Why does the US army need private contractors?

There are of course many reasons to do so. One might be lack of personel but there are other reasons as well. Having a contractor to do the “dirty work” can help the government claim innocence and dissociate itself from anything immoral or illegal that was done. If things turn sour, the private company will end up taking the blame which is exactly what happened in Iraq as the company was even banned by the Iraqi government. Many of the operations that Blackwater became involved in had very particular challenges that made it very convenient to operate through the private contractor. Of course, there are limits over what foreign governments can do to a company like Blackwater given the fact that it is backed by the US government. Seems like the best of both worlds right?

It is a new world

We keep hearing about cyber warfare and how it will change the world. There is no doubt that wars are being fought far differently than a few decades ago. It’s no longer about man power, or at least not as much. Nowadays, it is about technology and information. Increasingly, cyber attacks can do great damage to the opponents, no matter if they are countries or international organizations such as Al Qaeda. Being able to dismantle the electronic capabilities of a country prior to an attack would give a huge advantage.

To give you an idea of how different the current wars are. The post 9/11 conflict (Iraq & Afghanistan) is the 2nd most expensive war of all time for the US with a cost of $784 billions (far away from the 2nd World War at $4.1 trillions). But the conflict is only 7th in terms of men involved in the conflict at 2.1 million.  Wars and conflicts will never be the same as they once were.  At the same time, cyber crime is also becoming a major issue. Barack Obama quoted a cost of $1 trillion

Is it bad luck that Georgia had serious issues with its internet and communication services in the hours prior to the attack from the Russian army? These attacks are believed to originate from the Kremlin but it’s not clear because it remains very difficult to make such a case.

To a certain degree, this is not a story about the future but rather about the present. Countries like China and Russia have already been connected to a great number of attacks, spying and other such crimes. They have been able to steal secrets both from corporations and from governments in order to obtain classified information for either commercial or military purposes. Also, criminal organizations are gaining knowledge and operational capabilities to deliver attacks, steal and create mayhem in what could be comparable ways to 9/11. Just imagine someone taking control remotely of a nuclear building in the United States. It may seem like a story from Hollywood a lot more than reality but I don’t think anyone wants to find out how truly serious these threats are.

What is needed?

I think there is a great opportunity for a company to become a private contractor for the US government’s cyber warfare unit. There would be many different tasks but here is what I see as the main ones:

-Spying: Doing the same activities to our enemies to gain knowledge about who they are, their capabilities, objectives, etc. This is critical to our security but is certainly an activity that the US government would not want to be associated with. “Cyber-espionage is the biggest intelligence disaster since the loss of the nuclear secrets” said Jim Lewis of the Centre for Strategic and International Studies.

-Cyber attacks: Being able to dismantle groups that are preparing to attack us is critical. But it can also be tricky. The US government would not want to be directly associated with an attack on a private group in Russia for example as that could be seen as an attack on Russia itself.

-Investigation: When a private company like Google complains about cyber terrorism, it is very tricky for the US government to dig too much into those activities. But having a private group

Why I want to find the next “cyber Blackwater”

Private contractors such as Blackwater have very special relationships with the government as you can imagine. They are allies in crime. Because of that, companies like Blackwater often do not have any competition when they are bidding on federal contracts and are usually paid high amounts to compensate for the risks taken by the executives and workers at those companies. That creates very interesting possibilities for the companies that can become the next Blackwater. Trying to find the right one is the big challenge as these companies will obviously not advertise themselves for what they do. They would instead simply be Government Contractors

I will be on the lookout for the companies that could fit this profile, I’d also be very interested to hear any opinions or ideas as well!

Happy Labopur Day!

IntelligentSpeculator

Already the weekend and we couldn’t be happier about it!!! The weather continues to look “summer like” so we will go outside to enjoy it, here are some links you might want to check out from this week:)

-Top Canadian Dividend stocks @ TheFinancialBlogger
-Is the death of equities exaggerated? @ MarketWatch
-Psychological Stages of a real estate bubble @ TheBigPicture
-10 investing mistakes to avoid @ New York Times
-Do you want to beat the market? @ AndrewHallam
-Where will the stock market end in 2010? @ TheDividendGuyBlog
-Stocks that pay monthly dividends @ DividendsValue
-Get a better understanding of how much money is traded on FX markets @ ZeroHedge
-Why the long term economy growth is not relevant to investing @ MillionDollarJourney
-30 personal finance bloggers to follow @ OwnTheDollar

Photo credit

What?

Conference calls where company executives present the financial and operating activities, comment on future expectations and also answer questions from selected financial analysts

When?

These calls are made 4 times per year, when the company has filed its earnings report.

How?

There are many ways to listen to these but the easiest and most easily accessible are through each company’s website. You can usually find the info in the investor section of the website and these can often be listened to after the fact. I personally don’t think that listening to them before the next day’s trading is that important. I will explain later on.

What do I NOT listen to?

When listening to these calls, these are some of the elements that I do not really care about:

-The actual tone of the executives: These are professionals. Even in times of distress or bankruptcy, they remain calm and composed
-Executive opinions about future revenues: Again, these executives are somewhat biaised

What do I listen to?

When listening to these calls, these are some of the elements that I pay most attention to:

-Where the growth comes from? Any information about where the growth comes from is a good indication about they keys for the company’s success
-Analyst questions: While the questions are always somewhat political (no one is trying to embarass executives), it is still the best opportunity to get more precise answers about subjects that the executives might have preferred to avoid . They will also tend to point out inconsistencies in what was said in the opening statements. Seeing if the executives explain directly or if they avoid answering can be a big hint.
-What is the executive’s focus? Revenues or costs? I am always looking for a company that is focused on revenues
-What is the company working on? Is it something where it can be competitive?
-Questions that executives do not want to answer: Is it because they consistentyly do not want to discuss that subject or is there something more?

How do I use this information?

The thing is that I would not usually do a trade the day following earnings but the information collected in a conference call would help me focus on the right factors in the following weeks and months when juding the stock’s valuation. Knowing that a particular segment of the company is very important will certainly make me focus a lot more on news, traffic and sales as it will have an important impact on the company’s bottom line.

Any other thoughts?

Do you listen to earnings calls and if so, what is your experience in doing so? What do you usually take away from these calls?

What is a payout ratio?

The payout ratio is a fairly simple concept, it represents the portion of earnings that is paid out to shareholders. The calculation is quite simply:

Payout Ratio = Dividend per share / Earnings per share

For example, a company that makes a profit of 2$ per share every year and pays out 1$ of dividends would have a 50% payout ratio.

Why you would want a low ratio

Conventional wisdom implies that you would look for a company with a very low payout ratio. Why? Because as you can imagine, a company that has a high payout ratio could very well be unable to continue offering its high dividends. It is non sustainable for a company to pay more out through dividends than what it actually generates. When that happens there are 2 options. Either diminish the dividend or increase earnings, both of which are challenging.

Because of that we have used the payout ratio in a very simple manner in our search for the top dividend stocks; setting a maximum “acceptable” payout ratio that we apply to take out non qualifying stocks.

Why you actually might want a high ratio

All of that being said, there are corporate finance theories that suggest you might not want to have a very low ratio either. One of the advantages of a high ratio is that its puts more pressure on managers to increase their earnings in order to be able to pay and increase the dividends. Such pressure has often been proved to generate better results in the end. It is psychological but it tends to help managers focus on increasing earnings and dividends.

Think about it for a second.. Do you tend to spend more when you have 10,000$ in your bank account (whenever that happens) or when you have a couple hundred dollars? Chances are that when you go shopping, you are much more inclined to spend with a big balance in your account. It is the same thing with companies that are only accumulating big cash piles. They often are less careful with spending which in the end hurts shareholders. A lot of research has been done over the years to prove this theory.

Another reason would be that a company that pays out most of its earnings will be able to make you profit a lot more when they increase those profits. A 50% increase in profits over the years could very well mean a 30-40% dividend increase as well if the ratio is maintained.

It is all about a balance

Like everything else, it is not black or white. You surely do not want a company that is unable to sustain its dividend payout and payout growth but you also want to look for a company that can be as efficient as possible. I will be trying out a few different numbers in the next few months to see what kind of results it generates. Be sure to sign up for our weekly newsletter if you want to find out more.

Examples

These stocks, all solid, consistent dividend payers all pay between 50% and 75% of their earnings out in dividends:

Pitner Bowes Inc (PBI)
Bemis Co Inc (BMS)
Coca-Cola (KO)
Eli Lilly (LLY)

There are many others…

So which do you prefer?

Would you be looking for a stock that pays a tiny portion out of their revenues or a larger chunk?

Tech news: (concern the stocks we follow)

Apple (AAPL) announced a new multiplayer Game Center, a new touch only Ipod touch, a new Itunes version, a tv box that uses Netflix (NFLX) for movie streaming, tv rentals are now available through Itunes

Best return:     Netflix (NFLX) +7,48%

Worst return:   Shanda Interactive (SNDA)

What to look for

Last month, we were looking for stocks that have been able to grow their dividend payouts for many many years which yielded some interesting results. This time we will simply be looking at which companies show the most promise in terms of profitability which should help them raise dividend payouts in the future.

In terms of dividend yield only, the top yield is once again held by Frontiers Communications Corp which currently yields close to 10%. The easiest thing to notice is that FTR pays more in dividends than it makes in earnings. No doubt, they will not be able to keep it up. Here is the chart:

We will be filtering out the top 100 list to find the ones that fit all of these criteria! In the meantime, here is the list!

Ticker	Name	Price	Dividend Yield	Return MTD	Payout Ratio	Ex-Date
FTR	Frontier Communications Corp	7.73	9.7	1.18	256.68	9/7/2010
WIN	Windstream Corp	11.535	8.67	1.18	129.42	9/28/2010
CTL	CenturyLink Inc	36.16	8.02	1.52	108.88	9/2/2010
PBI	Pitney Bowes Inc	19.24	7.59	-19.74	68.94	11/17/2010
RRD	RR Donnelley & Sons Co	15.145	6.87	-8.86	N/A	11/10/2010
MO	Altria Group Inc	22.32	6.81	0.72	85.4	9/13/2010
RAI	Reynolds American Inc	54.54	6.6	-5.67	104.99	9/8/2010
VZ	Verizon Communications Inc	29.51	6.44	1.55	145.51	10/6/2010
T	AT&T Inc	27.03	6.22	4.2	77.65	10/6/2010
FE	FirstEnergy Corp	36.53	6.02	-1.7	66.6	11/3/2010
POM	Pepco Holdings Inc	17.95	6.02	6.15	101.28	9/8/2010
HCN	Health Care REIT Inc	45.94	6.01	2.93	222.15	11/5/2010
CINF	Cincinnati Financial Corp	26.68	6	-3.16	59.03	9/20/2010
LO	Lorillard Inc	76.01	5.92	1.17	66.56	11/29/2010
LLY	Eli Lilly & Co	33.56	5.84	-4.47	49.73	11/10/2010
PGN	Progress Energy Inc	42.91	5.78	1.9	82.77	10/8/2010
DUK	Duke Energy Corp	17.19	5.7	1.97	114.34	11/10/2010
Q	Qwest Communications International Inc	5.65	5.66	-0.18	83.38	9/8/2010
LEG	Leggett & Platt Inc	19.17	5.63	-8.01	137.84	9/13/2010
TEG	Integrys Energy Group Inc	48.45	5.61	3.74	N/A	11/24/2010
PLD	ProLogis	10.85	5.53	1.37	N/A	11/12/2010
AEE	Ameren Corp	28.07	5.49	10.64	55.23	9/7/2010
NI	NiSource Inc	17.34	5.31	5.09	109.56	10/27/2010
HCP	HCP Inc	35.22	5.28	0.6	716.07	11/4/2010
PNW	Pinnacle West Capital Corp	39.85	5.27	4.62	258.99	10/29/2010
CNP	CenterPoint Energy Inc	14.79	5.27	5.34	74.62	11/10/2010
HCBK	Hudson City Bancorp Inc	11.525	5.21	-6.07	54.7	11/3/2010
EXC	Exelon Corp	40.72	5.16	-1.41	51.29	11/10/2010
PPL	PPL Corp	27.16	5.15	-0.48	116.55	9/8/2010
ED	Consolidated Edison Inc	47.53	5.01	4.37	74.77	11/15/2010
PAYX	Paychex Inc	24.89	4.98	-4.23	93.94	10/29/2010
SO	Southern Co	36.69	4.96	3.85	83.32	10/28/2010
MCHP	Microchip Technology Inc	27.69	4.95	-7.99	115	11/9/2010
SE	Spectra Energy Corp	20.34	4.92	-1	77.22	11/10/2010
BMY	Bristol-Myers Squibb Co	26.08	4.91	4.65	77.84	9/29/2010
PBCT	People's United Financial Inc	12.72	4.88	-8.09	201.19	10/29/2010
PCL	Plum Creek Timber Co Inc	34.47	4.87	-2.78	116.53	11/12/2010
SCG	SCANA Corp	39.03	4.87	1.88	65.96	9/8/2010
TE	TECO Energy Inc	16.88	4.86	4.61	79.85	11/10/2010
DTE	DTE Energy Co	46.85	4.78	1.49	65.6	9/16/2010
AEP	American Electric Power Co Inc	35.41	4.74	-0.44	55.65	11/8/2010
HRB	H&R Block Inc	12.85	4.67	-18.05	41.09	9/8/2010
FII	Federated Investors Inc	20.85	4.6	-0.65	49.79	11/5/2010
XEL	Xcel Energy Inc	22.31	4.53	1.46	64.99	9/21/2010
PFE	Pfizer Inc	15.93	4.52	7.36	57.06	11/3/2010
PM	Philip Morris International Inc	51.44	4.51	0.78	68.4	9/24/2010
GAS	Nicor Inc	42.29	4.4	-3.43	62.58	9/28/2010
NYX	NYSE Euronext	27.74	4.33	-4.25	142.47	9/13/2010
MRK	Merck & Co Inc	35.16	4.32	2.03	27.89	9/13/2010
OKE	Oneok Inc	42.91	4.29	-7.78	56.56	10/27/2010
PEG	Public Service Enterprise Group Inc	31.96	4.29	-2.86	42.27	9/7/2010
KIM	Kimco Realty Corp	14.91	4.29	-1.06	N/A	10/1/2010
D	Dominion Resources Inc/VA	42.76	4.28	2.91	80.67	11/24/2010
VTR	Ventas Inc	50.51	4.24	-0.41	161.44	9/8/2010
MWV	MeadWestvaco Corp	21.76	4.23	-9.18	69.78	11/23/2010
ETR	Entergy Corp	78.84	4.21	2.78	46.86	11/10/2010
COP	ConocoPhillips	52.43	4.2	-5.05	58.3	10/28/2010
KMB	Kimberly-Clark Corp	64.4	4.1	0.44	53.01	9/8/2010
DD	EI du Pont de Nemours & Co	40.77	4.02	1.26	85.62	11/10/2010
JCP	JC Penney Co Inc	20	4	-18.8	74.54	10/6/2010
NUE	Nucor Corp	36.78	3.92	-6.03	N/A	9/28/2010
GPC	Genuine Parts Co	41.93	3.91	-2.1	63.82	9/8/2010
PCG	PG&E Corp	46.76	3.89	5.32	41.64	9/28/2010
HNZ	HJ Heinz Co	46.24	3.89	3.96	58.04	9/20/2010
CVX	Chevron Corp	74.16	3.88	-1.79	50.55	11/16/2010
KFT	Kraft Foods Inc	29.95	3.87	2.53	56.77	9/28/2010
WM	Waste Management Inc	33.09	3.81	-2.53	57.24	9/2/2010
JNJ	Johnson & Johnson	57.02	3.79	-0.92	43.42	11/19/2010
EIX	Edison International	33.75	3.73	1.81	47.41	9/28/2010
NEE	NextEra Energy Inc	53.73	3.72	3.7	47.33	11/24/2010
CAG	ConAgra Foods Inc	21.59	3.71	-8.05	46.82	10/27/2010
SYY	Sysco Corp	27.49	3.64	-11.24	49.68	9/29/2010
LMT	Lockheed Martin Corp	69.52	3.62	-6.66	30.03	11/29/2010
SVU	SUPERVALU Inc	9.72	3.6	-13.07	32.82	11/29/2010
MAT	Mattel Inc	20.99	3.57	-0.8	51.32	11/24/2010
ABT	Abbott Laboratories	49.34	3.57	0.53	43.09	10/13/2010
KLAC	KLA-Tencor Corp	28.01	3.57	-10.8	48.24	11/12/2010
INTC	Intel Corp	17.72	3.56	-13.33	71.23	11/3/2010
NU	Northeast Utilities	28.97	3.54	4.99	49.33	11/30/2010
ADP	Automatic Data Processing Inc	38.61	3.52	-6.45	55.99	9/8/2010
NOC	Northrop Grumman Corp	54.12	3.47	-6.91	34.27	11/26/2010
MOLX	Molex Inc	17.65	3.46	-10.45	137.89	9/28/2010
RTN	Raytheon Co	43.92	3.42	-5.08	24.74	10/4/2010
MHP	McGraw-Hill Cos Inc/The	27.65	3.4	-9.15	39.4	11/22/2010
HD	Home Depot Inc	27.81	3.4	-1.63	58.21	11/30/2010
VFC	VF Corp	70.62	3.4	-10.98	56.72	9/8/2010
AVB	AvalonBay Communities Inc	105.22	3.39	0.12	366.94	9/24/2010
CLX	Clorox Co	64.82	3.39	-0.09	47.69	10/26/2010
MMC	Marsh & McLennan Cos Inc	23.72	3.37	0.85	183.7	10/6/2010
ETN	Eaton Corp	69.48	3.34	-10.8	87.21	11/4/2010
PPG	PPG Industries Inc	65.83	3.34	-4.49	104.47	11/8/2010
GE	General Electric Co	14.48	3.31	-10.17	62.15	9/16/2010
ITW	Illinois Tool Works Inc	41.26	3.3	-5.15	64.02	9/28/2010
MRO	Marathon Oil Corp	30.49	3.28	-8.15	57.35	11/15/2010
MTB	M&T Bank Corp	85.64	3.27	-1.14	95	11/29/2010
CEG	Constellation Energy Group Inc	29.33	3.27	-7.18	4.33	9/8/2010
K	Kellogg Co	49.68	3.26	0.08	45.05	11/30/2010
PSA	Public Storage	98.02	3.26	-0.1	60.61	9/13/2010
PG	Procter & Gamble Co/The	59.67	3.23	-2.44	48.84	10/20/2010
VNO	Vornado Realty Trust	81.06	3.21	-1.33	N/A	11/8/2010

The other successful bet was the long treasury (TMF) which is essentially the same bet as a poor performance of the equity markets usually translates into strong performance of the treasuries.

Other bets that did well are:

-Short oil (DTO)
-Long Gold Miners (GDXJ)
-Long Global Carbon (GRN)

The one big surprise for me was not seeing a volatility ETF make the top 50 as they usually perform very well in such difficult environments.

And a few other commoditiy plays also did very well. Will these be winners in September? Difficult to say but most of the winners in August are still down for the year.

Without further wait, here are the top 50 ETF’s in August 2010:

Ticker	Name	Market Cap	Price	Return YTD	Fees	1Y Return	Return MTD
SOXS	Direxion Daily Semiconductors Bear 3x Shares	$8,770,043.00	$43.85	N/A	0.95	N/A	32.588
FAZ	Direxion Daily Financial Bear 3X Shares	$1,017,564,000.00	$16.73	(12.25)	0.95	-25.448	23.372
TMF	Direxion Daily 30-Year Treasury Bull 3X	$30,228,000.00	$54.96	72.23	0.95	38.967	21.884
SRTY	ProShares UltraPro Short Russell2000	$33,900,050.00	$56.50	N/A	0.95	N/A	20.721
TZA	Direxion Daily Small Cap Bear 3X Shares	$788,917,600.00	$38.41	(22.31)	0.95	-45.712	20.516
SSG	ProShares UltraShort Semiconductors	$37,107,000.00	$20.62	9.36	0.95	-14.221	20.413
TYP	Direxion Daily Technology Bear 3X Shares	$59,407,510.00	$49.10	10.11	0.95	-32.511	19.895
SKF	ProShares UltraShort Financials	$627,354,000.00	$22.98	(3.80)	0.95	-11.738	16.55
SJH	ProShares UltraShort Russell2000 Value	$15,893,550.00	$23.55	(11.08)	0.95	-28.159	15.444
UBT	ProShares Ultra 20+ Year Treasury	$15,553,600.00	$103.69	N/A	0.95	N/A	14.762
SDD	ProShares UltraShort SmallCap600	$28,632,000.00	$23.86	(9.72)	0.95	-28.274	14.443
BXDD	Barclays ETN+short D Leveraged ETN Linked to S&P 500	$3,223,060.00	$55.57	15.53	N/A	N/A	14.033
TWM	ProShares UltraShort Russell2000	$651,168,000.00	$22.61	(10.52)	0.95	-28.422	13.953
SMDD	ProShares UltraPro Short MidCap400	$5,845,058.00	$58.45	N/A	0.95	N/A	13.874
SIJ	ProShares UltraShort Industrials	$14,742,000.00	$21.84	(10.77)	0.95	-31.133	13.791
KRS	ProShares Short KBW Regional Banking	$26,509,080.00	$75.74	N/A	0.95	N/A	13.617
SQQQ	ProShares UltraPro Short QQQ	$49,027,570.00	$65.37	N/A	0.95	N/A	13.566
REW	ProShares UltraShort Technology	$30,084,000.00	$25.07	10.26	0.95	-19.453	13.499
SKK	ProShares UltraShort Russell2000 Growth	$25,963,500.00	$18.22	(9.15)	0.95	-28.44	13.425
SPXU	ProShares UltraPro Short S&P 500	$401,037,000.00	$35.49	(1.98)	0.95	-28.56	13.093
BGZ	Direxion Daily Large Cap Bear 3X Shares	$343,406,300.00	$16.47	(3.85)	0.95	-30.766	12.826
DTO	PowerShares DB Crude Oil Double Short ETN	$71,247,000.00	$83.82	18.49	0.75	5.82	12.615
ZROZ	PIMCO 25+ Year Zero Coupon US Treasury Index Fund	$45,970,000.00	$91.94	34.36	0.15	N/A	12.338
GDXJ	Market Vectors Junior Gold Miners ETF	$1,272,763,000.00	$30.34	16.32	0.59	N/A	12.261
EDV	Vanguard Extended Duration Treasury ETF	$176,562,000.00	$103.86	32.97	0.14	19.464	11.673
MWN	Direxion Daily Mid Cap Bear 3x Shares	$26,509,420.00	$19.28	(22.06)	0.95	-47.342	11.603
GRN	iPath Global Carbon ETN	$4,260,000.00	$28.40	23.13	0.75	0.392	11.392
SDOW	ProShares UltraPro Short Dow30	$34,507,270.00	$69.01	N/A	0.95	N/A	11.172
SMK	ProShares UltraShort MSCI Mexico Investable Market	$4,692,003.00	$23.46	(11.01)	0.95	-39.322	11.143
FCGS	Direxion Daily Natural Gas Related Bear 2X Shares	$4,533,045.00	$45.33	N/A	0.95	N/A	11.092
AGQ	ProShares Ultra Silver	$172,107,900.00	$66.20	14.12	0.95	39.365	10.98
LHB	Direxion Daily Latin America Bear 3X Shares	$6,603,033.00	$33.02	(17.86)	0.95	N/A	10.976
ERY	Direxion Daily Energy Bear 3X Shares	$42,088,190.00	$57.66	1.60	0.95	-31.377	10.554
BAL	iPath Dow Jones-UBS Cotton Subindex Total Return Callable ETN	$12,614,610.00	$42.26	13.68	0.75	40.713	10.554
TYD	Direxion Daily 10-Year Treasury Bull 3X	$6,661,000.00	$66.61	42.59	0.95	31.876	10.525
JJT	iPath Dow Jones-UBS Tin Subindex Total Return ETN	$11,058,750.00	$49.15	28.06	0.75	61.262	10.41
SCO	ProShares UltraShort DJ-UBS Crude Oil	$52,227,720.00	$16.07	11.58	0.95	-4.931	10.282
GDX	Market Vectors - Gold Miners ETF	$6,998,919,000.00	$53.61	14.95	0.53	32.518	10.162
DPK	Direxion Daily Developed Markets Bear 3X Shares	$22,583,500.00	$14.57	(4.37)	0.95	-25.344	9.971
EDZ	Direxion Daily Emerging Markets Bear 3X Shares	$133,935,400.00	$38.38	(21.88)	0.95	-57.352	9.525
DGP	PowerShares DB Gold Double Long ETN	$458,094,000.00	$33.56	24.55	0.75	58.393	9.438
UGL	ProShares Ultra Gold	$197,806,800.00	$55.72	22.46	0.95	56.641	9.404
QID	ProShares UltraShort QQQ	$1,092,052,000.00	$18.91	(1.16)	0.95	-25.818	9.292
BXDC	Barclays ETN+short C Leveraged ETN Linked to S&P 500	$4,834,953.00	$71.63	10.28	N/A	N/A	9.133
RSW	Rydex Inverse 2x S&P 500 ETF	$114,720,000.00	$57.36	1.61	0.71	-17.001	9.044
MZZ	ProShares UltraShort MidCap400	$40,992,000.00	$19.52	(11.90)	0.95	-30.329	8.888
BZQ	ProShares UltraShort MSCI Brazil	$36,712,520.00	$22.25	(1.17)	0.95	-47.977	8.845
SDS	ProShares UltraShort S&P500	$3,877,681,000.00	$35.34	1.06	0.91	-17.474	8.784
SIL	Global X Silver Miners ETF	$71,046,920.00	$15.97	N/A	N/A	N/A	8.715
SJF	ProShares UltraShort Russell1000 Value	$7,521,000.00	$50.14	(3.57)	0.95	-19.712	8.553

Tech news: (concern the stocks we follow)

Apple (AAPL) is said to be about to announce that it will include a Netflix (NFLX) service in its next tv box
AOL (AOL) just acquired mobile firm  “Rally up”
Rackspace (RAX) was cut to “hold” by Benchmark
Staples announced it would soon be selling the Amazon (AMZN) Kindle in its stores
Google (GOOG) released a “smart sorter” in its Gmail section that performs “smart” email sorting
Google (GOOG) & AP reached a distribution deal

Best return:    Quinstreet (QNST) +2,19%

Worst return:    Research in Motion (RIMM) -6,02%

Monday I could not open a new trade because I still have 5 live trades but one stock that was discussed in the Premium Newsletter last weekend was Travelzoo. I would not go short a stock that gained over 25% in a couple of days to a avoid being against such strong momentum but it would certainly make sense to strongly consider shorting the stock when things will calm down a little. I have shorted Travelzoo against Priceline earlier this year with great success mostly because valuations were not consistent with a stock that has not generated that much growth in recent years. So why does it trade so high? Because for some investors Travelzoo shareholders are easily excitable.

It happened again

The odd thing about the recent rise is that there wasn’t anything “material” behind it. The main factor that contributed to Travelzoo’s rise was an announcement that it would start offering a “Groupon” like service. What is Groupon? It has been at the centre of a lot of hype in recent weeks as it gains a lot of traction similar to what Facebook & Twitter experienced after a few months. You can visit the website if you’ve never heard of it but basically it gives out coupons targetted to where users live. The concept is simple but brilliant and has been generating copycats everywhere.

Travelzoo will certainly be able to generate business by using the concept but will it be enough to justify a 25% increase? Not likely I would say. They do have millions of emails and will certainly put effort into getting more info about the subscribers such as the city they live in, but so do competitors such as Expedia (EXPE) and Priceline (PCLN)