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commoditytipsfree — Sun, 11 Mar 2012 11:00:03 GMT

Silver
yesterday closed with a gain of 311rs to settle at 58775 as PSI moves toward
the wanted percentage of the Greek government, stronger risk appetite send both
gold and silver prices higher. Final results of the Greek debt swap will come
out.

The
latest US non-farm payroll data will also be released today, which will greatly
influence directions of the dollar as well as gold and silver prices. Market sentiment
firmed up after reports that a number of major European financial institutions
had signed up to the bond swap deal, which is aimed at writing down 53.5% of
the country's EUR177bn debt.

The
swap is vital for Greece to cut its debt and secure a bailout of EUR130bn.
Without the aid package, Greece could potentially default on its debt later
this month. Bullion prices got another boost from a report in the WSJ saying
that the Fed was considering a new type of mortgage and bond-buying program,
also known as QE, to help stimulate the US.

Gold
can benefit from such an environment of easy money because of expectations that
ample liquidity would put a damper on the value of paper currencies.

The precious
metal came under heavy selling pressure in recent weeks after Bernanke
disappointed financial markets when he failed to signal another imminent round
of monetary easing. Now technically market is trading in the range as RSI for
18days is currently indicating 52.66, where as 50DMA is at 57694 and silver is
trading above the same and getting support at 58338 and below could see a test
of 57902 level, And resistance is now likely to be seen at 59188, a move above
could see prices testing 59602.

Trading
Ideas for mcx tips :

Silver
trading range for the day is 57902-59602.

Silver
gained as stronger risk appetite send both gold and silver prices higher.

Pressure
seen this weeks after Bernanke disappointed financial markets signal another
round of monetary easing.

The
swap is vital for Greece to cut its debt and secure a bailout of EUR130bn

Intraday Trading Tips free Trial

commoditytipsfree — Fri, 09 Mar 2012 09:57:44 GMT

Report mentioned that Australia's Wheat
grain committed for export at the end of January 2012 was 6.4 million tonnes,
which was 129 thousand tonnes less than in December 2011. The total wheat grain
committed in January 2012 was 864 thousand tonnes (16%) more than January 2011.

Wheat grain stored by bulk grain
handlers at the end of January 2012 was 25.6 million tonnes. Wheat grain graded
for milling comprised 69% (17.6 million tonnes) of the total wheat grain
stored, with the remaining 31% (8.0 million tonnes) graded for feed. The total
wheat grain stored in January 2012 was 3.4 million tonnes (16%) more than the
amount stored in January 2011.

Xstrata Coal has agreed to acquire the
Sukunka hard coking coal deposit (“Sukunka”) from Talisman Energy Inc for
US$500 million in cash, subject to customary conditions. Sukunka is located in
the Peace River Coalfield of northern British Columbia, contiguous with First
Coal Corporation and Lossan tenements acquired by Xstrata Coal in August and
October 2011 respectively.

Sukunka has an NI 43-101 compliant coal
resource of 236 million tonnes in the Measured and Indicated categories.
Norwest Corporation has completed a pre-feasibility study for a long wall mine
producing hard coking coal. Xstrata Coal's technical studies indicate the
potential to realize further value from the resource.

Xstrata Coal Chief Executive, Peter
Freyberg, said:

“Based on our due diligence and
technical analysis, Sukunka has the potential to be a high quality
metallurgical coal mine. Once developed, Sukunka would meaningfully increase
our exposure to hard coking coal, while unlocking synergies with our
neighbouring assets in the Peace River coalfield and providing additional
regional scale.”

The Dalian Commodity Exchange said China
is in the middle of approval for launching coking coal futures in 2012. The
exchange is also looking for the debut of iron ore futures in order to increase
China's presence in the international iron ore market.

As per latest release from Thai Rice
Exporters Association, the total Thailand rice shipments in January through
February 23 were recorded at 4.65 lakh tonnes, a 41% drop year-on-year.

January's rice exports in all rice
categories dropped in quantity year-on-year because buyers shifted to parboiled
rice from Pakistan, India and Vietnam, which offer cheaper prices than rice
from Thailand.Thai rice prices, now guaranteed under the government's rice
mortgage scheme, are less competitive.

Vietnam's five percent white rice is the world's
lowest price at US$415 per tonne and its price is likely to fall even lower
when more yields from new harvests hit the market. Meanwhile, the same variety
of rice from India and Pakistan costs $445 per tonne while Thai rice is more
expensive at $525 per tonne.

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Commodity tips for your wealth

sharetips033 — Mon, 18 Oct 2010 01:05:43 GMT

The capital raised by a corporation through the issue of shares entitling holders to an ownership interest
(equity); "he owns a controlling share of the company's stock"

Stock
is a security issued in the form of shares that represent ownership interests
in a company. There is both common stock and preferred stock. Common stock
holders elect the company's board of directors and actively participate in the
company's success through a rising stock
price. Common stock holders may also receive dividends, provided the company is
profitable, obligations to commercial creditors and bondholders have been met,
and the board sees fit to declare them.

The
term stock is also used to mean the ownership shares of a corporation.
For example, an owner of a corporation will have a stock certificate which
provides evidence of his or her ownership of a corporation’s common stock or
preferred stock. The owner of the corporation’s common or preferred stock is
known as a stockholder.

A stock derivative is any financial instrument which has a value that is
dependent on the price of the underlying stock. Futures and options are the
main types of derivatives on stocks. The underlying security may be a stock
index or an individual firm's stock, e.g. single-stock futures.

Stock futures are contracts where the buyer is long, i.e., takes on the
obligation to buy on the contract maturity date, and the seller is short, i.e.,
takes on the obligation to sell. Stock index futures are generally not
delivered in the usual manner, but by cash settlement.

There are many different stock brokers from which to choose, such as full
service brokers or discount brokers. The full service brokers usually charge
more per trade, but give investment advice or more personal service; the
discount brokers offer little or no investment advice but charge less for
trades. Another type of broker would be a bank or credit union that may have a
deal set up with either a full service or discount broker.

The price of a stock fluctuates fundamentally due to the theory of supply
and demand. Like all commodities in the market, the price of a stock is
sensitive to demand. However, there are many factors that influence the demand
for a particular stock. The field of fundamental analysis and technical
analysis attempt to understand market conditions that lead to price changes, or
even predict future price levels.

Fund selection?

veryanallen — Tue, 15 Nov 2011 18:11:00 GMT

Low returns come from investing in unskilled funds. Static beta-based asset allocation fails when stock markets don't compensate for volatility and most bonds offer insufficient yield for their default risk. An alpha-driven manager mix is for anyone needing persistent performance no matter what's going on in the world. But how to identify those RARE managers and avoid market dependent impostors? Don't hunt for "investment grade" bonds, search for "investment grade" funds.

If someone asks "Should we invest in Japan and China" I interpret that to mean "Do Chinese or Japanese securities offer long/short opportunities that a skilled expert can generate absolute returns from?" to which the answer is of course YES. But some think it means "Should they buy Japan and China beta". Beta is blindly buying everything no matter how risky or fraudulent. Alpha is profitably choosing specific securities to short sell or buy. The prudent man doesn't invest in "cheap" benchmark trackers that do no analysis. Passive funds are certain to underperform the best active managers.

Investing in hedge funds is about replacing market risk with manager risk. Constructing a portfolio of the best managers is as difficult as selecting securities so I use similar processes. You need powerful metal detectors to find alpha needles in beta haystacks. Whether it is trading stocks or choosing funds, the aim is to maximize use of capital and minimize opportunity cost. If you have the time and ability to generate required returns from managing your own money then you should, otherwise you need quality investment advice.

Very few people have the combination of talent, expertise and work ethic to produce absolute returns in excess of absolute risk on a consistent, long term basis. Identifying them in advance is itself a form of alpha. In analyzing funds, the estimation of future alpha and beta independence is non-trivial but in summary: if beta > alpha then it's too risky and of no interest to conservative investors like me but if alpha > beta then it is worth further analysis and due diligence as it could be a good hedge fund.

Beating the market does not always require skill. Cash has outperformed most developed equity markets over the past 15 years and bonds have beaten stocks for 30 years. Does that mean bonds and cash have alpha? No. Are they worth investing in today at these yields? As an alternative are hedge funds, in aggregate, worth investing in? No. The "average" hedge fund underperforms cash over the long term. Alternative beta and hedge fund clones were failed ideas. Almost as bad as portable alpha and 130/30. Remember them? Now the new, new things are leveraged beta risk parity and minimum variance. Sad! If only minimum variance equated to minimum risk.

It's no longer a question of whether to invest in hedge funds. The $64 trillion question now is why tie up money elsewhere. Bombastic passive pundits say you must have X% in stocks and (100-X)% in bonds for all scenarios changing only as a function of age! If "risk free" bonds yielded 10% perhaps LDI or your "age in bonds" might once have made sense but NOT at 2%. It's not surprising investors feel discombobulated. Risk and return are not related. Alpha is the ability to produce higher returns from the risk taken. Most portfolios are still too exposed to stock or bond beta drawdowns. Ignore asset class labels and focus on the best, nimble, unconstrained managers. Let them decide the what, where, when and how of making money.

I separate manager returns into market driven and value added. Most define an index fund as designed to track indices but I broaden it to funds whose returns are mostly dependent on underlying benchmarks. In the last three years the MSCI World and HFR Fund Weighted Composite have had +0.9 correlation. Most so-called absolute return funds lose money in down markets. Any product whose performance is dominated by index direction is more an index fund than a hedge fund. Many "hedge funds" are simply beta repackagers. Typically I can screen out 90% of the universe very quickly.

Of the remaining 10% of managers, I then calculate what percentage of their alpha was due to skill and what from luck. I also use hidden Markov models to uncover hidden factor dependencies. After various other qualitative and quantitative analysis 90% of that 10% are also eliminated. Starting from 10,000 funds I end up with 10% of the 10%. The cream of the cream of the crop. Less than 100 firms, globally, have ever made it through. It is easier and more likely for someone to become a major film star or sports legend than it is to become a fund manager worth investing in.

1. Buy GOOD funds in drawdowns. All genuine hedge funds lose money sometimes. No matter how brilliant, even the best managers only have small competitive edges. I doubt there is anyone that gets even 60% of investment decisions correct over time which is why great defense is more important than good offense. Every true hedge fund is CERTAIN to have drawdowns. "Hot money" amateurs usually redeem often creating great entry points for new patient money. Bad drawdowns include John Paulson 2011, Ken Griffin 2008, James Simons 1989, Warren Buffett 1974 and Munehisa Honma 1769. Avoid funds with infinite Sortino ratios because the crowd loves them. To their ultimate cost. Skill is persistent, luck runs out. Bad luck also ends.

2. Don't avoid proven strategies. Only invest in what you understand? If you don't understand a strategy, find someone that does. Many times I look at the - losing - portfolio of a "diversified" fund of funds and see no black box quant, no managed futures, no short biased, no volatility arbitrage and no frontier markets funds. No surprise such FOHFs are losing assets while the good ones that look at all strategies are thriving. High frequency trading is a reliable source of returns but NO institution globally has issued an RFP for a HFT allocation. Yet. Look for long term performance - the strategy's holding period is irrelevant. For the past 250 years the best performing funds have been entirely quant.

3. Do proper due diligence but don't take too long. Many investors take months and months, often years, to decide whether to invest in a fund. There is no evidence that such a slow process adds any value or avoids incredibly rare frauds. We live in a high frequency world. It takes me a few minutes to decide to avoid or exit a fund. Deciding to invest in a fund takes a few days provided I have visited all its offices and interviewed the most senior and most junior decision-making staff. And if someone I trust is happy with the operational, back office side and I am familiar with the administrator and prime brokers.

4. Never invest in a fund that is often mentioned in the mass media. Ideally you want funds the mainstream has never heard of. It is very hard to produce returns when a manager's every move is followed. Beware of overly transparent funds. Transparency to ACTUAL investors is important but not to anyone else. I receive and read about 800 monthly performance letters and commentaries each month but you will never see one uploaded here. Secrecy is the edge of ALL strategies.

5. Ignore pedigree. Many investors place great emphasis on managers' previous firms or education. Practical experience is important but track records are rarely fungible or relevant. More importantly it is not a predictive indicator. Even more dangerous is paying any attention to universities attended. Common sense is not so common and no-one has a PhD in it. Avoid any fund advised by Nobel prize "winners" like the plague.

6. Redeem from funds announcing their intention to IPO. Every hedge fund firm in the world that went public hasn't made a cent for clients since it went public! Serving two CONFLICTING masters - LPs and shareholders - does not work and shareholders haven't been served well either. Check out hedge fund IPO prices and the prices today.

7. Every investment in a hedge fund is venture capital. It makes no difference if it was set up yesterday or 60 years ago. People worry a lot about capacity and AUM. Some strategies only have room for $20 million, others $200 billion. A good manager closes his fund long before returns reduce. Never fall for the old "closing soon" trick used by marketers. And never, ever believe the "We are closed, but for you we are open" nonsense. Beware of the "endowment" effect and holding onto funds past their prime. Every fund has to justify itself every month. Otherwise it is time to upgrade to a better fund.

The great thing about hedge funds is there are always new ones to look at. As great funds close, successful managers retire and unsuccessful ones go out of business, better strategies are developed. Like everything it's a dynamic active selection process unsuitable for static, passive investors. The average hides those with acumen in the far right tail of the talent distribution. The stock market is a market of stocks. Who lives in a static world? Who wants average portfolios with average performance?

Tail risk?

veryanallen — Tue, 09 Aug 2011 16:08:00 GMT

Tail risk for the summer doldrums? The "quiet" month of August is rarely quiet. Triumph of the realists or revenge of the pessimists? Concern over government debt hits markets so "rational" investors BUY government debt! Fat tails are getting even more obese. The future is unknown so robust hedging and market neutrality are mandatory. Bear markets and low interest rates don't impact the returns of PROPERLY constructed multistrategy portfolios. It is sad seeing so much hard working peoples' savings and pensions savaged by the long only lobby. No return for taking so much risk for such a long time.

Time to buy? It's always time to buy alpha not beta. Volatility is a blessing since forced trading, mispricing and arbitrage situations increase. Unacceptable losses for many years show unskilled long only is for speculators but skilled long/short is for widows, orphans and retirement plans. Time to REPLACE the risky beta bet with better, cheaper alpha solutions. Beta bandits had their chance but the damage they have wrought should now cease. The only fund manager mandate that makes sense is absolute return, not to beat benchmarks. The asset class fixation must make way for superior MONEY MAKING strategies.

How can long only portfolios be considered diversified when codependencies are so obvious? When stocks crash "risk free" yields also drop, doubly worsening pension liabilities. Hedge funds aren't alternatives; they are replacements. 100% in quality REPLACEMENT INVESTMENTS is the way to reduce risk and secure viable income streams for the long term. Adding commodities and geographic diversification doesn't help since they rely on similar global demand factors.

Emerging and frontier markets offer alpha opportunities NOT beta anymore. Real hedge funds are in the business of trading, finding inefficiencies and monetizing volatility for absolute returns. Managers needing bull markets to make money are running closet index funds NOT hedge funds. Acid tests like now are great for differentiating true ability from random luck.

Hedge funds seek alpha. Across all market participants, alpha sums to zero but the hedge fund industry generates substantial positive alpha. That's despite wide return dispersion and "average" hedge funds aren't skilled. The reason is simple - much investment by non-hedge funds is for non-alpha seeking reasons. All hedge funds try to produce absolute returns but most other funds simply aim to beat or track a benchmark. Securities are bought as they are in an index not because they are good investments. Forced selling from the pressure to be fully invested at all times(!) amid redemptions and forced buying to not stray far from an index (tracking "error") means many trades aren't made in the pursuit of absolute return.

Why buy an equity because it's in an index not because it's growing or cheap? All debt capital markets professionals know the criteria for a bond to be in a fixed-income benchmark. No matter how badly priced or the default probability, passive funds must usually buy. That's the problem of rules-based index construction and beta dominated asset allocation. Dog stocks and dog bonds with fleas gets bought by index and relative return funds while good hedge funds can avoid or short sell them. They can also go heavily to cash when desired. The result is NET POSITIVE ALPHA, of which the best hedge funds produce the mother lode.

What beta? The S&P has had no price gains since 1998, FTSE since 1997 and TOPIX since 1983. 28 years! Japan isn't the exception, it's the leading indicator and little has been learnt. Keep to the plan but what if the destination is lower? Smart investors adapt to changing environments. Delta one dinosaurs die. Sophisticated investors don't waste time and capital in unhedged passive products. Stop letting beta "expected returns" destroy wealth. Is your portfolio prepared for the possibility of stocks being lower in 2030 than today? 2040? 2050?

The three decade bull market in "risk free" bonds continues despite "more" default risk, according to the "experts". Last January I must have seen at least 100 presentations on how yields were going to rise in 2011! If you bought 30 year Treasuries in August 1981 you locked in over 14%, outperforming ALL equity indices but massively underperforming recent hedge fund "retirees" George and Warren. Soros and Buffett had outstanding track records from the disastrous (for beta) 1970s but were ignored by allocators even then. Today the 30 year yields just 3.57%, woefully inadequate for anyone looking to preserve wealth, fund retirement or beat inflation.

There's not much safe haven in bonds at these rates. The Fed says it's keeping rates low till 2013 but it'll be much longer than that. Bank of Japan has had "temporary" zero interest rates for many years. The record of credit rating agencies is bad but more importantly ask yourself are current yields worth the trouble? I don't care if a bond is rated C or AAA, only how wrongly priced it is to its value. There are no toxic securities only the toxic prices the unskilled pay because it's in an index!

Bonds don't yield enough, stocks aren't reliable. The answer is long short security selection and tactical market timing; better known as ALPHA. If your portfolio needs a higher consistent return over the long term, you need to be able to analyze securities and time markets yourself or hire dedicated managers who have PROVED they can and whose personal cash is invested alongside yours. All I do everyday is analysis and due diligence to find the NEXT Georges and Warrens.

Skill at long short security selection and market timing are the ONLY drivers of consistent return. How can index funds be "low cost" considering the wealth destruction they wreak. I'm too conservative to take beta risk. Even if I was CERTAIN of a bull market I could never advocate a long only portfolio. I just try to make +10% each year at the lowest risk whether the Dow and Nikkei go to zero or 50,000. If your portfolio isn't stress tested for any eventuality you have the wrong portfolio.

I'm glad brilliant managers make their skills available for such bargain fees as 2 and 20. It would be simpler for them to just trade family and friend money. The sooner pension plans are 100% invested in hedge funds the better for society. No need to cut benefits or raise retirement ages and capital contributions. Pay those absolute liabilities from absolute returns. Avoid "average" hedge funds by doing sensible manager selection and portfolio optimization. Access consistent returns and eliminate tail risk with REPLACEMENT investments. There are no alternatives.

Weekly Address: Taxpayer Subsidies for Farms are Neither Right, nor Smart, and They Should End

MarkJPerry — Tue, 03 May 2011 06:05:00 GMT

Here's a weekly presidential address I'd like to see, based on President Obama's address last week on "Taxpayer Subsidies for ~~Oil Companies~~ Farms are Neither Right, nor Smart, and They Should End."

WASHINGTON â€“ "As ~~oil and gas companies~~ U.S. farms make tens of billions in profits and the government scours the budget for savings, President Obama called on Congress to stop handing them ~~$4 billion~~ $12 billion annually in taxpayer subsidies.

After the worst recession since the Great Depression, our economy is growing again, and we’ve gained almost 2 million private sector jobs over the last 13 months. But I also know that a lot of folks aren’t feeling as positive as some of those statistics might suggest. It’s still too hard to find a job. And even if you have a job, chances are you’re having a tougher time paying the rising costs of everything from groceries to gas. In some places, ~~gas~~ ground beef is now more than ~~$4 a gallon~~ $3 per pound and milk is more than $3.50 per gallon meaning that you could be paying upwards of ~~$50 or $60 to fill up your tank~~ $500 or $600 per month to feed your family.

Of course, while rising ~~gas~~ food prices mean real pain for our families at the ~~pump~~ grocery store they also mean bigger profits for ~~oil companies~~ America’s farms. This week, the ~~largest oil companies~~ U.S. Department of Agriculture announced that they’d made ~~more than~~ almost $25 billion in the first few months of 2011 â€“ up about 30 20 percent from last year.

Now, I don’t have a problem with any company or industry being rewarded for their success. The incentive of healthy profits is what fuels entrepreneurialism and helps drives our economy forward. But I do have a problem with the unwarranted taxpayer subsidies we’ve been handing out to ~~oil and gas companies~~ farms â€“ to the tune of $4 $12 billion a year. When ~~oil companies~~ farmers are making huge profits and you’re struggling at the ~~pump~~ supermarket, and we’re scouring the federal budget for spending we can afford to do without, these tax giveaways to farmers aren’t right. And we need to end them.

That’s why, earlier this week, I renewed my call to Congress to stop subsidizing ~~the oil and gas industries~~ America’s farms. Understand, I’m not opposed to producing ~~oil~~ agriculture, but taxpayer subsidies to farmers when they're making record profits are neither right, nor smart, nor fair, and they should end."

MP: Data on farm income and farm subsidies are available here from the USDA. The USDA is projecting $94.7 billion this year in "net farm income," and government payments to U.S. farms have averaged more than $12 billion per year for the last four years.

Germany, High Yields, and Wind Energy

Stockerblog.com — Mon, 02 May 2011 19:59:00 GMT

It appears that Germany is the strongest member of the European Union and is the country that seems to be the primary member keeping the EU alive. Germany contributes more money by far than any other country to the EU, approximately 21% of the total EU budget. From an income investing standpoint, according to WallStreetNewsNetwork.com, there are about ten dividend paying German stocks that trade in the United States, on the New York Stock Exchange and the Pink Sheets.

One German play is Deutsche Bank AG (DB) trades at 7 times forward earnings and pays a yield of 1.0% based on its last annual dividend. Earnings for the latest quarter ending March 31, 2011 were up 17% year over year.

BASF AG (BASFY.PK), the large chemical company, has a forward price to earnings ratio of 11 and generated an earnings increase of 141.8% for the latest quarter ending December 31. The stock yields 2.3% based on its last annual dividend.

E.ON AG is the German based holding company of the world's largest investor-owned energy service provider in the world. The stock pays a generous 5.9%, and trades at 7.5 times earnings.

Speaking of earnings, Germany announced its first commercial offshore wind farm, called the Baltic 1, which generates 50-megawatts of power from 21 Siemens turbines, enough to power approximately 50,000 households. The windfarm is operated by EnBW (EBK.DE), which unfortunately for US investors, can only be purchased on German stock exchanges.

However, there are other wind energy companies available to Americans, such as Broadwind Energy, Inc. (BWEN), a manufacturer of products for the wind energy industry, which has a forward PE ratio of 21. There is also Brookfield Asset Management (BAM) is a Canadian based asset management holding company which has a division that develops wind power throughout Canada, trades at 24 times forward earnings and yields 1.5%. MasTec, Inc. (MTZ) builds wind farms, solar farms, and underground and overhead distribution systems, and has a forward PE ratio of 14.5.

Even the high yield German utility E.ON has a wind energy division. For a free list of dividend paying German stocks, which can be downloaded and sorted, go to WallStreetnewsnetwork.com.

Disclosure: Author did not own any of the above at the time the article was written.

By Stockerblog.com

Restaurant Performance Back to 2007 Levels

MarkJPerry — Mon, 02 May 2011 19:23:00 GMT

The National Restaurant Association reported strong restaurant activity in March, with the Restaurant Performance Index (RPI) reaching 101.0 for the second time in four months (see chart above). That's the first time since that the RPI has been a level of 101 twice in a four-month period since the pre-recession summer months of 2007. Other highlights include:

1. March represented the sixth time in the last seven months that the RPI stood above 100, which signifies expansion in the index of key industry indicators.

2. The Current Situation Index for restaurant activity rose above 100 for the first time in 43 months, which signifies expansion in the current situation indicators.

3. The Expectations Index stood above the 100 level for the eighth consecutive month, which signifies expansion in the forward-looking indicators.

4. For the sixth consecutive month, restaurant operators reported a positive outlook for staffing gains in the months ahead.

5. Same-store sales and customer traffic levels continued to improve in March.

Markets in Everything: Tatoo Advertising on Head

MarkJPerry — Mon, 02 May 2011 17:06:00 GMT

Ebay listing (starting bid $300, but no bids so far): "Advertise for life on Billythebillboards head forever! Be the 33rd website or company to advertise on my head. Estimated tattoo size is 5 inches long and half inch thick I pay for tattooing."

Higher Education Bubble Updates

MarkJPerry — Mon, 02 May 2011 16:42:00 GMT

Updates on the higher education bubble (see chart above):

1. Wikipedia now has an entire entry dedicated to the "Higher Education Bubble."

2. The Harvard Business Review blog has a new post on "The Business School Tuition Bubble."

3. The Pope Center for Higher Education Policy has a new article on "The Cost of the College Bubble."

The "Decline or Demise" of U.S. Farming?

MarkJPerry — Mon, 02 May 2011 13:16:00 GMT

In this post on manufacturing's declining share of GDP for both the U.S. and global economies, Scott Grannis writes:

"In this same vein, I would add that agriculture was once about half of total US GDP, whereas now it is only a small fraction, yet we feed ourselves and are a net exporter of food. Here again we see how tremendous productivity gains have enabled us to devote fewer and fewer resources to the production of essential goods. This is as it should be."

MP: The chart above shows agriculture's declining share of U.S. GDP using annual BEA data from 1947-2010. From a high of almost 9% of GDP in 1948, the agriculture sector's share of total output has declined steadily and fell below 1% by 2002. And yet we produce more food today than at any time in history and it's cheaper as a share of disposable income than ever before. Thanks to productivity gains, farm employment today represents only about 2.5% of total employment compared to more than 12% of America's workforce in 1950.

Going all the way back to the early 1800s, more than 80 percent of both U.S. employment and output were directly tied to a relatively inefficient (by today’s standards), labor-intensive agriculture sector of the economy. Food products were very expensive and consumed a large part of a typical household’s income. Over time, technology revolutionized farming, resulting in the same trends we observe today in manufacturing: huge increases in farm worker productivity, reduced farm employment, significantly lower and more affordable prices leading to a reduced share of food in both household income and national income (GDP).

And yet, when have you heard anybody claim that "U.S. farming is dead," or talk about the "decline or demise of America's agriculture industry?" Probably never. But a lot of people talk about the "decline of U.S. manufacturing" even though it's going through the same long-term trend as farming - jobs and output are declining as a share of GDP, but manufacturing output and productivity are increasing. And we're much better off because of it.

Bin Laden Effect: Obama Re-Election Odds Rise

MarkJPerry — Mon, 02 May 2011 11:40:00 GMT

The chart above is featured today on the Enterprise Blog, showing that Intrade odds for Obama to get re-elected just jumped from 60% to 70%. There's lots of good discussion about Bin Laden on AEI's blog today, here's a good summary.

Update: "My quick take is that Obama will be re-elected (getting Osama is way more important than Iraq or Saddam in the American mind, attacks on American soil, etc.), at this point the Republicans won’t try to beat him from the center and will thus nominate a more extreme candidate and lose badly, and the most important effects will be on Pakistan, not this country," writes Tyler Cowen.

Who Should Decide On Prices After a Disaster?

MarkJPerry — Mon, 02 May 2011 06:47:00 GMT

Several years ago, Art Carden provided the fill-in-the-blank "price gouging" form below, and it's being put to good use now in Alabama and Kentucky following the tornadoes in those states:

"Fearing increases in the prices of basic items as a result of (disaster) , officials in (state or municipality) have declared a state of emergency whereby restrictions on "price gouging" are now in effect. According to (politician or law enforcement official) , the law is designed to protect innocent consumers from "unconscionable" increases in the prices of food, gasoline, ice, electric generators, and home-repair services. The unintended, unseen consequences, however, are predictable, unfortunate, and avoidable."

MP: It's only in the fantasy world of politics that the "anointed elected officials" think they get to be the "price deciders," and determine if sellers are guilty of "price gouging." In the real world of the marketplace it's much different and much more democratic - the impersonal market forces of supply and demand become the "price deciders," and we're all much better off with those market-determined prices than with the artificial prices determined by politicians and bureaucrats.

If the goal is eliminate shortages of critical goods in Alabama and Kentucky by directing scarce resources as quickly as possible to the areas where they are needed the most, then there's no mechanism more efficient than the price system to achieve that outcome. Just like an earthquake, hurricane, flood or massive price breaks don't change the fundamental laws of physics, gravity or aerodynamics, those disasters also don't change the basic laws of supply and demand.

And it's those market forces, not political rhetoric, that are the best friend of the disaster victims. Suppressing the very price mechanism that most effectively eliminates critical shortages after a natural disaster for political reasons will certainly make the situation worse, not better; and the recovery period longer, not shorter - and those are the unintended, but inevitable consequences of "price gouging" laws.

Stem Cell Funding Band Reversed: What About the Stocks?

Stockerblog.com — Sun, 01 May 2011 15:14:00 GMT

Last week was a busy week for stem cells. The suspension of Federal funding for stem cell research has just been overturned by a United States Appeals Court. The two to one ruling last week said that the law against Federal funding was ambiguous. In addition, Dr. Paul Sharpe spoke at the First International Conference on Dental and Craniofacial Stem Cells in New York last week. He discussed the use of regenerative dentistry to regrow teeth with dental stem cells.

Research has been continuing into the use of stem cells for gene therapy and the treatment of Parkinson’s disease, heart disease, diabetes, multiple sclerosis, arthritis, and many other medical conditions. Stem cells can come from various sources including embryos, cord blood, which is the blood from umbilical cords, and even in baby teeth. There are several publicly traded companies in the stem cell field, according to the free list of stem cell stocks at WallStreetNewsNetwork.com.

For example, Alexion Pharmaceuticals (ALXN) is a Connecticut based company with an $8.9 billion market capitalization that is involved in the development of biologic therapeutic products for the treatment of hematologic and cardiovascular disorders, auto-immune diseases, and cancer. The company licenses porcine embryonic stem cells for transgenic animals. The stock has a price to earnings ratio of 93 and a forward PE of 32.

Cellgene (CELG) is a $27.4 billion market cap company involved in the discovery and production of therapies designed to treat cancer and immune-inflammatory-related diseases. One of the company's main products is Thalomid, which is used for the treatment of erythema nodosum leprosum, a complication of leprosy. They also received a patent on placental stem cell recovery. The stock sports a PE ratio of 31 and a forward PE of 14.

Integra Lifesciences Holdings (IART) is a New Jersey based $1.5 billion market cap company that develops, manufactures, and sells medical devices, implants, biomaterials, and instruments to the stem cell, surgery, and soft tissue repair markets. The stock trades at 24 times current earnings, and 16 times forward earnings.

For a free list of over a dozen stem cell stocks which you can download, sort, and update, go to WallStreetNewsNetwork.com.

Disclosure: Author did not own any of the above at the time the article was written.

By Stockerblog.com

Clarification About Oil Company "Subsidies" and Oil Companies "Not Paying Their Fair Share" of Taxes

MarkJPerry — Sun, 01 May 2011 07:49:00 GMT

From the American Petroleum Institute:

"Contrary to what some in politics and the media have said, the oil and natural gas industry currently enjoys no unique tax credits or deductions. Since its inception, the US tax code has allowed corporate tax payers the ability to recover costs and to be taxed only on net income. These cost recovery mechanisms, also known in policy circles as “tax expenditures”, should in no way be confused with “subsidies”, i.e., direct government spending."

Read the details here.

In addition to the misunderstanding that oil companies somehow receive direct subsidy payments from the government like the payments some farmers receive (sometimes for NOT growing certain crops), there is also the misunderstanding that oil and gas companies are "not paying their fair share" of income taxes. The assumption here must be that other companies or U.S. industries are paying "their fare share" and oil companies "get off easy."

The chart above is based on data from the API and shows that oil companies face a much higher income tax burden as a share of before-tax earnings (41.1%) compared to other S&P Industrial corporations. Keep in mind that oil companies pay a higher effective tax rate than even the highest corporate marginal income tax rate of 35% because they are also paying state income taxes and foreign income taxes. And there are also royalties, bonuses bids, excise taxes and other transfers to governments that aren't even included in the 41.1% tax expense rate.

How Increasing Worker Productivity Has Led to the "Decline of Manufacturing" as a Share of U.S. GDP

MarkJPerry — Sun, 01 May 2011 06:33:00 GMT

As a follow-up to Friday's CD post about U.S. (and world) manufacturing's declining share of GDP, here's some perspective from Chicago Fed economist William Strauss, who explains how rising worker productivity (see chart above) has contributed to that trend:

"In 1950, the manufacturing share of the U.S. economy amounted to 27% of nominal GDP, but by 2007 it had fallen to 12.1%. How did a sector that experienced growth at a faster pace than the overall economy become a smaller part of the overall economy?

The answer again is productivity growth. The greater efficiency of the manufacturing sector afforded either a slower price increase or an outright decline in the prices of this sector’s goods. As one example, inflation (as measured by the Consumer Price Index) averaged 3.7% between 1980 and 2009, while at the same time the rise in prices for new vehicles averaged 1.7%. So while the number (and quality) of manufactured goods had been rising over time, their relative value compared with the output of other sectors did not keep pace. This allowed manufactured goods to be less costly to consumers and led to the manufacturing sector’s declining share of GDP."

The Price of Gasoline in Pictures

Stockerblog.com — Sat, 30 Apr 2011 20:33:00 GMT

Yes, it seems like every day the price of gas at the pump keeps going higher. It is hard to believe that back in January of 2009, the price per gallon of U.S. regular all-formulations retail gasoline was only $1.67 and now it is above $3.80 a gallon. If you have the privilege of living in California, you will pay an average price for regular of $4.21 per gallon and in the City of Los Angeles, the average price is $4.25 per gallon.

Since a picture is worth a thousand words, I thought I would provide you with a couple of graphs showing the increase in the price of gasoline since both 1990 and 2009.

Michigan Economy Doing Better Than California?!

MarkJPerry — Sat, 30 Apr 2011 19:52:00 GMT

For the six months starting last August and continuing through March of this year, the jobless rate in Michigan has been lower than California's rate (see chart above). That follows 88 straight months going back to March 2003 when Michigan's jobless rate was above California's. How interesting that Michigan, the "basket-case" state with the highest jobless rate in the country during most of the last recession, now has a jobless rate almost two points below the "unionacracy" of California.

And who would have thought we'd ever see this happening - some companies are now relocating from California to Michigan! According to this report from Joe Vranich, 70 companies left California from January 1 through April 15 of this year, and the #3 destination behind Texas (14) and Arizona (6) was Michigan, with four relocations (tied with Nevada). And just last Thursday an Irving-based company (Blackford Capital) announced that it's the fifth California company heading this year for greener and more business-friendly pastures in Grand Rapids, Michigan. That's "disinvestment event #78" so far this year according to Vranich, who regularly tracks the companies moving out of California.

Here's something else: According to current U-Haul rates, it's 35% more expensive to rent a one-way truck from Los Angeles to Grand Rapids ($2,673), than from Grand Rapids to Los Angeles ($1,980), implying a higher relative demand for trucks from California to Michigan than vice-versa, i.e., a net out-migration of people moving from California to Michigan.

Stocks Going Ex Dividend the Second Week of May

Stockerblog.com — Sat, 30 Apr 2011 19:23:00 GMT

Here is our latest update on the stock trading technique called 'Buying Dividends'. This is the process of buying stocks before the ex dividend date and selling the stock shortly after the ex date at about the same price, yet still being entitled to the dividend. This technique generally works only in bull markets. In flat or choppy markets, you have to be extremely careful.

In order to be entitled to the dividend, you have to buy the stock before the ex-dividend date, and you can't sell the stock until after the ex date. The actual dividend may not be paid for another few weeks. WallStreetNewsNetwork.com has compiled a downloadable and sortable list of the stocks going ex dividend during the next week or two. The list contains many dividend paying companies, all with market caps over $500 million, and yields over 2%. Here are a few examples showing the stock symbol, the market capitalization, the ex-dividend date and the yield.

Entergy Corporation (ETR) market cap: $12.2B ex div date: 5/10/2011 yield: 4.9%

Overseas Shipholding Group Inc. (OSG) market cap: $856.8M ex div date: 5/10/2011 yield: 6.2%

Eli Lilly & Co. (LLY) market cap: $42.0B ex div date: 5/11/2011 yield: 5.4%

Pitney Bowes Inc. (PBI) market cap: $5.2B ex div date: 5/11/2011 yield: 5.8%

Shaw Communications Inc. (SJR) market cap: $8.5B ex div date: 5/11/2011 yield: 4.7%

Sonoco Products Company (SON) market cap: $3.5B ex div date: 5/11/2011 yield: 3.3%

The additional ex-dividend stocks can be found at wsnn.com. (If you have been to the website before, and the latest link doesn't show up, you may have to empty your cache.) If you like dividend stocks, you should check out the high yield utility stocks and the Monthly Dividend Stocks at WallStreetNewsNetwork.com or WSNN.com.

Dividend definitions:

Declaration date: the day that the company declares that there is going to be an upcoming dividend.

Ex-dividend date: the day on which if you buy the stock, you would not be entitled to that particular dividend; or the first day on which a shareholder can sell the shares and still be entitled to the dividend.

Record date: the day when you must be on the company's books as a shareholder to receive the dividend. The ex-dividend date is normally set for stocks two business days before the record date.

Payment date: the day on which the dividend payment is actually made, which can be as long at two months after the ex date.

Don't forget to reconfirm the ex-dividend date with the company before implementing this technique.

Disclosure: Author did not own any of the above at the time the article was written.

By Stockerblog.com

How to Read a Form 10-K Like a Pro

DoughRoller — Sat, 30 Apr 2011 04:01:37 GMT

While I don’t talk much about my job as a lawyer here on the Dough Roller, I can tell you this–I’ve read more Form 10-Ks than I care to remember. A Form 10-K is an annual report that public companies must file with the Securities and Exchange Commission (the SEC). And if you are a stock picker or just interested in how a public company is performing, understanding how to navigate a 10-K is a must. So let’s dig in.

A Brief History of the Form 10-K

The stock market crash that ushered in the Great Depression was in October of 1929 (October 24th–Black Thursday–and October 29th–Black Tuesday–to be precise). The federal government, under President Roosevelt’s leadership, took many actions to address the economic turmoil that followed. Two such actions included the Securities Act of 1933 and the Securities Exchange Act of 1934.

Important: If you want to impress your friends at the next party, refer to these two statutes as the 33 Act and the 34 Act.

While this is an oversimplification, the 33 Act covers a company’s initial public offering. Basically, the 33 Act requires a company that wants to go public to provide detailed information about the company and its financial statements to the investing public. As required by the SEC, it provides this information through several forms, one of which is Form S-1. If you want to see an example of an S-1, check out the S-1 that Bankrate.com recently filed, which contains quite a lot of interesting information about the business of online publishing and internet marketing.

The 34 Act accomplished two things important to us today. First, it established the SEC. Second, it required public companies to periodically update the investing public about the condition of the company. While the information provided during an IPO is great, things do change. And the 34 Act made sure that public companies kept investors apprised of those changes.

Trivia Question: Who was the first Chairman of the SEC? Hint: The first Chairman’s son would one day become President of the United States. See below for the answer.

As implemented by rules established by the SEC, these periodic filings include Form 8-K (current report), Form 10-Q (quarterly report), and of interest to us today, Form 10-K (annual report).

Form 10-K Overview

There are four parts to a Form 10-K, each dictated by rules established by the SEC. The first two parts provide narrative and financial data about the company, including the company’s audited financial statements. Parts III and IV include information about executive compensation, related party transactions, and various exhibits to the Form 10-K. Here’s a list of the required sections of a 10-K, along with a brief description of some of the more important items from an investor’s perspective (although they are all important):

PART I

ITEM 1. Description of Business:

ITEM 1A. Risk Factor: Companies disclose risks to their business. Risks can include competition, expiration of patents, liquidity, and a host of other things. It’s an important part of the 10-K to read when you are evaluating an investment.

ITEM 1B. Unresolved Staff Comments: This is a fairly new requirement. From time to time, the staff of the SEC’s Division of Corporation Finance (“CorpFin” for short)will issue what are called comment letters to public companies. These comment letters often raise questions about a company’s financial statements, and can result in a protracted discourse between the staff of the SEC and a company’s management. If matters raised in a comment letter have not be resolved when the company’s Form 10-K is filed, the unresolved matters must be disclosed in Item 1B. The disclosure requirement encourages companies to resolve staff comment letters expeditiously.

ITEM 2. Description of Properties:

ITEM 3. Legal Proceedings: Here companies discuss material litigation. Depending on the industry and specific circumstances, this section can be extremely important in evaluating a company.

ITEM 4. Submission of Matters to a Vote of Security Holders:

PART II

ITEM 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

ITEM 6. Selected Financial Data: As the heading suggests, here companies will disclose financial data management believes is important to the entity. Item 6 is not the audited financial statements, and not all data disclosed in this section is consistent with Generally Accepted Accounting Principles (e.g., pro forma disclosures).

ITEM 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations: Also known as “MD and A,” item 7 is one of the most important sections of a Form 10-K to evaluate as an investor. In MD and A, management discusses the company’s performance and future prospects.

ITEM 7A. Quantitative and Qualitative Disclosures About Market Risk

ITEM 8. Financial Statements and Supplementary Data: This is where you’ll find the company’s audited financial statements. This section includes the audit report and the company’s balance sheet, income statement, statement of cash flows, and statement of stockholders’ equity. In addition, there are footnotes to the financial statements, which are also audited.

ITEM 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure

ITEM 9A(T). Controls and Procedures

ITEM 9B. Other Information

PART III

ITEM 10. Directors, Executive Officers and Corporate Governance

ITEM 11. Executive Compensation: Reference is often made to the company’s Proxy Statement for this information. The Proxy Statement is another important filing to evaluate as an investor.

ITEM 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

ITEM 13. Certain Relationships and Related Transactions, and Director Independence

ITEM 14. Principal Accounting Fees and Services

PART IV

ITEM 15. Exhibits, Financial Statement Schedules Signatures:

Where to find a company’s 10-K

There are several ways to get a company’s 10-K. You can find most companies’ Form 10-K on their website, usually under an “investors” heading. Alternatively, you can look up any company’s 10-K in the SEC’s EDGAR database.

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Make no mistake, a Form 10-K can be a lengthy, intimidating document. However, it’s filled with information that serious investors should evaluate when considering an investment in a company. While many investors leave decisions about which companies to invest in to the managers of their mutual funds, investors who make their own decisions should quickly become familiar with digesting the information in a company’s annual Form 10-K.

Trivia Question Answered: President Roosevelt appointed Joseph P. Kennedy, Sr., father of President John F. Kennedy, to serve as the Chairman of the newly established SEC.

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