do well.

Prosecution witness Jenny Morel, managing director of Kiwi venture capital company No8 Ventures, said NZVIF was set up "to make sure we had experienced operators here who could grow our markets". "You would have to ask how does [the Thiel deal] help the development of a New Zealand venture capital industry and are we for some reason subsidising a foreign investor?"

Moreover, when NZVIF was first set up, it only provided $1 for every $2 invested by venture capitalists. It has a separate Seed Co-Investment Fund that does provide dollar-for-dollar funding, but that has only been for funds investing in very early stage companies.

It has quietly changed the rules and is investing "dollar-for dollar" alongside Thiel in at least one quite mature firm.

NZVIF has retrospectively provided matching funding for Thiel's multimillion-dollar investment in Xero, which has been listed on the NZX for nearly five years, on terms that are favourable to Thiel, when there are no possible advantages for the taxpayer.

If Xero's shares shoot up, they will probably only get a low interest rate as a return, but if the shares go down, taxpayers may well carry their full share of that loss.

He had already made the investments in Xero, Pacific Fibre and BookTrack, so there was no reason for the Crown to offer an incentive for those investments to occur.

NZVIF initially disguised that some of Thiel's contribution to the fund was in form of existing investments by saying NZVIF was contributing $20m, $5m would come from other New Zealand investors "and the balance from Thiel".

Case For The Defence: There is a shortage of venture capital for young technology firms and while NZVIF would help New Zealand venture capitalists if they could get their act together, unlike Valar, they are having difficulty raising the matching co-investment they need to get new funds off the ground.

This deal keeps things moving.

Valar will bring more than just investment capital to Kiwi firms. Thiel was a founder of PayPal and an early backer of Facebook and has networks in the United States.

Defence witness Economic Development Minister Steven Joyce, says investors like Thiel bring "considerable expertise building companies from start-ups to world-leading companies". NZVIF has received more congratulatory messages over the deal with Thiel than over any other.

NZVIF's new rules allow it to invest dollar-for-dollar in venture capital funds where they "intend to invest entirely in seed and start-up investment opportunities".

When Thiel originally invested in Xero, it had made limited progress and had yet to expand overseas, so the investment was an "early stage one", and it's fair to characterise it as one that qualifies, retrospectively, for dollar-for-dollar co-funding.

It is not reasonable to characterise the NZVIF transaction as a selling-down by Thiel of his stakes in Xero, Pacific Fibre and BookTrack to taxpayers, as Thiel has shown his confidence in Xero by investing in its last share placement. Valar is already scouting for additional investments in New Zealand and is likely to find lots of open doors.

While NZVIF's original statement may have glossed over important aspects of the deal and the rules changes that allowed it to happen, there has has been no attempt to hide the details of the transaction.

NZVIF has been unable to disclose the exact value of Valar Ventures' existing investments and the proportion of uninvested cash, for genuine reasons of commercial confidentially.

The Verdict:Guilty as charged on the first three counts. Not proven on the fourth and most serious charge of doing a deal that was generally a bit rubbish.

NZVIF is sentenced to reflect on its original 2002 mandate, write-out the definition of seed capital 10 times, and to expect greater scrutiny of all public announcements.

A restraining order is placed on anyone using the terms "US technology billionaire", "generosity" and "investment", and they are reminded that when such folk engage in philanthropy they generally do so by giving to charities.

Article from stuff.co.nz

NOTIFICATION OF PUBLIC DISPOSITION OF COLLATERAL

ridodirected@gmail.com (RIDO) — Sun, 25 Mar 2012 20:14:00 +0000

By RBR-TVBR on Mar, 25 2012

Article from nbr.com and tvbr.com

Valley Bank (the “Secured Creditor”) has extended various secured loans and other financial accommodations (the “Loans”) to Louisville TV Group, LLC, an Iowa limited liability company (“Louisville Group”), and Louisville TV Licenses, LLC, an Iowa limited liability company (“Louisville Licenses”) (Louisville Group and Louisville Licenses sometimes hereinafter are referred to collectively as the “Debtor”). The Loans are secured by liens on substantially all of the assets of the Debtor (collectively, the “Collateral”).

The Collateral includes, without limitation, all of the accounts, goods, inventory, equipment, instruments, chattel paper, general intangibles, documents, deposit accounts and investment property of the Debtor, as well as the proceeds derived from a sale or transfer of the FCC licenses held by Louisville Licenses for the operation of full-power television station WBKI-TV (FCC Facilities ID #25173) licensed to Campbellsville, Kentucky and operating on Digital Channel 19, and for the operation of auxiliary stations WMU207, WMU208, WPQR553, WPQR554, WPQR555, KB55772, and WPQR552 in connection therewith.

Due to the occurrence of various events of default under the Loans, the Secured Creditor, pursuant to Section 9-610 of the Uniform Commercial Code as adopted and in effect in the State of Iowa, will sell, at a PUBLIC SALE, all of the Collateral to the highest qualified bidder.

The Secured Creditor will sell the Collateral at a public disposition on April 6, 2012 at 10:00 a.m. Central Standard Time (CST), at the offices of Perkins Coie LLP, 131 S. Dearborn Street, Suite 1700, Chicago, IL 60603.

The following information is provided regarding the public disposition:

1. The Collateral will be sold as one lot, or as otherwise determined in the Secured Creditor’s discretion.

2. The bidding will be by written bid delivered in person or by fax. Bids must be submitted in writing in person at the place of sale, or faxed to the attention of Megan Morrissey, Esq., Perkins Coie LLP, Telecopy No. (312) 324-9406, in each case received by 10:00 a.m. CST on April 6, 2012.

3. The Collateral may be purchased only in whole for cash or cash equivalent (including wire transfers) delivered to the Secured Creditor at the time and place of sale. The Secured Creditor may bid for and purchase all or a portion of the Collateral by credit bid up to the amount of its claim against the borrowers and guarantors, including without limitation, expenses of the public sale, principal and accrued interest.

4. The Secured Creditor reserves the right to adjourn, delay or terminate the sale by announcement at the time and place of sale in its sole and absolute discretion, and such sale may without further notice, be made at the time and place to which it was so adjourned or delayed.

5. For further information on the terms and conditions of the sale, prospective bidders may contact the Secured Creditor’s counsel, Megan Morrissey, by telephone at (312) 324-8406 or by email at MMorrissey@perkinscoie.com.

THE PUBLIC SALE SHALL BE “AS IS” AND “WHERE IS”, WITHOUT EXPRESSED OR IMPLIED REPRESENTATIONS AND WARRANTIES OF ANY KIND OR NATURE WHATSOEVER AND ALL WARRANTIES OF TITLE, POSSESSION, QUIET ENJOYMENT, MERCHANTABILITY, QUALITY, FITNESS FOR A PARTICULAR PURPOSE, OR THE LIKE ARE EXPRESSLY DISCLAIMED.

The sale shall be subject to such further conditions as may be announced by the Secured Creditor or its agents at the start of the public sale. Sale of the Collateral does not affect the rights of the Secured Creditor to pursue any other right or remedy it may have against Debtor or any other party.

About The Author: RBR-TVBR has been reporting on the business of broadcasting for nearly three decades. Beholden to no one, it is independently owned.

Article from nbr.com and tvbr.com

Portfolio sales pushed into strong market

ridodirected@gmail.com (RIDO) — Fri, 23 Mar 2012 21:06:00 +0000

23 March 2012 | By Claire Ruckin
Article from International Financing Review

Banks are stepping up efforts to reduce bloated loan books to take advantage of the market’s demand-supply imbalance and investors’ appetite to deploy cash, with £720m-equivalent of leveraged loans put up for sale last week from banks including Lloyds and RBS.

“It is a good time to sell because the levels are quite high at the moment. It is a good chance to cut risk,” one trader said.

Europe’s top 40 leveraged loans rose dramatically in the first quarter of 2012 as technical conditions pushed up prices to 95.41% of face value, compared with 90.88 on January 3.

“There is an awful lot of debt in Lloyds that is performing badly and £500m is a fraction of what it could sell”

Last week, Lloyds agreed to sell a £500m portfolio of mostly UK leveraged loans to Bain Capital’s credit investment arm Sankaty Advisers, while RBS is in the market with £152m-equivalent portfolio of leveraged loans. An €85m-equivalent sale of legacy Lehman Brothers’ loans is also attracting investor interest.

“Funds have cash to spend. They can’t sit on the money forever, otherwise they will lose it. There will be more of this to come,” another trader said.

The 26 loans Lloyds is selling to Sankaty include Four Seasons and the West Cornwall Pasty Company paper. The trades are taking place at heavily discounted prices but will chip away at the bank’s planned sale of its £141bn book of non-core loans, as it seeks to reduce doubled-up loan exposure following its merger with Bank of Scotland in September 2008.

“Sankaty is interested in small and mid-market names and is aiming to fill the void being created by the likes of Lloyds, RBS and Barclays,” a banker said.

Lloyds is also looking for buyers for a US$10bn portfolio of shipping loans and is trying to sell other loans as it seeks to strengthen its financial position. The non-core portfolio consists of loans that do not deliver targeted returns, are high risk or may be distressed or sub-scale.

“This is the tip of the iceberg. It has so much to go. There is an awful lot of debt in Lloyds that is performing badly and £500m is a fraction of what it could sell,” another banker said.

Tougher rules

Banks have been hit with tougher rules that mean they have to set aside more capital against loans, making them more costly to hold and forcing dozens of lenders to sell assets as they struggle to deliver returns above their cost of capital.

RBS is auctioning £152m-equivalent of loans as part of its ongoing programme to reduce balance sheet exposure. The portfolio, which had an average bid price of 88.9% of par, according to Thomson Reuters, includes multi-currency, multi-jurisdictional positions in loans including Biffa, Boots, Doncasters, Formula One, PHS and Travelex. Bids were due last Friday.

An €85m-equivalent portfolio of loans from legacy Lehman Brothers was also in the market with bids due on the same day. The average bid on all the names was 90 cents on the euro.

These portfolio sales are attracting interest from private equity firms that branched out into debt investment initially as a way of financing their own deals. More recently, though, PE shops have come to view such deals as a new source of income and have beefed up their debt investment activities as banks – more reluctant to lend on new buyouts – sell off swathes of existing loans.

Some private equity groups such as Apollo Global Management and Oaktree Capital buy debt in the hope of seizing control of underperforming companies, while other buyers, such as Sankaty, prefer to buy and hold until pricing recovers or the loans mature.

“It feels like there is a lot of cash to spend out there. It is a good time to be selling, although I’m not sure if it is a good time to be buying,” an investor said.

Article from International Financing Review

Not Enough, Apple

ridodirected@gmail.com (RIDO) — Wed, 21 Mar 2012 20:04:00 +0000

By Morgan Housel

March 20, 2012

Article from The Motley Fools

Apple (Nasdaq: AAPL ) announced its first dividend since 1995 yesterday. That's great news for shareholders, who are now entitled to some $10 billion of the company's cash every year. For perspective on how far and fast the company has grown, those who purchased Apple shares in 2003 will recoup their initial investment with every annual dividend payout.

But it isn't enough. Even with a share-repurchase program also announced yesterday, Apple is hardly making a dent in its bank account.

By the company's calculation, the dividend and share repurchases combined will cost $45 billion over the next three years. Yet according to analysts at Sterne Agee, Apple will generate $75 billion to $80 billion of free cash flow over the next year alone. At that rate, even with yesterday's announcement, Apple's cash hoard is likely to grow to $150 billion next year, and perhaps $250 billion by 2015. By then, Apple could fund its dividend and buybacks, buy New Zealand (literally), and still have one of the largest cash cushions in the world.

"Even with these investments, we can maintain a war chest for strategic opportunities and have plenty of cash to run our business," said CFO Peter Oppenheimer. Understatement of the year.

Apple, in other words, hasn't solved what some see as its biggest (if not only) problem: what to do with its cash.

And a real problem it is. Apple earned an average return of 0.77% on its cash and cash equivalents last year. With inflation tracking at 3%, its cash is losing value in real (inflation-adjusted) terms at a rate of more than $2 billion per year. That's more than the company earned in annual profit as recently as 2006.

Some note that yesterday's announcement was just the opening salvo, and the quarterly dividend of $2.65 per share can and will be raised. But even if Apple doubles -- heck, triples -- its initial payout, the $100 billion cash hoard will continue to grow substantially. And with news of 3 million iPads sold on the opening weekend, to say nothing of the prospect of Apple TV on the horizon, current estimates of cash-flow generation may prove too pessimistic (though those can be famous last words).

Apple needs to do something else with its cash -- far bigger and more ambitious than yesterday's announcement.

That may eventually mean an acquisition. After paying its dividends, Apple can still afford to purchase nearly any technology or media company. There are a mere 85 companies in the world with a market cap above $80 billion, or more than Apple could reasonably acquire with cash. Fewer than 10 are even tangentially related to its business.

More likely is a massive one-time special dividend, as Microsoft (Nasdaq: MSFT ) issued in 2004. Back then, Microsoft sat on $60.6 billion of cash and parted with $33 billion of it in one fell swoop. The equivalent for Apple today would be cutting a check for about $55 billion, or around $50 a share.

In fairness, some of Apple's relative timidity no doubt stems from burdensome tax laws. Cash held in foreign subsidiaries -- about half, in the case of Apple -- is subject to repatriation taxes if brought back to the United States. That can total 35% minus a credit for foreign taxes already paid. Some analysts and companies are holding out for a repatriation holiday, as took place in 2004. Others, including myself, think repatriation taxes should be ended altogether, switching instead to a territorial system that taxes income only where it is earned, as nearly every other industrial nation does.

But there comes a point where citing repatriation taxes is no longer a valid excuse to deprive shareholders of cash. If there is no repatriation holiday, and a territorial tax system is not in the cards (both likely for the indefinite future), will multinationals like Apple never return cash held overseas? Truly, never? If so, then a company's foreign operations are literally good for nothing in shareholders' eyes. The bullet will have to be bitten eventually.

Great start, Apple. But it's not enough.

Big tech names might gather a lot of investor attention, but the truth is that they're playing second fiddle to an even larger revolution in technology. To better prepare investors for this new revolution, The Motley Fool has just released a free report on mobile called "The Next Trillion-Dollar Revolution" that details a hidden component play inside mobile phones that also is a leader in the exploding Chinese market. Inside the report, we not only describe why the mobile revolution will dwarf any other technology revolution seen before it, but we also name the company at the forefront of the trend. Hundreds of thousands have requested access to previous reports, and you can access this new report today for free.

The Steve Jobs Betrayal

You may already know that in the final year of his life, Jobs revealed a stunning betrayal — and told his biographer, "I will spend my last dying breath... and every penny of Apple's $40 billion in the bank to right this wrong." What was it that made Jobs so irate — and why could it make a few in-the-know investors some major profits over the coming months and years?

Fool contributor Morgan Housel owns shares of Microsoft. Follow him on Twitter, where he goes by @TMFHousel. The Motley Fool owns shares of Microsoft and Apple. Motley Fool newsletter services have recommended buying shares of Microsoft and Apple and creating bull call spread positions in Microsoft and Apple. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Steve Jobs' Final Vendetta

Article from the Motley Fools

How to Invest in Currency and Forex

ridodirected@gmail.com (RIDO) — Sat, 17 Mar 2012 19:38:00 +0000

By: InvestorGuide Staff, dated March 16th, 2012

Article from investorguide.com

With all of the considerable recent publicity about the benefits of currency trading via the forex market, more and more people want to know how to invest in currency. Fortunately, the process has gotten much easier in the last few years due to the ready availability of online forex brokers.

All it takes to open up an account with an online forex broker and start investing in currency is some trading capital to put at risk and a relatively recent computer connected to the Internet. You typically just have to fill out an online form, provide identification and send the broker a deposit to be used as margin to secure your leveraged trading positions.

You can then download and install either the broker’s proprietary forex trading platform or broker independent forex trading software like the very popular MetaTrader platform. Buying or selling one currency against another then typically just involves a couple of mouse clicks. Learning how to invest in currency via the forex market really could not be simpler, although doing so profitably might take some practice.

Still, if you want to explore other currency investment choices, you can try trading currency futures via one of the major financial exchanges that list such contracts, although minimum lot sizes and transaction fees are typically higher than those available at most online forex brokers. Some currency linked Exchange Traded Funds (ETFs) are also available to investors that prefer to trade via stock exchanges. In addition, some banks offer certificates of deposit in a variety of currencies.

Currency options and binary options can also be used to invest in currency. Such option contracts generally provide the buyer with the right but not the obligation to purchase one currency against another in return for paying an upfront premium. Many futures exchanges that offer currency futures also offer options on those futures contracts. In addition, trading options via a number of online currency and binary option brokers has recently become available to retail investors.

Finally, if you are not interested in establishing a leverage position or earning interest on your foreign currency, you can probably just go to your local bank or foreign currency dealer and purchase an equivalent amount of a physical foreign currency with your domestic cash. Nevertheless, available quantities tend to be limited, spreads are usually much wider, and you will then have to worry about how to store your foreign money securely.

Article from investorguide.com

Ecopetrol: A Solid 2012 Latin Oil Investment

ridodirected@gmail.com (RIDO) — Wed, 14 Mar 2012 21:05:00 +0000

March 14, 2012 | about: EC, includes: NXY, PBR, XOM
Article from Seeking Alpha

Despite the ongoing fallout from the European sovereign debt crisis and concerns about the slowness of the global economic recovery, the demand for oil proved to be resilient through 2011. It is predicted that this demand will improve in 2012 and escalate significantly in the foreseeable future. This can be attributed to supplies being constrained and ongoing political tensions and upheavals in major oil producing countries, notably in the middle-east. Overall the oil price outlook for 2012 bodes well for oil producers, with Goldman Sachs at the end of 2011 predicting that the oil price per barrel will rally as high as $120 for Brent crude by July 2012.

However, the price of Brent Crude has already exceeded that target and is now trading at around $127 a barrel. This solid rise in oil prices bodes well for continued rises in the price for oil and for earnings and income growth for those companies involved in the oil production and exploration industries. When this is considered in conjunction with the some of the increasingly positive signs of improvement in the U.S. economy and increasing demand for energy from China and India, the price should continue rise. When this is considered in conjunction with increasing positive Latin American growth signs and in particular Colombia, I believe it is time to consider investing in resource companies that operate in Latin America. Ecopetrol (EC), Colombia's largest company recently reported its best financial full year results yet and I believe that it is a solid investment opportunity that will reward investors who invest now. In this article I will show you why. Ecopetrol is also Colombia´s only vertically integrated oil and natural gas company that is geographically diversified with operations in Colombia, Brazil, Peru and the U.S. Gulf Coast.

Ecopetrol's 2011 financial results were particularly strong. For the fourth quarter 2011; the company saw a 14% rise in earnings to $9.6 billion and a 5% rise in net income to $2.3 billion. In addition, for this period its balance sheet strengthened with cash and cash equivalents rising a massive 53% to $3.4 billion, although long-term debt also rose but only by a marginal 2.2% to $4.1 billion. In line with Ecopetrol's solid fourth quarter 2011 financial results, it reported a particularly strong result for the final year 2011, with a net profit of $7.8 billion, which is an 85% increase from its net profit for 2010. This is the third consecutive year that Ecopetrol's net income has risen.

There were also a number of other key positive take outs from Ecopetrol's 2011 report, including:

Net oil and gas production for 2011 rose by 15.6%, on a year over year basis, as a result of the higher production and transportation capacity of the Castilla and Magdalena crude wells.

The opening of a new export market with the shipment of six million barrels of crude to the Asia in 2011, as well as increasing diversification of export destinations with crude exports to other non-traditional destinations, such as the Caribbean and the West Coast of the U.S.

A higher demand for natural gas predominantly from Venezuela.

The company announced a 27% increase in reserves of 400 million barrels, giving the company reserves of 1.9 billion barrels.

Ecopetrol announced plans to further increase reserves through the exploration of 42 new wells, with 37 located in Colombia, 3 in the Gulf of Mexico and two in Brazil.

The president of Ecopetrol also recently stated; "Ecopetrol is now producing 724,000 barrels a day and aims to lift this figure during 2012 to a daily average of 800,000 barrels, with aspirations of producing the equivalent of a million barrels a day by 2015 and 1.3 million barrels by 2020." All of this bodes well for further revenue and net income growth, as the company takes advantage of the expected increase in the price of oil through 2012.

There were however some negatives in the report that need to be considered including:

The cost of sales in 2011 increased by 38% to from 2010 driven by a net increase of 45% in variable costs.

For 2011 heavy crude production represented 48.8% of total crude oil production compared to 43.7% the previous year, yet light crude is more valuable and receives the highest price.

When investing in a Colombian company it is also important to consider the degree of sovereign risk especially given Colombia's history of violence and political instability. However, the security situation has improved considerably since the mid 2000s, leading to increased economic growth, foreign investment and prosperity. All of which has seen Colombia's economy expand at its fastest pace since 2006, with third quarter 2011 GDP growth of 1.7%, which in annual terms is 7.7% and the highest seen since 1979.

Overall despite ongoing low intensity conflict in some of the richest oil areas of the country, predominantly in the south eastern departments, the overall economic growth prospects are particularly bright and the degree of sovereign risk is lower than would normally be expected. In addition, Colombia's oil reserves are Total oil production in Colombia, the fourth biggest oil producer in Latin America, reached 914,000 barrels per day in 2011 on average.

When comparing Ecopetrol's key performance indicators against its competitors the company appears to be an even more appealing investment as the table below shows.

Based on the PEG ratio, Ecopetrol has solid growth prospects, which are similar to Nexen's but far better than Petroleo Brasileiro's and Exxon's. I also quite like Ecopetrol's solid profit margin which is higher than Nexen's, Petroleo Brasileiro's and Exxons, which when combined with a solid return on equity of over 30% bodes well for future earnings and income growth. Ecopetrol also has quite a conservative balance sheet with a debt to equity ratio of only 0.20, which is less than half of Nexen's and Petroleo Brasileiro's but double Exxon's.

This conservative debt to equity ratio bodes well for the degree of investment risk undertaken when investing in Ecopetrol, as it means its operations are predominantly funded by equity rather than debt. This means either an increase in interest rates or a drop in revenue due to a declining oil price should have little effect on Ecopetrol, nor should the company experience any discomfort with regard to debt convents should its stock price drop substantially.

Overall the high profit margin and return on equity bode exceptionally well for future net income growth, however investors should remember that these are lagging indicators and do not necessarily provide a reliable prediction of the company's future performance. To get a good feel for Ecopetrol's future performance it is important to get a feel for its forward valuation and determine whether this is expensive in comparison to its competitors.

With a current trading price of around $61 and analysts' forecasts of 2012 EPS of $4.53, Ecopetrol has a forward PE of 13. Analysts are also expecting Ecopetrol's 2012 revenues to rise by 9% to $34 billion. Nexen is trading at around $20, with analysts predicting 2012 EPS of $1.93, giving it a forward PE of 10. Furthermore analysts have predicted a 3% increase in 2012 revenues to $6.5 billion. For Petroleo Brasileiro's one of Brazil's largest integrated oil and gas companies, analysts have estimated 2012 EPS of $3.11, which with a current trading price of around $28, gives it a forward PE of 9. Analysts have also estimated a 5% increase in revenues to $152 billion. Finally we have the king of oil Exxon, which is currently trading at around $87, with analysts estimating 2012 EPS of $8.19, giving Exxon a forward PE of 11. Analysts have also estimated that Exxon's 2012 revenue will drop by 3% to $473 billion.

Overall Ecopetrol does look expensive in comparison to Nexen, Petroleo Brasileiro's and Exxon based on its current stock price and forward PE. However, based on its solid performance indicators and solid estimated revenue growth, which is substantially higher than Nexen's, Petroleo Brasileiro's and Exxon's I believe that it is justified.

I also quite like Ecopetrol's handy dividend yield of around 4%, which is a solid yield for an oil and gas producer and is double Exxon's 2%, quadruple Nexen's 1% and higher than Petroleo Brasileiro`s 0%. Finally, I believe at its current trading price Ecopetrol is undervalued by the market with an earnings yield of 6%, which is more than double the current risk free rate.

Overall Ecopetrol is in good financial shape and year on year is consistently generating solid revenues and net income. Despite some other oil or natural gas plays appearing to have some stronger performance indicators and not be as expensive, I do not believe they have the same upside of Ecopetrol. I am of the firm opinion that Ecopetrol is well positioned to continue growing in value and investors who take a position in the company now will benefit from both strong growth and enjoy the solid dividend yield.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

Article from Seeking Alpha

Money-market funds, largely unchanged since 2008 crisis, remain big risk

ridodirected@gmail.com (RIDO) — Mon, 12 Mar 2012 20:29:00 +0000

By Kevin G. Hall / McClatchy Newspapers

Monday, March 12, 2012 - Added 4 hours ago

Article from Boston herald.com

WASHINGTON — Plain-vanilla money-market funds, part of the skeletal structure of American finance, may be a $2.7 trillion disaster hiding in plain sight.

When Congress in 2010 passed the most sweeping changes in financial regulation since the Great Depression, it tried to address most of the problems that led to or were exposed by the near-collapse of the financial system. Money-market funds slipped through the cracks.

Money-market funds, a $2.7 trillion industry, remain largely unregulated. They remain vulnerable to runs from investors, who retain the false perception that there’s no risk in them. The funds have been pitched as “can’t fail” investments, yet as recently as last summer the largest money-market funds had 45 percent of their assets tied up in European bank debt.

“Nothing in financial services is as dangerous as a guarantee without capital backing it,” Sallie Krawcheck, the former president of wealth management for Bank of America, warned in a recent op-ed article in The Wall Street Journal.

In an interview with McClatchy, Krawcheck said the Securities and Exchange Commission is right to be concerned and seek ways to bolster this crucial segment of the financial sector. Although these funds offer many pages of disclosures, she said, many investors still wrongly assume that the funds guarantee at least a break-even return. They’re unaware that many fund managers aren’t even banks with capital reserves, but rather simply asset managers.

“Individuals are very happy to spend quite a bit of time on risky investments, but for cash, individuals look for much more straightforward investments. Do you want to research websites on what the underlying investments (in money-market funds) are?” Krawcheck said.

The reason ordinary investors like money-market funds is they are similar to checking accounts, where cash earns a small amount of interest but the money is not locked in and is accessible. Money-market funds matter in the broader sense because they invest heavily in commercial paper, short-term debt issued by corporations to manage their cash-flow needs. These markets are lifeblood for corporate finance.

An October 2010 report by the Presidential Working Group on Financial Markets warned that a run on money markets could cause shocks throughout the U.S. financial system.

Big Wall Street players such as J.P. Morgan Chase say that enough has been done to bolster these funds and that additional fixes being considered might reduce returns to investors and thus kill the industry, or least put it at a disadvantage. And money-market fund managers are upfront now about risks.

“An investment in a money-market fund is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. Although the fund seeks to preserve the value of your investment at $1.00 per share, it is possible to lose money by investing in the fund,” investment giant Fidelity warns on its website.

That doesn’t calm SEC Chairman Mary Schapiro. Asked during a recent breakfast with reporters what keeps her up at night, she put money-market funds atop her list.

“I do feel a sense of urgency about the structural weaknesses that do exist in money-market funds,” Schapiro said. “There is a structural weakness that makes them prone to runs, and I think we need further debate and discussion about some concrete ideas there.”

Schapiro declined to discuss specifics, but SEC spokesman John Nester confirmed that rule changes are being prepared.

“At the chairman’s direction, the staff is currently drafting proposals to address the susceptibility of money-market funds to runs,” he said in a written statement.

In 2008, after the giant Wall Street bank Lehman Brothers failed, money markets fell into panic. The oldest money-market fund, Reserve Primary Fund, had to write off its investment in commercial paper issued by Lehman, and could not guarantee its investors 100 cents on the dollar. It was a phenomenon called breaking the buck, and had happened only twice before as isolated events.

The third time, however, skittish investors worried what other failures lurked, and in the financial market equivalent of a bank run, began tried to cash out en masse. Within a single week, $310 billion was withdrawn from money markets. Only when the Treasury Department stepped in to temporarily insure money-market funds did panic ease.

Fast forward to today.

Money-market funds in 2010 were forced to have more access to capital on short notice, and the credit quality of what they can invest in was tightened. The funds are no longer government insured and the revamp of financial regulation, called the Dodd-Frank Act, prohibited government from future market intervention like that which saved the system in 2008. Instead the new law provided a path to shut down failing financial institutions formerly regarded as “too big to fail.”

However, money-market funds are just as vulnerable to runs as they were then, but this time they’ll be on their own. Few analysts see this as probable, but it remains possible.

(EDITORS: STORY CAN END HERE)

For decades, money-market funds have enjoyed an implicit guarantee that they cannot fail because they seek a stable market value — called a net asset value — of $1 per share. If that value falls below $1 a share, as it did in 2008, panic can ensue.

The SEC under Schapiro wants to make the funds less vulnerable to runs. Within two months, SEC staffers will recommend two alternatives for the full commission to consider. One involves moving to a variable net asset value, which essentially would float the value of the assets and thus change the how money-market funds have operated.

“I think that the industry will reject that pretty categorically. And so then the question is what else could be done. One approach would be essentially to create some more capital. They have very limited capital at this point. And there might be ways to maybe over time to build up the capital base,” Federal Reserve Chairman Ben Bernanke said in Senate testimony on March 1 . “So that’s one possible approach, and then either complementing that or a separate approach would be something that involved not allowing the investors to draw out 100 percent immediately.”

In fact, the other alternative SEC staffers are expected to propose involves higher capital requirements to buffer against runs by investors. This would allow fund managers to pump in money to maintain the 100 cents on the dollar standard when one of their investments sours — as when Lehman failed.

As part of this second alternative, anyone withdrawing from a money-market fund must leave at least 3 percent behind for perhaps 30 days. That would be a disincentive to stampede out of the market as in 2008, and provides a disincentive to be the first out, too. For the investor who moves slowly, it ensures a limited amount of loss. In the present system, the first investors out the door leave the slower ones with the losses.

During Bernanke’s testimony to the Senate Banking Committee, New York Democrat Charles Schumer expressed doubts about the SEC effort.

“I’ve heard from some investors and from some funds that given the low margin that money-market funds pay, that it would just end the business more or less. Or certainly I’ve heard from investors that they wouldn’t put money in if they knew they had to keep 2 or 3 percent in there,” Schumer said

The Fed chief did not appear persuaded.

“I think ... the Federal Reserve in general, and I personally, would have to agree that there are still some risks in the money-market mutual funds. In particular, they still could be subject to runs,” Bernanke told Schumer.

___

Article from Boston Herald.com

Cut the Cord

ridodirected@gmail.com (RIDO) — Sat, 10 Mar 2012 21:12:00 +0000

Barron's Cover | SATURDAY, MARCH 10, 2012

By THERESA W. CAREY | MORE ARTICLES BY AUTHOR

Article from Barron Online

In Barron's 17th annual ranking of online brokers, Interactive Brokers gets the highest marks.

"In many ways, the iPad is reinventing portable computing and outstripping the wildest predictions," Apple chief Timothy D. Cook said last week while unveiling the tablet computer's latest upgrade. A bit of hyperbole? Yes, but Cook won't get any argument from online brokers. Barely a year after the first real investment-related applications were designed for it, the iPad has become a viable platform for buying stocks and bonds and is driving gains in mobile-trading activity.

Big brokers like TD Ameritrade, E*Trade and Fidelity, as well as smaller rivals like MB Trading and OptionsHouse, have all rushed to serve iPad-based customers with new apps. Although no industry-wide figures are available, there's lots of evidence the iPad and other mobile devices are having an effect. Ameritrade says the number of transactions taking place on mobile devices has more than doubled in each of the past two years. E*Trade reports an average of 200,000 unique monthly mobile log-ins and that 5% of its retail trades took place on a mobile device at the end of 2011. OptionsHouse CEO George Ruhana says mobile apps now account for over 15% of the firm's core customer activity.

And more growth is coming. As Apple's Cook noted: 55 million iPads have been sold since their launch in 2010, with 15.4 million of that total in the most recent holiday quarter alone.

Should the growth continue, the iPad and its rivals will prompt even more investors to cut the cord as the brokers provide more and better apps. "Our data show that when customers feel they get the same functionality out of a tablet that they do out of their desktop software, they will break the cords and go mobile for active trading," says David Lipsett, president of MB Trading. "You should never have to sacrifice features over the technology venue in which you access our services."

Barron's was so impressed with the real and potential gains in mobile (though we predicted as much last March), that we've made a significant change to our scoring rubric in our 17th annual ranking of the Best Online Brokers. We've added a mobile category to our rating. To compensate we've combined two categories–trading experience and trading technology–into one. A differentiator this year is the availability and quality of mobile trading and account data, so we looked for streaming real-time data, including charting and news. We looked for ways to trade stock and options on a tablet or smartphone. Cross-platform integration is key; when you set up a watchlist on your desktop, it should be available on your mobile device as well (and vice versa). Brokers who do not offer a mobile app, or who have limited capabilities, suffered in our rankings this year.

The brokers' creativity extended beyond the iPad to mobile generally. New mobile applications included those that offered simple balance data and the ability to place a stock transaction, on up to streaming graphs and complex options order-entry capability. In addition, an increasing number of smartphone apps can now help you deposit a check using the device's built-in camera. TD Ameritrade's iPhone app even lets you scan a barcode when you're at the grocery store, and get a quote on the stock of the company that makes those cookies you like. It's an exciting evolution in trading technology, and one that we expect to continue this year.

As important as it is to stay connected to the markets in volatile times, the iPad and mobile weren't the only news in 2011. International trading is hot. With Fidelity launching foreign trading in January, and Schwab's plan to roll it out later this year, retail online investors will increasingly have the ability to place transactions directly on international exchanges. The currency conversion choices vary, from managing the trades in dollar amounts to changing dollars into the local currency, and maintaining the holdings in that foreign currency.

It's not just about getting information whenever you want, but being able to go wherever you want. Nearly half of the brokers surveyed allow online currency exchange of some stripe, including foreign-exchange trading. Steve Quirk, senior vice president of the Trader Group at TD Ameritrade, says, "Clients are trading during hours of the day that were reserved in the past for sleep."

Although it may be under attack, the desktop got some serious help in the last year. Schwab and E*Trade are completely rewriting their platforms, while Interactive Brokers rolled out a truly elegant (and much-needed) update to its Trader Workstation. The new kid on the block, Kapitall, has an interface based on gaming technology that is truly unique.

AND THE WINNERS ARE... We evaluated 27 firms, focusing on what they have to offer for wealthy, active traders. We evaluated these rivals across eight categories, looking for what can be traded online, how the tools work together across platforms, the design and capabilities of mobile platforms, educational offerings and customer service, and the nuts and bolts of placing and executing a trade. When examining costs, we considered stock and options commissions as well as platform or maintenance fees, margin debt and charges for transferring an account. For complete details of our scoring system see the glossary at the end of the story.

Though we award 4½ stars (out of a possible five) to four brokers this year, we also list the top brokers in six categories–long-term investing, options trading, international investing, high-frequency trading, services for novices and in-person service—to help you decide where you should open (or transfer) an account. We show the brokers who were at the extremes when we calculated the monthly cost of trading for infrequent traders as well as for those who trade multiple times per day.

And now to the rankings. Thanks to its much improved platform, and its excellent mobile-trading tools, we have a new winner.

Interactive Brokers (interactivebrokers.com) claimed its victory on points over some tough competition. But let's get the caveats out of the way quickly: This is not a broker for the casual buy-and-hold investor; as a matter of fact, the firm is clearly aimed at hedge funds and very frequent traders. There is a minimum monthly fee of $10, which can be disposed of with a few trades. In addition, some of the data feeds are not free, but if you have multiple accounts at IB, you only have to pay for them once. A $10,000 minimum is required to open an account, and it's clear from online-discussion groups that the customer service available to small account holders is not exactly warm and fuzzy.

What Interactive Brokers is doing right more than compensates for its social awkwardness. The recently launched update to the Trader Workstation features a new interface called Mosaic, which can be customized to your heart's content. It's much easier to use than its previous incarnation, and the customization features are terrific. We also found Interactive Broker's portfolio analysis and reporting and tax-accounting features superior.

The Tax Optimizer allows you to select a specific tax lot, but it goes well beyond that. It allows customers to run real-time "what-if" scenarios to choose the best tax lot and profit-and-loss impact methodology for a particular transaction for all asset classes except futures.

Frequent traders will find this a great way to figure out the tax impact of multiple trades, and the paperwork doesn't have to be submitted the moment the trade is placed. You have until 8 p.m. eastern time the day of the trade to decide what lots you sold so you can examine the tax ramifications of each.

The Portfolio Analyst lets a client assess his performance at any time, using up to 150 industry benchmarks. One particularly interesting report covers Performance Attribution, which compares your account's return to a chosen index, such as the S&P 500, and explains the difference in return due to variations in sector weighting. In other words, how much of your portfolio change was due to market moves, and how much was due to your investing expertise? Reports can be saved and edited; advisors can set up a batch of their client reports to review.

IB has a terrific iPad app, mobileTWS, that takes full advantage of the device's expansive real estate. The layout puts the controls along the right and left margins of the app, keeping the main central viewing area from being blocked by your hands when you want to change views. Streaming quotes and graphs are clearly displayed, as well as the full life cycle of a trade, from creation to fill. Very well done.

The firm's customer-service reputation, or lack thereof, is hard to dispute. For those who are bringing $100,000 or more to a new account, however, IB offers an ambassador who is your single contact through the transition. In addition, the firm's customer-service group has been expanded and there are now reps around the globe, allowing customers to reach someone in support around the clock.

Commissions and fees are very low, though there are some extras you'll find in data fees for international exchanges, and fees for streaming news in the IB Information Systems research platform. You can get a lot done without paying extra, though.

MB Trading (mbtrading.com) merits the 4½-star mark again, with many improvements to its flagship platform as well as the launch of terrific mobile apps. A goal of the development team was to add customer-requested features to the software, and to unify the look and feel of those features across offerings. MB Trading clients can take advantage of a powerful downloadable software application, MBT Desktop Pro, a very functional Web platform, or its well-designed mobile apps.

One feature that MB Trading customers asked for–and received–was an improved order-entry process. Customers trading via MBT Desktop Pro or MBT Web can opt to use one-click trading for stocks, options, futures or foreign exchange, defining their preferences for each asset class. Advanced options analytics were added as well as enhancements to charting and technical analysis.

On the mobile side, the tablet versions support all order types, including a wide variety of conditional orders. The multi-panel layout lets you display quotes, charts, and an order-entry ticket at the same time.

The charting functionality on the mobile apps is deep, with over 60 technical indicators available and real-time analysis, in all asset classes including foreign exchange. This is one of the very few brokers that has mobile capability for foreign-exchange trading.

Mac users will be happy to learn that there is a native version of Desktop Pro available, supporting all the asset classes, order types, and market depth displays from the traditional PC-based version.

MB Trading is a boutique firm; its customer service is terrific when you call a human, but its online community is not very active. Fees are in the mid-range and though its services are aimed at frequent traders, experienced options traders and those interested in foreign-exchange and futures trading can also find a home here.

TradeMonster (trademonster.com) is our top-rated Web-only broker this year, earning 4½ stars. Though you log into its platform on the Web, it has a downloadable software look and feel, with streaming data pushed into view with every tick. The mobile apps reflect the Web-based features. Options traders will find a wealth of terrific analytic and trading tools here, and those not yet into options will appreciate the education that guides you to the appropriate trading strategies.

TradeMonster's tradeCycle feature is one we've raved about since it was introduced in February 2010. TradeCycle encourages you to do your homework, using the site's Research Lab, prior to pulling the trigger. One update this year is that news events are color-coded: red for bearish events, such as a drop in earnings, or green for bullish events, such as an uptick in sales. The liveAction scanning tool displays the results of over 100 technical scans running in real-time; you can save the results to a watchlist for future perusal.

TradeMonster is also very responsive to its customer requests, adding numerous features to the platform such as text message alerts, the ability to adjust the cost basis of a spread and the ability to configure your gain and loss metrics to include commissions and fees.

When placing an order, you can wrap as many conditions around it as you can imagine. The order-entry ticket has a built-in graphical position analysis, which is especially helpful for those placing options orders. A newly-launched feature called the Quantity Assistant lets you calculate the number of shares or contracts based on a percentage of buying power or percentage of a holding; these calculations can be made across multiple accounts as well.

Speaking of multiple accounts, tradeMonster offers some slick tools to investment advisors that can also be used by retail investors. One is the Group Order, which lets you send an order for multiple accounts. You can also search across multiple accounts for a particular stock or options contract, or search on tags applied to past trades. Bond trading has been added this year as well as portfolio margining. TradeMonster, which was sixth on our list a year ago, has stepped up to run with the big dogs.

TradeStation (tradestation.com), last year's winner, didn't keep pace with its rivals' gains, though it definitely deserves its 4½ stars. Its mobile apps fell a little short of others' efforts. There is, however, a lot to like here, including major enhancements to education offerings and dazzling options analytical tools.

You can trade just about everything in this powerful downloadable software platform, including forex. TradeStation gives you the ability to create your own trading system based on a variety of technical and fundamental data, and test it using several decades' worth of clean data. The order router does a terrific job of finding the best price; active day traders appreciate the superior speed and quality of executions.

The order router employs logic that seeks out and captures price improvement, designed to account for the fact that the orders displayed in market-depth reports do not reflect what is actually available. Fills are very fast, in spite of the number of markets that are being queried in the course of each order.

Serious investors who require a variety of professional-grade testing, scanning, and trading tools will also appreciate the TradeStation platform. User requests from TradeStation's very active social network were the inspiration for the major product and service enhancements of the last year. Its OptionStation Pro platform gives options traders new ways to analyze and visualize theoretical and actual options positions. Chart trading adds the ability to trade directly from the platform's readily customizable charts.

Though TradeStation was acquired by Japan's Monex Group last year, there's been no slowdown in its development. We expect to see more inroads into Asian markets for the firm.

This software, once again, is clearly not from a broker who is catering to the uninitiated. There's a $99 per-month platform fee if you trade fewer than the equivalent of 5,000 shares of stock per month or 50 options contracts.

THE FOLLOWING THREE BROKERS were part of a large contingent (seven in all) that earned four stars (click here for the entire list). Each of them merits serious attention, and it's possible that some of their services could better fit your needs than would other brokers higher on the list. We offer them with a brief summation of pros and cons.

OptionsHouse (optionshouse.com)

Pros: Terrific tools for options traders, as you might have guessed from the name. A suite of risk-management tools was just launched, based on professional risk analysis used by OptionsHouse's parent firm, options-market maker Peak6. This suite is designed to give options traders a better picture of what is generating risk in their portfolios across eight different categories. The mobile tools are terrific. Serious options traders will be very happy here.

Cons: Very limited access to international markets.

TD Ameritrade (tdameritrade.com).

Pros: A wide range of technology that brings the world to traders and investors of every experience level. The Web platform gives you access to Trade Architect, which is a bridge application intended to introduce intermediate-level traders to the tools added to the firm with the acquisition of thinkorswim. TD Ameritrade's mobile apps, especially for the iPad, are very well-designed. There are quite a few research amenities available to TD Ameritrade customers that you would pay extra for at other firms.

Cons: Near the top of the cost scale, but you get a lot of bang for the (many) bucks.

optionsXpress (optionsxpress.com).

Pros: Great research tools for those moving into options trading, plus well-designed mobile apps that let you execute complex options orders. Acquired by Charles Schwab last year, optionsXpress kept up its pace of innovation, including the launch of Xtend, which brought streaming data into a Web-based trading platform. The firm plans to maintain itself as a separate brand under the Schwab umbrella for an indefinite period. OptionsXpress customers saw commissions drop this year as the pricing lined up with Schwab's rates. We remain huge fans of the optionsXpress All-in-One Trade Ticket and consider it the industry standard for placing orders in a multi-asset environment.

Cons: The proliferation of available platforms can be confusing. There's no single platform where all the tools are accessible.

GIVEN ALL THE TECHNOLOGICAL advances in the online brokerage offerings during 2011, we can't help looking ahead, and to take a few guesses at what we can reasonably expect to see.

TradeKing (tradeking.com)

Pros: An active and engaged community of traders which includes the ability to interact with CEO Don Montanaro, along with a wide variety of trading professionals. TradeKing is building out its proprietary HTML5 platform, TradeKing LIVE, which is a browser-based application with streaming data that can run on any device. It's got a lot of great tools for options traders, including easy-to-view options chains. The tools are customizable and can be placed wherever you'd like on the page.You can attend live or archived webinars on a variety of topics, and its cost-basis reporting tools (Maxit from Scivantage) are excellent.

Cons: Mobile trading is limited, though iPad and Android apps are expected later this year.

PlaceTrade (placetrade.com)

Pros: This firm could be considered a kindler, gentler Interactive Brokers. Trades are executed at IB using a platform they've licensed to CEO Sarah Place, but customers can also access the full-service brokerage offerings as well at a surprisingly low price. New to the survey this year, this firm's rating can be attributed to utilizing the IB trading engine while offering a great deal of personalized service.

Cons: Website generates a new page with nearly every click, so your desktop gets messy quickly.

E*Trade (etrade.com)

Pros: Real-time quotes, once reserved only for active traders, are more readily available via the firm's site redesign, called E*Trade 360. The customizable layout lets you put together a trading and investing dashboard with your favorite items displayed. Education has been a focus for E*Trade as well, with 57 live events offered in 2011 and more planned in 2012. Power E*Trade Pro integrated more options research and trading functionality, including an options screener that's good for finding new ideas as well as hedging current positions. The updated bond center offers additional education as well as analytical tools that echo those available to equities and options traders. E*Trade's iPad app is very well-designed.

Cons: To fully utilize all the tools E*Trade offers, you'll have to jump from E*Trade 260 to Power E*Trade Pro.

Fidelity (fidelity.com)

Pros: Fidelity's active-trader application, ActiveTraderPro.com, combines streaming data, news, and market scanning tools that arefree for customers who qualify. We especially like the searchable news feeds, which start out with news about your positions and watchlists, but can be customized to your heart's content. Options tools, especially for multi-leg trading, have been seriously enhanced, with features like a trading ticket that populates dynamically based on the rules for your chosen strategy as well as your approved trading level. The Fidelity Website received a fixed-income research and education update as well as access to Recognia's technical analysis tools.

Cons: The most useful streaming tools are only available to qualified customers, and you'll have to flip to the Website for many of the research features.

Charles Schwab (schwab.com)

Pros: The granddaddy of them all is trying hard to keep up with the new kids by updating its tools, offering a streaming platform called StreetSmart Edge, which is being developed in-house. It's a great move forward into more modern technology, and there are plans to roll out a cloud-based version that can run as a native Mac app in the near future. The workflow and ability to customize StreetSmart Edge, plus tools like a momentum tracker and enhanced charting, are welcome additions. The expansion of optionsXpress in 2011 gives Schwab some much-needed options tools. Education and in-person help is a comfort for those who still want to interact with a human.

Cons: You still have to qualify for StreetSmart Edge, and the usual Web platform is looking tired.

ChoiceTrade (choicetrade.com)

Pros: Recently lowered options commissions to $5 plus $0.15 per contract, which is very reasonable. The Web-based service was overhauled; one interesting feature is the ability to stage orders and set up very complex contingencies in The Wheel. The Wheel lets you define a series of conditions that can turn it into either a short-term scalping engine, or a long-term profit managing engine. It's a great step forward for the order-entry process. The options chain displays the intrinsic value of a contract on the screen, which is a unique feature. Frequent traders can use ChoiceTrader Select, a very powerful execution platform powered by eSignal.

Cons: Several add-ons, including streaming quotes and charts, invoke an additional fee.

Zecco (zecco.com)

Pro: The newly-launched trading center includes free streaming real-time quotes and an updated charting application. One intriguing new feature is a dollars-to-shares converter on the order-entry screen. The firm's added a context-sensitive help system that can be toggled off if you'd rather not be bothered. Options-trading tools have been expanded; automatic display of 16 different strategies is now available, which includes the Greeks and a prefilled order ticket. Mutual-fund order entry screens are improved, and show the minimum investment necessary. Zecco has a separate entity, Zecco Forex, for foreign-exchange trading; it requires its own account. Zecco is pushing hard to tie into a variety of social-networking sites, and has also worked to upgrade its customer service.

Cons: Margin data are updated overnight, which could be a concern for the frequent trader. No iPad app.

Scottrade (scottrade.com)

Pros: The firm integrated an online-banking service into its brokerage in 2011, giving it more of a "one-stop shopping" feel. Scottrade is known for having branches all over the US; the current count is well over 500, making this firm a reasonable choice for those who want some in-person help. Though the trading platform isn't state-of-the-art, fees are very reasonable and stable. Scottrade set its $7 per trade commission rate back in 1998, and hasn't (yet) budged. Scottrade added a group of Morningstar Focus ETFs that customers can trade commission-free.

Cons: Portfolio performance reports are based on delayed quotes. Complex options trades must be executed on a separate platform. Limited mobile apps.

Merrill Edge (merrilledge.com)

Pros: Integrated banking services with Bank of America; those with $25,000 or more in cash in a BofA or Merrill Edge account qualify for 30 commission-free stock trades per month. Merrill eliminated tiered pricing, which resulted in a fee drop for approximately 75% of its client base. The fixed-income center added to the Website is nicely laid out, and allows access to a large inventory. Also new this year is an options research center, which includes a strategy builder and some options-related education. The Retirement Center includes a great interactive tool to help plan for retirement. The Research Library contains a wide range of proprietary reports, including the BofAl-ML US1 report. You'll find Merrill financial advisors at 500 BofA branches now; the company's goal is to push that to 1,000 this year.

Cons: The site feels like it's prodding you to move to a more managed style of account (along with the higher fees). Very limited ability to place conditional orders.

Lightspeed Trading (lightspeed.com)

Pros: A terrific platform for the very high frequency trader who is interested in low-cost trading of stocks and options. The platform includes a very powerful scanning tool, Lightscan, which screens the entire universe of symbols based on customer-defined filters. Lightspeed is the first broker to offer Recognia's Education On Demand, which supplies well-designed text and video tutorials, followed up by quizzes to let you know how much sunk in. Customers can use the List Order Entry window to execute a group of orders at once. Options screening and trading functionality are being enhanced this year, with complex options capability promised for the very near future. Lightspeed plans to add access to global markets in 2012 also.

Cons: This platform suffers in our rating system because of its limited range of offerings and lack of mobile technology, but its target customers probably aren't bothered by that.

Just2Trade (just2trade.com)

Pros: Low, low costs with few frills. Some great education offerings from such a low-cost broker. Among them: Recognia's technical analysis system. The order-entry flow has been improved so that a real-time quote is automatically displayed. The Recognia technical events chart is displayed on the order-entry page as well, which is a nice touch. Other additions this year include complex options and fixed-income trading, so this is a good package of products at very low cost.

Cons: Limited mobile functionality, weak portfolio analysis tools.

SogoTrade (sogotrade.com)

Pros: Now a subsidiary of Wang Investments, SogoTrade survived its clearing firm changeover and is now running smoothly. Simple Website to navigate.

Cons: Limited customizability on Web, limited mobile functionality. No fixed-income inventory. This broker still seems to be trying to figure out who they are.

SpeedTrader (speedtrader.com)

Pros: Low fees with access to the software platform DASTrader. SpeedTrader has two Web platforms and offers access to two downloadable platforms as well. You can automate your trading strategies on their SpeedTrader PRO platform. This firm focuses on institutional business.

Cons: Not a terribly friendly environment for the retail trader. Limited portfolio analysis and tax reporting.

Cobra Trading (cobratrading.com, venomtrading.com)

Pros: Newly launched Web platform, Venom Trading, is a customizable application written in Microsoft Silverlight, accessible from any browser. Customers can also use the very powerful RealTick platform for an additional fee. Venom is a step in the right direction.

Cons: Most research tools require additional subscription fees. No fixed-income trading. Confusing to require navigation to a separate Website to log into Venom.

eOption (eoption.com)

Pros: Very low costs for options traders, and a low flat rate for any size stock order. Newsletter subscribers can enable automatic execution of suggested trades, defining the maximum amount per trade based on dollars, percentage of account, number of contracts or shares, etc. Quick and easy paperless account opening process.

Cons: Limited research capabilities, so you may need an account at a broker with better amenities to find trading opportunities. No mobile functionality.

TradingBlock (tradingblock.com)

Pros: Portfolio Hedger points out options-trading strategies that can protect, or even generate, income from, your existing stock positions by putting on a strategy called a collar. To generate trading ideas, you can check out its TradeBuilder tool, which ranks up to 24 possible trades based on your speculative idea. TradingBlock is adding tools to its Website in the next few months intended to help generate income.

Cons: Occasional issues with quote engine. Few screening tools outside of those for options. No mobile functionality.

Firstrade (firstrade.com)

Pros: Simple and straightforward Web trading platform that can be switched to Chinese. Updated account notifications in the newly designed Message Center.

Cons: Limited streaming capability, but the firm is working to fix this objection. No tax-lot selection when closing a position.

ING Direct / Sharebuilder (sharebuilder.com)

Pros: Set up automatic trading to build your portfolio for a monthly subscription fee. You can also trade in real time. Interesting carousel view of multiple accounts makes it easy to pick the account you want to work with. This carousel theme is echoed throughout the site. This is a decent choice for those who want to build a basic portfolio of ETFs and invest automatically. Note: Parent firm was recently acquired by Capital One, so the branding may change later this year.

Cons: Limited range of offerings – no complex options or bonds.

SureTrader (suretrader.com)

Pros: Two platforms that offer streaming data. Aimed at the high frequency trader.

Cons: The company has headquarters in the Bahamas, offers no toll-free dial-in from the U.S. and very high margin rates.

Kapitall (kapitall.com)

Pros: New kid on the block with a game-like trading and research interface. Full review published 2/25/2012 on Barron's Online (Electronic Investor "Shopping for Stocks").

Cons: For now, you can only trade stocks long with Kapitall – no margin, no options, and no mobile

We anticipate more interest in tax-related wares, since the Internal Revenue Service has begun implementing its cost-basis reporting rules. Traders and investors are becoming more savvy about the tax consequences of their trades, and are demanding better pretrade analysis. Similarly, a small but noisy subset of traders want direct access to international assets that range from Canadian oil stocks to Brazilian mining stocks.

Most brokers we polled expect the costs of trading will remain pretty stable. As volatile and punishing as conditions were last year, the markets continue to settle from the upheaval of 2008 and 2009. Some additional small brokers may fall into the arms of bigger rivals interested in their technology, and one or two bigger mergers are possible, but the online brokerage consolidation is mostly done.

And as for new firms? We just welcomed Kapitall in 2011, and you may see a handful of others in 2012.

Certainly, you should expect mobile applications to become even more plentiful and interesting, particularly for the tablets like iPad that combine desktop capabilities with smartphones' portability.

As TD Ameritrade's Steve Quirk says, "We believe that mobile is the future, and the growth trends will continue through 2012."

We Ranked Our 27 Brokers Using the Following Measures

Trading Technology: This category represents the overall workflow for placing an order as well as the order routing technology.

We evaluated the quality of the data available prior to placing an order with an emphasis on streaming real-time data. A real-time quote that is displayed without any additional user input (such as typing the symbol into a separate box or hitting a "Quote" button) receives credit here; if the trader has to make a duplicate entry of the ticker symbol to get a quote, the broker got zero. We checked out the ways a trader is told that an order is executed, such as pop-up notices or an order status screen that is updated when the order fills.

We looked for prefilled order tickets when selling a position, which eliminates possible errors during the closing process. We also evaluated the options order entry process, as well as mutual-fund, bond, and (when available) futures, commodities and foreign-exchange order-entry screens. Methods for placing conditional orders, such as one-cancels-another or one-triggers-another, were checked out.

The availability of price-improvement strategies and smart-order routing technology (which finds the best bid or offer) are necessary to earn top ratings in this category. We asked whether a broker's order routing engine used a spray or sequential engine; spray routing contacts multiple venues simultaneously and are less inclined to execute orders via routes that offer payment for order flow. Brokers offering price improvement—a sale above the bid price, a buy below the offer—received a fraction of a point depending on the portion of their transactions that benefited.

Top marks were earned by brokers who offered a wide array of order types, including conditional orders, and had spray order routing technology. The ability to place a trade from a graph earned a fraction of a point. In addition, we looked for ways to customize the trading experience, such as setting a default number of shares or contracts, to speed order entry. The order entry-and-execution process must flow easily from one step to the next, with streaming real-time information (including buying power and margin balance) available when needed.

Usability: A 5 here means the site or program was easy to use and well-designed, didn't bog down when moving from screen to screen, and can be tailored to the user's needs. We looked at how easy it is to get started on the platform or website as a new customer. Constant availability of a trading ticket, and easy access to research and account status data is key. Being able to easily switch from one area of the website or program to another is important here, as are customization options.

Mobile: A differentiator this year is the availability and quality of mobile trading and account data. We looked for streaming real-time data, including charting and news. We looked for ways to trade stock and options on your tablet or smart phone. Cross-platform integration is key; when you set up a watchlist on your desktop, it should be available on your mobile device as well. We also considered the workflow for placing an order and managing an account. To earn a 5 in this category, a broker must offer the ability to place complex options transactions and conditional orders, and be able to share watchlists and trade ideas with the customer's desktop or Web-based offering.

Range of Offerings: We awarded points for the diversity of investments that can be traded online, with partial points given for those that can only be traded offline. Since long and short stock-trading, as well as single-leg options orders are now standard, we don't award points for those transactions. We asked brokers how many stocks, on average, their customers can sell short, and awarded up to a half-point based on their answer. Complex options trading, and the availability of mutual funds, bonds, futures, commodities and international trading were also considered. A 5 in this category means you can execute all of these transactions online.

Research Amenities: This category measures the quality and accessibility of research, quotes and charting. We looked for research, news and charting linked to a customer's portfolio and watch lists; the quality of third-party research and its integration with the rest of the site; and the availability of screeners, with special emphasis on options-strategy screeners. Brokers also won points for offering real-time streaming quotes at no additional cost, powerful charting capabilities, and Level II quotes. Partial credit was awarded for features that generated an extra fee.

Portfolio Analysis and Reports: The emphasis here is on clearly laid-out reports, updated in real time, showing current balances, positions and margin status. Portfolio-analysis reports, with links to news and research, as well as extensive transaction history, are most desirable. Tax reporting also falls in this category. Full credit is given for reports that can be created on the broker's website, with no additional fees or data entry required. Partial credit is awarded to brokers that populate services such as GainsKeeper and Maxit (tax analysis and reporting programs) for an additional fee.

Customer Service and Education: We sized up online help such as live-chat capability, user guides and frequently-asked-question files. Offline help was assessed by making calls to customer service, and weighing the brokers' reports of the average time spent on hold when a customer calls in. We took a look at the education offerings, both online and live. The ability to visit a broker in person, and to access the account via a mobile device, is taken into account here.

Costs: We looked at commissions for stock and options trades and margin interest rates, giving more points for lower costs. We scaled the points awarded so that the lowest costs in the group earned the maximum number of points, with fractions (and occasional zeros) given to the more expensive brokers. Stock and options commissions are the biggest factor here, but mutual-fund and other transaction fees are also considered. A 5 could be earned here by very low stock and mutual-fund commissions, $4 or less for 10 options contracts, margin interest rates below 2%, and no account-maintenance fees.

Making Sure Your Mobile Transactions Are Safe

Use password protection, question your broker and avoid the free public airwaves to keep iPad data out of harm's way.

It's tempting to slip your iPad out of your purse to check on your brokerage account while enjoying a cappuccino. But is it a good idea to send your data out over the public airwaves provided free of charge by your favorite coffee shop? Do you risk having your information intercepted by miscreants who want to use it for their own purposes?

Frankly, the most pressing security issue usually isn't the airwaves so much as theft or loss of the device itself. The ne'er-do-wells who make off with your gear, or those who simply find a wayward iPhone in a restroom, have instant access to your e-mail accounts, log-ins to corporate data systems and social-networking sites, as well as more personal items like photos.

Your first security measure should be to password-protect your mobile device. The iPhone and iPad can be set up with a four-digit passcode lock, which you should do as soon as you take it out of the box. The passcode can be created so that all the data the device holds, including contacts, text messages, and e-mail login, are erased if someone enters the wrong code 10 times.

What if your devices are safe and sound, but your wi-fi connection isn't? It's obvious when your iPad is missing. It's not so easy to tell when your data transmissions are being intercepted by bad guys. Thieves use such strategies as packet sniffing, phishing, and pharming–all ways of intercepting data or tricking you by spoofing a financial-services Website.

Ever since 2006, when customers of several online brokerages discovered that their passwords had been stolen and their accounts used to inflate the prices of some thinly traded stocks (called "pump and dump" schemes), financial-services firms have made mobile security a high priority.

If you're conducting any financial business from a mobile device, make sure the firms you're working with employ encryption for transmitted data, and that they monitor transactions for unusual behavior. Most banks and brokers are now on the lookout for activity that comes from geographical areas that they know are hotbeds of cyber-criminal activity, and have been successful at stopping the great majority of these intrusions.

Even so, mobile-security experts recommend avoiding open wi-fi, and going with EVDO (Evolution Data Optimized, learn more at www.evdoinfo.com) or GPRS (General Packet Radio Service). It's faster, far more secure and not that much more expensive when you realize you won't be wasting time looking for signal or worrying about what you can and can't do on the connection.

To use EVDO, you just purchase a device from Sprint, Verizon or AT&T and pay a monthly fee for data access. You are your own hot spot when you have one of these, and they work with any mobile device you own, including a laptop. There are some that plug into your tablet's USB port and others that are battery powered and stand alone. GPRS is built in to many smartphones, and is much more secure than open wi-fi. Your mobile device's 3G and 4G connections are secure, though they'll draw on your data usage.

So hang on tight to your mobile devices, and make sure that when you transmit sensitive data that you are doing so safely. If you're not sure a wi-fi connection is safe, just enjoy the coffee.

E-mail: editors@barrons.com

Article from Barron Online