Archive for category Stock Market
Bin Laden death could boost markets short-term
Posted by admin in Stock Market on May 2nd, 2011
by Adam Shell – May. 1, 2011
USA Today
The killing of Osama bin Laden, the mastermind of the 9/11 terror attacks that hit at the heart of the U.S. financial district, killed thousands and shut down the New York Stock Exchange for four days, is likely to provide a short-term psychological boost to financial markets and a Wall Street community still mourning over the losses suffered that day.
“It’s bullish short term, both to celebrate … and also to reflect the likely long-run stability introduced by killing the head of this terror movement,” says James Paulsen, chief investment strategist at Wells Capital Management.
Adds Paul Hickey, founder of Bespoke Investment Group: “It’s great for the country and our psyche. It will provide a boost just like it did when we caught (Iraqi president) Saddam Hussein, because it’s a victory against our number one enemy, but ultimately life goes on and the markets will focus on business.”
President Obama announced late Sunday night that U.S. forces had tracked down bin Laden in Pakistan, killed him, and have his body in custody.
The terrorist attack of Sept. 11, 2001, included strikes at the World Trade Center in downtown New York City — the financial capital of the world and a symbol of U.S. capitalism and power. The terrorists’ goals was to foment fear, erode consumer and investor confidence, and disrupt the U.S. economy.
The nation’s stock exchanges closed for four days, and when the market opened for business on Monday, Sept. 17, 2001, the Standard & Poor’s 500 stock index plunged nearly 5%. The market bottomed out five trading days later on Sept. 21, with a total loss of 11.6% in that short span.
Today, the S&P 500 is 24.8% higher than it was the day before the worst terrorist strike on U.S. soil.
Wall Street was Ground Zero on 9/11, and the memories are still fresh in the minds of those that were in New York City that day, when two of the World Trade Center towers, home to many in the financial business world, imploded and collapsed.
“I vividly remember walking out of the Marriott hotel onto Liberty Street and seeing the first tower on fire,” says David Kotok, chief investment officer at Cumberland Advisors. “I saw the second explosion from across West Street. The image of jumpers is embedded in my memory. The takeaway for me is clear: There is a certain sense of justice now that the mastermind of 9/11 is dead and was killed by a planned and implemented U.S. forces action.”
Wall Street, however, understands that fresh strikes against U.S. interests are possible in coming days and could upset markets if they are successful.
“The risk, of course, is that there is now likely to be a retaliatory attack and fear will rise on that score in the next few weeks,” Paulsen adds. “I don’t think this terror network is over or dead. But killing their leader significantly weakens their efforts and it also comes at a time when the Middle East is rejecting dictators in general. We will still fear terror but I think we are headed toward a more confident feeling in this country.”
Paulsen says the U.S. killing of bin Laden nearly 10 years after 9/11 may also renew confidence in the USA, which could prompt a rally in the U.S. dollar, which has been falling steadily versus other currencies in recent months as the nation’s debt load has mushroomed to more than $1.5 trillion.
“It may even add to a feeling of turning a corner and finally turning the page on the financial crisis and recession the world has been though,” Paulsen adds.
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Missouri clerk wins Powerball – $258 million
Posted by admin in Housing Market, Stock Market on April 23rd, 2010
Gold Will Collapse Like Oil Did in 2008: Charts
Posted by admin in Stock Market on November 29th, 2009
by Daryl Guppy – Nov. 23, 2009 1:53 AM ET
CNBC.com
The gold price has moved quickly and it has developed an important new uptrend characteristic. This so-called ‘parabolic’ trend is a dangerous type with a high probability of a sudden collapse.
The original breakout above the psychological resistance level near $1,000 was a breakout from a trading band. Using the trading band the first price target projection was near $1,080. This was achieved quickly.
The same trading and projection method is used to set the next higher target. This target is near $1,160. This target has a high probability it will be achieved.
The breakout above $1,000 started with the characteristics of a rally. The rally has been fulled by a number of reasons: large buying activity of central banks in particular India’s Central bank, the decline in the US Dollar, and the anticipation of continued low interest rates in the U.S. among them.
A strong rally breakout typically develops into a sustainable and reliable trend, characterized by retreat and rebound activity within the new up trend development.
However, in the past week, the nature of the rally breakout has changed drammatically. It’s no longer a normal uptrend, but best described as a parabolic trend.
The parabolic trend is a curved trend line that captures the acceleration of price. The trend will eventually develop into a vertical line, which is used to define the end of the rising trend.
The characteristic of the parabolic trend is that the trend collapses very rapidly when price moves to the right of the trend line.
The parabolic trend line is divided into three sections:
In the first section the parabolic trend is difficult to recognize. In the second section of the parabolic trend the exit signal is a close below the value of the trend line.
The second section of this parabolic trend is currently developing.
The third section of the parabolic trend is more dangerous. Here the exit signal is a move below the value of the parabolic trend line. Additionally, there is always a time when the price has no choice. Price will automatically move to the right of the trend line and signal the end of the trend.
How We Can Fix Wall Street
Posted by admin in Stock Market on November 29th, 2009
by Jennifer Schonberger – Nov. 27, 2009
The Motley Fool
During last fall’s financial Armageddon, many of Wall Street’s biggest banks faced a stark choice: Either take government money to stay alive, or go bankrupt. The survival instinct won out, and after taking government money, some — including Goldman Sachs (NYSE: GS) and JPMorgan (NYSE: JPM) — have paid it back.
But Bank of America (NYSE: BAC), AIG (NYSE: AIG), Citigroup (NYSE: C), General Motors, GMAC, Chrysler, and Chrysler Financial still retain those funds, and they’re paying the price — literally. These seven are subject to the whims of the government’s “pay czar” until they pay back their government money.
Do recent developments like the “pay czar” usher in a new era for executive compensation, where restrictions are placed on bonuses paid as a way of reining in incentives that led to an era of corporate excess and reckless risk-taking? Should the country’s executive compensation system be restructured as part of an overhaul of corporate governance? For that matter, what changes should be made to corporate governance as a whole?
Congressman Paul Kanjorski (D.-Pa.), chairman of the House Financial Services subcommittee on capital markets, gave his thoughts on reforming corporate governance during a recent interview. What follows is an edited transcript.
Jennifer Schonberger: Part of the reason Wall Street levered up and took on so much risk was that it produced such great returns in the short term — i.e., quarterly results, which in turn translate to windfall bonuses. In that vein, we talk about rectifying the system, restructuring it and trying to put a lid on risk. How much of that is rooted in pay structure/executive compensation? Can we rewire the system to make it more long-term focused?
Rep. Paul Kanjorski: That can be done rather easily, but we shouldn’t do it as simplistically, because the government should not get inside the interest of a corporation — what they pay their workers. That’s a private entity. We should get concerned and exercise regulation because it has impact on the economy or the financial stability of the nation. We shouldn’t be spending our taxpayer money and getting heavily involved in setting wages.
Now we’ve done that just recently. Our problem is, we need serious reform in corporate governance, and if you do that, you’ll arm the shareholders and the appropriate parties with sufficient powers to make sure the insiders don’t get away with dictatorially running corporations and the assets of corporations. We just haven’t attended to that. Next year, that should be our big measure before this committee — really in a serious way examining corporate governance and what additional powers are necessary.
Schonberger: Corporate governance has really fallen off the radar for a lot of investors. How do we get investors to care about this critical issue?
Short term vs. long-term
Posted by admin in Stock Market on November 26th, 2009
by Mark Hulbert – Nov. 25, 2009 12:01 a.m. EST
MarketWatch.com
ANNANDALE, Va. (MarketWatch) — It might not exactly be news that Robert Prechter, the famous follower of the Elliott Wave theory, is bearish on the U.S. stock market.
That’s because he has been playing the equity market from the short side for quite some time now.
But what is news is that, earlier this week, he became even more aggressively bearish than usual: He is now recommending that traders allocate 200% of their stock trading portfolios to shorting the stock market.
What should be your response to Prechter’s latest advice?
There is no easy answer, unfortunately.
But this question does raise a whole range of fascinating issues having to do with how best to interpret not just his, but any adviser’s, track record.
On the one hand, Prechter’s advice over the last couple of years has been top-rated. It’s not just that he was bearish during the financial meltdown — he also did a good job of playing the various intermediate-term corrections along the way.
Consider, for example, the issue of the Elliott Wave Financial Forecast that was sent out at the end of August 2008, some 15 months ago. This issue, edited by Prechter colleagues Steven Hochberg and Pete Kendall, appeared just two weeks before Lehman Brothers went bankrupt. Soon thereafter, of course, the entire financial system came dangerously close to becoming completely unraveled, and the stock market went into a free-fall from which didn’t finally stop until March of this year.
Hochberg and Kendall wrote: “The stock market is building up the necessary reserves for its next major move, a third wave decline at multiple degrees of trend. This should be the strongest decline of the bear market to date.”
Right on target, as we now know.
Furthermore, only a couple of weeks after the March lows earlier this year, Prechter and his colleagues reduced their short-side exposure, anticipating that the rally would continue for some time.
No wonder, therefore, that their newsletter has one of the best stock market timing records over the last two years of any that the Hulbert Financial Digest monitors.
On the other hand, Prechter’s longer-term record couldn’t be more different. The last time that his newsletter recommended that traders be long stocks was in 1997, some 12 years ago. In fact, during the bull market of the 1990s, traders following his advice spent most of the time short the market or in cash.
This helps to explain why the newsletter’s timing advice for traders is in last place for performance over the last 20 years among all stock market timing strategies tracked by the Hulbert Financial Digest.
So take your pick: Short-term top-rated, long-term dead last.
The newsletter’s track record therefore provides a particularly graphic illustration of an enduring problem for assessing an adviser’s track record: How much weight should be placed on recent performance, versus how much on the long-term?
Companies You Should Buy Right Now
Posted by admin in Stock Market on November 24th, 2009
By Brian Richards & Tim Hanson – Nov. 24, 2009
The Motley Fool
The stock market is fundamentally different from what it was a decade ago. The Internet, frankly, changed everything.
We take it for granted now, but the Web democratized the buying and selling of stocks in an unprecedented way.
Party at the moon tower
Equities, for one, have become more accessible in two ways:
- Internet-based discount brokerages provide a dirt cheap alternative to buying stocks through very costly full-service brokerages. Not only are investors saving money on commissions in general, but we’re also able to buy shares in small lots while still keeping commissions to less than 2% of our investment.
- The volume of information on stocks and funds is arresting. Anyone with a computer can now access the same information and tools as professional investors.
That’s not just theoretical, either. According to a study by the Investment Company Institute, of the millions of households that own shares in mutual funds, “the Internet has become central to many shareholders’ management of their finances. About eight in 10 shareholders with Internet access go online for financial purposes, such as to check their bank or investment accounts, obtain investment information, or buy or sell investments.”
Shameless Spider-Man reference ahead
With great power, though, comes great responsibility. And data shows that such empowerment sometimes backfires.
As Fool co-founder David Gardner has said time and again, “The market is so short-term.” The real-time streaming quotes, daily news stories, frequent analyst upgrades and downgrades, and quarterly earnings reports program investors into a certain mind-set, where minute-to-minute information becomes more significant than it needs to be. Investors, in short, outsmart themselves.
That’s a conclusion from the work of professors Brad Barber and Terrance Odean, who studied the investing habits of 60,000-plus individual investors in the 1990s. They found that investors moved in and out of stocks far too frequently, thereby suffocating returns and generating excess tax and trading costs to boot. Put more simply, they concluded that “trading is hazardous to your wealth.”
Why, then, do investors trade so frequently? In the words of Barber and Odean, “We believe that these high levels of trading can be at least partly explained by a simple behavioral bias: People are overconfident, and overconfidence leads to too much trading.”
See, information breeds confidence. Many investors today — pros and amateurs alike — believe that they can know more than their fellow investors. But here’s something we pretty much take as gospel these days: If you discovered a “trading signal” on the Internet, hundreds of thousands of other people did, too.
HP triples stock buyback plan, profit up 14 percent
Posted by admin in Stock Market on November 23rd, 2009
by Gabriel Madway – Nov. 23, 2009 7:36 PM e.s.t.
Reuters.com
SAN FRANCISCO (Reuters) – Hewlett-Packard Co tripled the size of its share repurchase program to $12 billion as China sales and better profit margins on its services boosted quarterly earnings.
The fiscal fourth-quarter results released on Monday were in line with preliminary figures that HP gave two weeks ago, which had topped Wall Street’s estimates at the time. Shares of HP fell slightly in after-hours trading.
HP, a hardware and technology services company that is a bellwether for IT spending, has been more cautious than some of its peers in predicting an economic turnaround.
But Chief Executive Mark Hurd sounded somewhat more optimistic, noting pockets of returning demand, including in its closely watched printer business, which has struggled this year.
“The economy remains challenging, but we do see encouraging signs of recovery in certain markets,” Hurd said on a conference call with analysts.
“They’re basically pointing to year-over-year growth in the January quarter,” said Kaufman Bros analyst Shaw Wu. “It’s a good sign.”
Hurd cautioned that Europe remains weak, if stable, and it was not clear when a recovery will take hold in the region.
HP’s diversification, recurring revenue, and cost controls have provided it with a solid cushion during the downturn.
HP bought EDS last year to become the No. 2 provider of IT services, behind IBM. HP said it has now cut 19,000 jobs as it continues to integrate the company.
HP’s services revenue rose 8 percent, and the company said signings were “strong,” positioning it well for next year.
PC unit sales rose 8 percent, although revenue fell 12 percent as prices across the industry continue to fall.
HP, the world’s No. 1 PC maker, continues to engage Acer Inc in a price war, analysts say, particularly on consumer laptops. HP said it made big gains in the enterprise PC business in the United States, and PC revenue in China jumped 40 percent.
