It was announced earlier in the week that Apple has lost its ranking as the most valuably publically traded company in the world. With the technology giant’s share prices plummeting, Exxon Mobil surged into pole position after a good performance last year. Apple may only be a few billion dollars behind the US oil company, but columnists all over the world seem to be suggesting that the California based brand has had its day.

The question then is whether or not this is an opportunity to go short on Apple, to leave it for dead, or to invest in the hope that its fortunes will change. To answer this question, we’ve got to look at competitors, and the reasons that Apple appears to be in decline.

It wasn’t that long ago that Apple seemed to be unstoppable. It had the best products available, a huge market share, and one of the best rated brands in the world. If analysts are to be believed, it is in decline for the very same reasons that its competitors lost out. Nokia, Research in Motion and a variety of other companies seemed to be at the top of the game, until they failed to notice changes in the technology market. The same has apparently happened to Apple, meaning rivals like Samsung are suddenly leading innovation and sales. Even Nokia are finding that their fortunes might be changing.

It seems that those who are writing off Apple as a company to invest in have very little faith in the brand’s ability to recover. There are others however, who realise that Apple’s power is not in its twilight; it is still one of the strongest companies in the world, with huge reserves to call upon. If there is any company that can turn its fortunes around, it is most certainly Apple.

There are a great many different strategies open to Apple, depending on where they believe they need to focus efforts. They are certainly going to go head to head with other technology giants such as Google when it comes to mobile operating systems, but Apple has the resources to ensure a high level of profitability.

The conclusion is that it seems far too early to write off Apple. Much of the current negativity is based upon just one quarter, and we’ve seen other huge companies such as Facebook, Amazon and Google suffer disappointing periods, only to recover.

Many investors will certainly have been scared off; there’s no avoiding that. Forex trading experts have even asserted that we could see risk aversion as a result of the company’s unexpected downturn, meaning investors move to havens such as the dollar and yen. For now at least, Apple is still worthy of investment, so much so that going short might only be worthwhile in the very short term. Only after a prolonged period of disappointment can the company really be regarded as past its prime.

In the grand scheme of things, ETFs are relative newcomers to the financial world, but they are fast becoming a popular component to many investors’ portfolios. This is primarily because of the excellent diversity offered by these funds, but another attraction is their potential for excellent tax efficiency, and the fact that annual management fees are relatively low. This is especially true when you compare ETFs to mutual funds.

ETF Classification

One of the main factors that benefits ETFs is that they are generally classified as trusts, meaning the ETF is entirely its own entity; it is essentially an investment company in its own right, and therefore buying and selling the ETF is just like buying and selling another company.

The process of creation and redemption is what sets ETFs apart, and makes them particularly tax efficient. This procedure means that investors can avoid a considerable chunk of capital gains tax, by masking it in the creation and redemption process. ETFs are generally open ended funds, which means that authorized participants may trade assets in exchange for shares or vice versa.

What this means is that shares which were acquired at varying values, meaning there are some being held at profit and some at a loss, can be used to manipulate capital gains. Shares with a higher cost basis can be exchanged at a capital loss, which can neutralise unrealised gains, helping to avoid a good deal of capital gains.

The main point to consider is that when ETFs redeem their investor’s capital, they do so as an exchange, unlike mutual funds which do so in cash terms. Exchanges are not subject to tax, which is what makes ETFs so effective in this respect. Hiding capital gains is what this system is all about.

The key point to remember is that ETFs can fulfil investor redemptions without actually having to sell any securities.

ETFs vs. Mutual Funds

Of course, ETFs are not completely tax exempt, and it isn’t always possible to veil the capital gains through the creation and redemption process. This is the main component of an ETF’s operation however, so there is always scope for reducing tax.

When comparing mutual funds to ETFs, you’ll find that tracking identical indices can potentially yield 5% more of a tax burden, which could potentially mean thousands in lost profit on your typical sized portfolio. This does not include potentially higher management costs either.

ETFs Outside the US

In reality, ETFs are likely one of the most tax-efficient products on the US market, particularly when it comes to forex.

In the UK and other countries, ETFs are similarly popular, though they are not unique in their low tax. They also require offshore banking to fully take advantage of low taxation potential, due to corporation tax. Spread betting, classed as a form of gambling, is of course illegal in the US, but by the same token, is tax-free in the UK. Go to http://www.cmcmarkets.co.uk/spread-betting to find out more about spread betting if you reside in the UK.  Please know it carries considerable risk.

If you file taxes online there are some great web-based software packages available that will help you sort through the maze of tax related investment decisions.  I have found that TurboTax is the best.

Should you include Forex in your investment portfolio?

Forex has gained considerable popularity recently, as people have realised just how accessible it has become. For this reason, a great many people are turning to it as a method of investment. There are now thousands of individuals worldwide who make their living through investment in currencies, and similarly, people are putting some of their portfolios into forex too. The question is, does forex make sense in the long term?

What Do Most Traders Do?

The vast majority of traders do so short term. This is because this is the most profitable way of doing things to earn a regular income. The main reason however, is that one of the main forex strategies; the technical approach, is much easier to master on a short scale. Traders will monitor a variety of price charts, looking for patterns and signals which they believe indicate an ideal time to make a trade. These charts work far, far better for short term trading. With forex, a short term trade can be held for only minutes, and most spot trades i.e. simple buy or sell trades, will be closed within a day.

What Makes Long Term Trading Less Attractive?

Price movements over the long term are very hard to predict, and a lot of investors would argue that other options are better because they are easier. The flip side of course is that extremely large profits are entirely possible for those that believe they can speculate successfully. Spot trading can be difficult to profit from over a long period of time, because brokers will charge fees for every day the position is open. For this reason, options and futures are the preferred products for long term traders.

Forex tends to attract those who enjoy the thrill of making trades, and the constant price fluctuations mean that exciting and risky short term trades are more popular. Similarly, the fact that the markets are open for 24 hours a day for 5 days a week means that anyone can make small trades whenever they want, and see instant results. Constant monitoring is yet another reason short term trades are popular; brokers like Alpari even offer smartphone platforms.

Who Is Long Term Trading For?

To put things simply, long term forex investment is an advanced method of investment. It is best suited to those who already have a portfolio to work with, and are looking for another avenue to explore, because it is difficult to get immediate results. It can take time to find out whether an investment has been successful, by which point there may have been considerable expenditure in brokers fees. Long term forex trading is however, a favorite of hedge fund managers.

If you’re looking to get in to forex as a way of earning money quickly, then short term trading is definitely a better option. If however, you are looking to hedge some of your funds, then long term trading may be for you, if you’re willing to take the risks. Visit website to find out more about the trading strategies and options.

These recent high profile SEC filings, which would included Pandora’s announcement that it’s IPO is imminent further increases the chatter about a tech bubble about to burst which could also potentially signal the top of this meteoric market rise off the March 2009 bottom.  Why?  Following the market crash in 2000 and 2008, the IPO market was reduced to only those companies that were for the most part showing decent profits.  As the IPO market catches fire again, you have internet companies that are far from profitable trying to cash in as investors and traders themselves try to cash in on the “next big thing.”  There’s no doubt Groupon is a hot commodity and its growth is staggering.  We’re talking about a company that did $30 million in revenues in 2009, then hit over $700 million last year.  There is one problem though.  This is a company also burning through a staggering amount of cash to the tune of over $$400 million last year.  The red ink floodgates are still open this year as the company lost over $100 million in the first quarter.  Pandora is also still swimming in red ink after 10 years in business. 

Despite the heavy losses I think we can expect another impressive opening for Groupon and to a lesser degree Pandora.  The party can continue longer than we think and may not reach a peak until the Facebook IPO comes to fruition.  As I mentioned with the LinkedIn IPO post, it’s best to let these high flyer IPO’s (or any IPO for that matter) trade for a few weeks to see where the base develops.  LinkedIn (LNKD) is well off the opening high and continues to try to find the bottom of a base.  Should LinkedIn form a shallow base and breakout to new highs quickly, it could signal this hot IPO market is here to stay for awhile. 

When an IPO like this hits the market the knee jerk reaction is to want to jump in as soon as it begins trading for fear of missing out on the next big thing.  Taking a look at the open today with the stock more than doubling in price and surpassing $100, it definitely appears “the fear of missing out” trade is on big time!  Jumping in on that kind of trade can be a big mistake and can often lead to large losses. 

Before I get into the trading tactics let’s take a look at why LinkedIn (LNKD) is generating such buzz.  First of all, it’s the highest profile social networking site to hit the market which in all likelihood will have Facebook and Groupon wondering whether they should hit the public market sooner rather than later.  I’m sure investors and execs at both companies are seeing the dollar signs.  LinkedIn is no slouch in the social networking world, but is still dwarfed by Facebook in terms of number of users, revenue and profit. It’s dwarfed in terms of valuation too.  Based on the secondary market, Facebook has now reached a stratospheric valuation of around $70 billion while Groupon is being valued in the $15 – $20 billion range.  I believe at the current price, LinkedIn is approaching a $7 billion valuation.

LinkedIn counts just over 100 million users and doubled revenues in 2010 over 2009 to $243 million with a net income of $15.4 million. However, the company says it does not expect to be profitable on a GAAP basis for 2011 and is forecasting declining revenues and rising costs going forward (according to Reuters).  For comparison sake, Facebook has more than 600 million users and reportedly earned $1.2 billion in revenue and $355 million in net income for the first nine months of 2010.  Now you begin to see the kind of frenzy a Facebook IPO would generate if it were to go public too. 

Many are beginning to question LinkedIn’s valuation as murmurs of another tech bubble begin to grow.  Shares were priced at 17.5 times the company’s 2010 sales (that’s BEFORE today’s parabolic move).  That compares with Google’s valuation of about six times.  Is the move justified for a company that doesn’t expect GAAP profits this year or for a company that TheStreet.com says is becoming far less useful?  Common sense would say absolutely not, but then again any of us who have been involved in the markets for some time knows that common sense and reality are often two sides of the coin.  The “fear of missing out” trade can go on longer than we think.  Does that mean you should jump on the bandwagon?  In my humble opinion – NO.

That leads me to a discussion of how best to trade IPO’s, particularly an IPO that has soared out of the gates.  In a nutshell, the best strategy is to WAIT.  You want to see where this thing settles out, or more technically, where it forms its first base… a bullish triangle, a short base, a longer cup with handle or double bottom base.  The hottest IPO’s often don’t base very long, but in my experience it’s best to wait at least two weeks from the open to get a feel of where resistance and support may be.  After two weeks, I’ll revisit the LinkedIn IPO and post a chart with my analysis along with examples from the past.  Good trading out there and do not chase this IPO!

“Buy on the rumor, sell on the news” is an overused phrase in the investment community, but before an investor takes this advice to heart, he should also verify the sources and confirm the validity of the messages that he receives. This last part of prudent counsel often gets lost in the shuffle of buy and sell orders, but it may be the only protection that an investor has when it comes to detecting obvious stock manipulation techniques employed by those bent on deceit.

Stock manipulation is also a favorite topic of the “talking heads” on financial news channels. Fraud openly exists, despite the efforts of regulatory and law enforcement officials to stamp it out. A sad testimony to risk management efforts is that fraud can never be completely eliminated, but must be tolerated at an acceptable level as a cost of doing business. The forex market is, perhaps, the only market we have that is less prone to manipulative tactics due to its shear volume, now at $4 trillion a day and counting. Even the largest hedge funds with their sophisticated forex trading platforms or even central bankers are unable to artificially drive the market in one direction or another, though their efforts to do so are widely publicized.

Stocks, however, are much easier targets. After Ted Cramer, the well-known television host of “Mad Money”, admitted in a 2007 interview with TheStreet.com that he was guilty of manipulating stock values during his employment days at a major hedge fund, numerous articles were written on the topic as if it were new news. His direct quote was quite telling when he stated, “What’s important when you are in that hedge fund mode is to not do anything remotely truthful, because the truth is so against your view, that it’s important to create a new truth, to develop a fiction.” The “YouTube” link to the video was subsequently overrun, but it is not difficult to locate it with a current search engine.

The “Flash Crash” last May resurrected the topic, and the report and actions taken by the SEC have not restored investor confidence. However, a recent resurgence in positive performance by the Dow, S&P 500, and the NASDAQ may have quelled a complete retreat by “401K” funds invested in stocks, but when optimism and favorable news reports abound, the circumstances that favor stock manipulation abound in lock step.

It is time once again to be wary of the following schemes designed to defraud:

• “Pump and Dump”: A typical strategy used by large position holders of OTC small business stock offerings. News headlines suddenly shout that revenues have increased 500%. A stampede ensues, prices skyrocket, and then the perpetrator unloads his position to the unwary. When the hype fades away, the stock’s value plummets like a lead balloon;

• “Short and Distort: This technique, just as illegal as the “Pump and Dump”, is employed in a Bear market. In this case, the fraudster “shorts” the stock of his target company, and then spreads a smear campaign to foster fear in the minds of current stockholders. Numerous small sell orders are executed through different brokers to signal that something may be wrong with the company. An avalanche of selling transpires, and the unscrupulous “shorter” takes his profit and runs.

There are a variety of smaller known tactics, but most deal with “penny” stocks and the market makers that support them. The only defense is to perform your own research, check the credentials for any that authors you read, and be aware that stock manipulation is a possibility.

A few things to point out.  For one, gold didn’t really correct, but rather digested overbought conditions with more of a sideways move (actually head and shoulders pattern) and remains in a fairly tight range above the $130 level, so certainly gold has held its own up here and could be poised for a move to the next major resistance level up around the $150 level (another 10% or so from current levels).

Before a move like that can take place, gold will need to move out of a possible head and shoulders top formation which is still a possibility, but hasn’t been confirmed.  We’ll need a couple healthy moves down in gold for that to happen.  Adam Hewison of Ino.com is basically on the same page.  He just did a quick video highlighting the current action in gold and will conduct a webinar tomorrow.  Watch the video and sign up for the webinar by clicking on the video image below.

To round out this update on gold, I wanted to bring in the analysis of David Banister of MarketTrendForecast.com who uses Elliot Wave Theory.  Despite the variance in the tools used to analyst the current price action in gold, I think we can all agree… the price action in gold remains in a strong uptrend.  While there are vulnerabilities that could play out, the odds favor a move to the next level of resistance which I mentioned as around the $150 level for the GLD.  David sees resistance around the same area and targets a move in price of gold to the $1480 – $1525 level.

Get David’s full analysis here

Sodastream is an Israeli company that sells home carbonation and flavoring systems for.. you guessed it!  Homemade soda and sparkling water.  While I haven’t used the product myself, the idea is brilliant and rides the wave of three important trends – an increasing awareness of the need for better nutrition, a cleaner environment and saving money (in the long run).  Three simple, but powerful trends. 

The company offers over 30 flavors to choose from including the traditional flavors such as cola, to diet options, to mixers such as tonic and even an energy drink formula.  As for nutrition, the company claims its all natural flavors contain a fraction of the calories, carbs, sugar and sodium that Pepsi and Coke do.  Environmentally, you have less packaging, cans & bottles and less pollution caused by the transportation of these products.  Americans spend BILLIONS on bottled water alone!  That stat truly disgusts me especially when you consider that some of the bottled water is more polluted than tap water!  That’s a topic for another day..

===> Click Here For Your FREE Daily Sodastream Technical Analysis Report

It all looks great in theory, but is the company selling these things?  The answer is a resounding yes… to the tune of nearly $200 million in revenue over the past year.  Keep in mind 80% of that currently comes from Europe.  The company just began ramping up its distribution here in the States this summer and now sells the product at Sears, Macy’s, Bloomingdales, Williams Sonoma, Bed Bath & Beyond, BJ’s and other retailers. It will be mighty interesting to see how well the company did last quarter when it reports this Monday.

I think there can be some comparisons made to Green Mountain Coffee Roasters (GMCR) which saw its stock skyrocket in the past few years.  The company makes the single cup coffee brewers and relies on recurring revenue from the K cup packets similar to the way Sodastream will rely on recurring revenue from the CO2 tanks and flavoring.  However, people have been brewing their own coffee for many years.  Will they begin carbonating their own sodas and sparkling waters?  That is the billion dollar question and we may find out over the next few years.  For now, the company is experiencing rapid growth and the technical action is very bullish.

When I’m looking at trading IPO’s, I always let the stock trade for at least a few weeks and look for the first consolidation period.  That could be in the form of a flat base, cup with handle base or in this case a bullish triangle.  The stock broke out of this bullish formation just above $32 and hasn’t looked back.  That provided the 1st, most ideal entry point, but it offered another entry point on a break above the high around $38.  In my opinion, it’s currently too extended for a proper entry point, but would provide a good 2nd chance opportunity on a return to $38 or lower.

Disclosure: I have no position in SODA.. unfortunately.

Berg told investors in the largest group of Meridian funds their money would be used to buy properties, but it’s now clear that didn’t happen.  In order to fool the auditors, Berg apparently opened dozens of PO boxes which he listed as the addresses of fictitious borrowers allowing him to sign the confirmation letters sent from the auditors and send them back. 

Berg filed for personal bankruptcy back in July and has been cooperating.  While he hasn’t been jailed yet, hopefully he’ll be getting three squares at another big house soon.