Stock futures extend gains on retail sales rise

Stock futures are extending their gains after retail sales unexpectedly rose in February, a positive sign for the economy.
The government said retail sales rose 0.3 percent last month. Analysts had expected sales had declined by 0.2 percent.
The news raises hopes that the economy is gaining momentum.
Ahead of the opening bell in New York, Dow Jones industrial average futures are up 39, or 0.4 percent, at 10,649. Standard & Poor's 500 index futures are up 4.00, or 0.4 percent, at 1,149.90, while Nasdaq 100 index futures are up 1.50, or 0.1 percent, at 1,924.00.
THIS IS A BREAKING NEWS UPDATE. Check back soon for further information. AP's earlier story is below.
Stock futures are trading higher Friday as investors look to consumers for guidance on the economic recovery.
A handful of reports could detail the U.S. economy's strength by shedding more light on consumers' spending appetites during a time of high unemployment.
The government plans to report on February retail sales and January business inventories. A report on March consumer sentiment is also due.
Any inkling of positive news may be exactly what the market needs. A rally in financial stocks Thursday helped the market extend their weekly gains. The Dow and S&P 500 have been hovering near 15-month highs, but investors haven't been in a rush to send those indexes any higher.
Overseas markets were mostly higher on Friday. European markets got a lift from strong industrial production figures for January in the 16-nation region that shares the euro.
Ahead of the opening bell in New York, Dow Jones industrial average futures rose 23, or 0.2 percent, to 10,633. Standard & Poor's 500 index futures rose 2.70, or 0.2 percent, to 1,148.60, while Nasdaq 100 index futures rose 2.75, or 0.1 percent, to 1,925.25.
Before the U.S. market opens, the Commerce Department reports on retail sales for February. Economists predict retail sales likely slipped slightly last month, reflecting weakness in demand for autos and the severe winter storms that hit much of the country.
Economists surveyed by Thomson Reuters are forecasting that sales dipped 0.2 percent in February following a gain of 0.5 percent in January.
Earlier this month, the International Council of Shopping Centers reported that sales jumped 3.7 percent in February compared to a year ago, the biggest gain since November 2007, the month before the recession began.
The new report is due out at 8:30 a.m. EST.
Data from the Reuters/University of Michigan consumer sentiment index for March on consumer sentiment will also provide more evidence on consumers' current spending appetites.
Higher consumer spending is vital because it accounts for about 70 percent of economic activity. Economists have cautioned, though, that any spending increases could falter as unemployment weighs on a sustained recovery.
The nation's unemployment rate was 9.7 percent in February.
Investors will receive additional guidance about the economy's health when the Commerce Department report on January business inventories. The data is likely to show a tick up in business inventories even though wholesalers cut their stockpiles during the month. Economists expect total business inventories posted a slight rise of 0.2 percent in January following a 0.2 percent fall in December.
The report is due at 10 a.m. EST.
Meanwhile, bond prices were mostly down Friday. The yield on the benchmark 10-year Treasury note, which moves opposite its price, rose to 3.74 percent from 3.73 percent late Thursday.
The dollar fell against other major currencies, while gold prices rose.
Overseas, Japan's Nikkei stock average rose 0.8 percent. Britain's FTSE 100 rose 0.3 percent, Germany's DAX index rose 0.8 percent, and France's CAC-40 rose 0.6 percent

Retail Sales Post Strong Gain

U.S. retail sales posted a surprising gain in February despite falling car demand amid trouble at auto maker Toyota Motor Corp. and fierce blizzards that crippled the East Coast for days.
Retail sales rose last month by 0.3%, the Commerce Department said Friday. With the Super Bowl football championship game early in the month, electronic store sales soared.
Economists surveyed by Dow Jones Newswires had forecast a 0.3% decrease.
January retail sales were adjusted downward, to a 0.1% increase from a previously reported 0.5% gain.
Excluding the car sector, all other retail sales rose 0.8%. Economists had forecast a 0.1% increase. Ex-auto sales in January rose 0.5%, revised from a previously estimated 0.6% gain.
Retail sales data are an important indicator of consumer spending. Consumer spending makes up 70% of gross domestic product, which is the broad measure of U.S. economic activity.
The retail sales report showed U.S. car and parts sales dived by 2.0% last month. Toyota suffered because of fallout from recalls and quality problems. Its sales fell 8.7% to 100,027 vehicles, previously issued industry data showed.
Filling station sales in February rose 0.3%.
Excluding sales of gasoline and cars, other retailers' sales jumped 0.9% last month, the biggest gain in three months.
Merchants reported sales increases included restaurants and bars, 0.9%; electronic and appliance stores, 3.7%; food and beverage stores, 1.3%; clothing stores, 0.6%; general merchandise stores, 1.0%; sporting goods, hobby, book and music stores, 1.2%; building material and garden supplies dealers, 0.5% and furniture retailers, 0.7%.
Non-store retailers, oddly, were flat last month despite the snow that paralyzed the East and kept many consumers housebound. The non-store category includes mail-order and Internet retailers.
Health and personal care store sales fell 0.7%, the only category aside from autos to report declining sales in February.

The wrong way to pick funds

 

(Money Magazine) -- Photographer friends tell me that if you're picking out a point-and-shoot camera you shouldn't focus much on the megapixels. That measure of a camera's resolution is hyped by manufacturers, but most cameras on the market give you all the pixels you'll need.
So when I was buying a new camera recently, I chose ... the model with more megapixels.
Call it the data dazzle. Your mind tends to hook on to any number that helps you compare various choices, even when you know the information isn't actually helpful.
I thought of this after reading a proposal to fix the retirement system from the Squam Lake Working Group, made up of some of the nation's top economists. One of their ideas is to create a simple one-page disclosure label for the mutual funds in 401(k) plans.
You'd see data such as the fund's costs and its likely risk. What you wouldn't see: its performance record.
"We don't think it's very informative," says Dartmouth economist Kenneth French, who worked on the proposal. French is also a director of a firm that runs low-cost funds, which would tend to look good in this light. But I think he also has the evidence on his side here.
The past is past: At least when I paid for extra megapixels I got them. But performance numbers represent returns that have already been earned. Your returns are in the future, and it's notoriously hard to pick tomorrow's winners and losers. Ask anyone who bought Bill Miller's Legg Mason Capital Management Value fund in 2006 (see below) -- or sold it in 2008.
Returns push your emotional buttons: Performance stats can be worse than uninformative. They can actually de-inform, making you forget about data that matter. Although low expenses add up to a big performance edge over time, nobody ever fantasized about paying just 0.25% for a fund.
But when you see a fund that has earned 15% annualized returns over a decade -- as some emerging-markets funds have -- it's hard not to imagine how cool it would be to own a piece of that.
Managers know the game: Returns drive fund sales. That gives managers an incentive to seek short-term glory at the expense of long-term strategy.
One way for a fund to look good, says Santa Clara University finance professor Meir Statman, is to invest outside its category. A fund that focuses on large U.S. companies might add shares of small tech companies when they turn hot. That will score good relative numbers for a while but expose investors to unexpected risks.
If you just can't ignore performance numbers, make it a rule to look at them last, after you've made a short list of funds with low expenses and experienced managers. You'll be two steps ahead of the game.

US Stocks Edge Higher, Led By Telecom Sector

NEW YORK (Dow Jones)--U.S. stocks rose slightly Tuesday, led by such telecommunications companies as AT&T and Verizon Communications following the unveiling of a faster router from Cisco Systems.
The Dow Jones Industrial Average rose 11.86 points, or 0.11%, to 10564.38. AT&T climbed 28 cents, or 1.1%, to 25.56, and Verizon Communications advanced 28 cents, or 0.9%, to 29.91, as Cisco unveiled a smarter, faster router following weeks of building hype over the networking titan's promise to "forever change the Internet." AT&T, a key Cisco customer, said it completed a test with the new router, named CRS-3, which allowed its long-distance Internet backbone to carry data traffic at 100 gigabits per second, roughly 10,000 times faster than the average household cable or DSL connection. Cisco (Nasdaq) ended flat at 26.13.
Boeing was also strong. The stock climbed 55 cents, or 0.8%, to 67.79, after Northrop Grumman said it would drop out of a protracted quest to win a $40 billion contract to build the U.S. Air Force's next generation of aerial-refueling planes, leaving Boeing as the only competitor left standing. Northrop, which is not a Dow component, fell 16 cents, or 0.2%, to 64.
The Nasdaq Composite advanced 8.47, or 0.36%, to 2340.68, a six-month closing high. The Standard & Poor's 500 added 1.95, or 0.17%, to 1140.45, led by its telecom sector. Tuesday's gains were limited as the materials sector fell on declines in metal futures, while consumer stocks and the health-care sector also fell.
"To me, the sentiment is getting a little tired," said David Chalupnik, head of equities at First American Funds. "The market has rebounded and is close to its high for this recovery, so the market is running into technical resistance, and 1150 would be a big number to break through for the S&P 500."
Still, Chalupnik added, "the trend for the market does remain positive. You do have good economic numbers coming out overall, and we expect continued improvement in the numbers although they are kind of muted for a recovery."
General Growth Properties climbed 47 cents, or 3.3%, to 14.55, after the shopping-center operator said it received a proposal from Fairholme Capital Management, one of its largest unsecured creditors, and Pershing Square Capital Management, one of General Growth's largest equity holders and a significant unsecured creditor, to help it emerge from bankruptcy.
Kroger fell 55 cents, or 2.4%, to 22.35. The supermarket operator's fiscal fourth-quarter earnings fell 27% on higher costs, better than analysts expected, although it issued cautious guidance amid an uncertain pace of economic recovery.
Texas Instruments declined 50 cents, or 2%, to 24.19, as the chip maker's first-quarter guidance just wasn't enough to impress investors. Although the company boosted the bottom end of its first-quarter forecast, investors had been hoping for more, such as the company raising the top end of its view.
Invesco reported that assets under management edged up $300 million in February to $412.9 billion from the prior month, but dropped from the end of 2009. Its shares fell 1.09, or 5.2%, to 19.99.
UBS raised its investment rating on Yum Brands to buy from neutral, saying the restaurant company, which owns brands including KFC, Pizza Hut and Taco Bell, is turning the corner. Taco Bell U.S. seems to have better momentum, Pizza Hut's U.S. trends are improving and China's fast-food sales seem to be stabilizing, the firm said. Yum Brands climbed 1.19, or 3.4%, to 36.60.
WebMD Health (Nasdaq) announced plans to buy back another 11% of its shares outstanding, saying doing so represents "a superior alternative" to other uses of the funds. Shares rose 1.50, or 3.4%, to 45.28, approaching the $45.80 offer price.
Navistar International climbed 83 cents, or 1.9%, to 44.25, as its financial unit reached an expanded U.S. financing agreement with GE Capital Corp., boosting the ability of the maker of trucks and engines to extend credit to customers for truck purchases. The accord is expected to take effect in 90 days.
UAL Corp. (Nasdaq) jumped 64 cents, or 3.7%, to 18.16 after its United Airlines said February unit revenue--the amount taken in for each passenger flown a mile on its planes and those of its affiliates--jumped 17% to 19% over the same month a year ago. The No. 3 U.S. airline by traffic also said its February traffic increased 2.1% on a decline of 5.3% in seats offered.

Stock investors ask: What's the next big thing

On 1-year anniversary of stock market bottom, investors ask: What's the next big thing?
NEW YORK (AP) -- A year after the stock market began its comeback from 12-year lows, investors are looking for the next big thing.
Stocks have lost some of the momentum that propelled the Dow Jones industrial average up 4,017 points, or 61.4 percent, from its close of 6,547 on March 9, 2009. That's natural -- bull markets tend to slow down as they head into their second year. But the lethargic pace of the economic recovery has also been a drag on stocks. And so investors are waiting for signs that the economy is ready to put up some solid, sustainable growth numbers.
Traders work on the floor of the New York Stock Exchange, Tuesday, March 9, 2010.(AP Photo/Mark Lennihan)
The most likely trigger: job growth. Investors need to see a Labor Department report that says employers are creating more jobs than they're cutting.
Until then, investors are going to stay cautious. Analysts say the market is likely to move sideways or drift higher, as it's been doing over the past few weeks. Tuesday's trading fit the pattern of modest moves. The Dow rose just under 12 points. The index is up 1.3 percent so far this year.
But that doesn't mean the market isn't going to have its fitful moments. And it certainly has volatile industries that are expected to move the rest of the market. On Tuesday, the financial companies that led stocks higher in the past year again drove trading. Analysts said financial shares rallied as investors reacted to rumors that the government might prohibit the trades known as short sales in stocks of companies it owns. The government has large stakes in Citigroup Inc., American International Group Inc. and mortgage companies Fannie Mae and Freddie Mac after bailing them out during the 2008 financial crisis.
The market began its ascent last March 10 after Citigroup, the big bank most wounded by the credit crisis and recession, said it had turned a profit. Signs that the housing market was starting to turn around added to the momentum.
At the time, such news, which amounted to glimmers of hope, was enough for investors. With stock prices so much higher now, they want proof.
"A lot of the gains we already enjoyed have been in anticipation of economic progress which has not yet occurred," said Lawrence Creatura, portfolio manager at Federated Clover Investment Advisors.
Besides jobs, investors need to see more strength in the housing market. Traders have been tolerant of recent declines in home sales, but if those numbers don't pick up, investors are likely to become uneasy.
First-quarter earnings reports that will be issued next month need to show continued sales growth. Companies' results for the last three months of 2009 were better than expected. Now investors want to know that demand, starting with consumers, is rising.
Adam Gould, senior portfolio manager at Direxion Funds in New York, said he will be looking for at least two months of back-to-back gains in job growth and for the unemployment rate to fall below 9 percent to feel more comfortable about the pace of recovery. Unemployment stands at 9.7 percent.
Even if the news improves, just holding the gains of the last year could be tough. Some of the market's big rallies in past years were followed by slumps. In the first year of the 1982-87 bull market, the Standard & Poor's 500 index jumped 58 percent. In the second year, the index fell 14.4 percent.
Still, that doesn't mean that's what will happen this time. In 2003, the S&P 500 index rose 26.4 percent. Then, in 2004, it peaked early and fizzled, until a 10.7 percent surge late in the year lifted stocks.
The Dow on Tuesday rose 11.86, or 0.1 percent, to 10,564.38. The Dow remains 25 percent below its peak of 14,164.53, reached in October 2007.
The S&P 500 index, the barometer favored by professional investors, rose 1.95, or 0.2 percent, to 1,140.45. The index is up 68.6 percent in the past year. Including dividends, it's up about 72 percent. It is still down 27 percent from its high of 1,565.15, also reached in October 2007.
And the Nasdaq composite index rose 8.47, or 0.4 percent, to 2,340.68. The Nasdaq is at an 18-month high but still down by more than half from its peak reached 10 years ago Wednesday. On March 10, 2000, it rose to 5,048.62 at the height of the dot-com bubble.
Advancing stocks narrowly outpaced those that fell on the New York Stock Exchange, where volume came to 5.2 billion shares, compared with 3.9 billion Monday.
Even after the U-turn of the past year, the market has given investors back only about half of what they have lost. The rebound has created $5.7 trillion in shareholder wealth. But the total value of U.S. stocks is still down by about $5.5 trillion from the market's 2007 peak, as measured by the Dow Jones U.S. Total Stock Market Index, which tracks nearly all U.S.-based companies.
Investors are going to make much smaller bets than they made a year ago as they look for clues about the economy. They'll also be trying to anticipate when the Federal Reserve will start raising interest rates from their current record low levels. Policymakers have kept rates low to stimulate lending and help the economy. And Fed Chairman Ben Bernanke has predicted rates will stay where they are for some time.
Still, the Fed eventually will have to raise borrowing costs to help keep inflation in check. Investors' fear is that rates might rise too quickly and could choke off the recovery.
Although stocks have only been creeping higher so far this year, some analysts still see some worrisome signs that investors could become overenthusiastic.
Jeffrey Frankel, president of Stuart Frankel & Co. in New York, believes investors are becoming too complacent.
Frankel points to the movement in a stock like Apple Inc. as a sign that investors are letting greed take over. Apple been setting new highs in recent weeks and is up 5.8 percent in 2010. In the past year, it jumped 168.3 percent.
"You're having wild moves in stocks again. You're having a herd mentality chasing stocks," he said.

TradingMarkets 7 Stocks You Need to Know for Wednesday

Wholesale Trade and the Treasury Budget hit the wires midweek. Several important earnings announcements will also take place prior to the trading day. Bulls celebrated their one year of dominance by closing higher on the session. Bearish pressure was placed on the United States by the European Union to rein in short trading euro speculators and Credit Swap Default traders. This pressure resulted in a topsy turvy day with a positive overall close. The DJIA climbed 11.86, the tech heavy Nasdaq index advanced 8.47, and the broad based S&P 500 eased higher by 1.94.
Here are 7 stocks you need to know for Wednesday.
A hefty $4.65 per share is expected prior to trading for Bon Ton Stores Inc. The Stock PowerRating for BONT is 2.
Candy maker, Cadbury plc, announces before the open with a forecast EPS not revealed.
Children's Place Retail Stores has traders awaiting $1.03/share prior to the opening bell. The Stock PowerRating for PLCE is 2.
Ski resort operator, Vail Resorts, hopes its EPS beats the consensus estimate of $1.13. The Stock PowerRating for MTN is 5.
An overhyped Cisco router failed to energize tech bulls upon release. The Stock PowerRating for CSCO is 4.
Rumors are sweeping the street that American International Group will soon divest more divisions. The Stock PowerRating for AIG is 2.
Exxon is digging deeper to locate unconventional assets to get an edge over their competitors. The Stock PowerRating for XOM is 4.
New Features! With over 80% accuracy in the model ETF trading portfolio, now get the highest and lowest rated ETFs from ETF PowerRatings, Leveraged ETF setups, and limit orders in Larry Connors' Daily Battle Plan.

China Stocks

China's economy is growing at an annualized rate of 9-10 percent while the US economy is at 3-5 percent "normally". The huge economic growth created a lot of opportunities for investors around the world. Wall Street analysts are paying increasing attention to well-run Chinese companies. Even though the stock market in China is young (started since early 1990), and it has a total market capitalization of only less than $2 trillion, the prospect for growth can not be overstated. For comparison, the United States has a total market capitalization of about $20 trillion while the GDP of USA is roughly 5 times that of China.
While many people believe in China's stock market's growth potential, there are huge ups and downs in the Chinese stock market prices, just like any stock markets around the world. Tremendous price gains was witnessed in China stock market in 2006. The year of 2007 for China stock market saw the peak for all major Chinese stock index. 2008 is a year that witnessed a continued slide in Chinese stock prices that leads to the notion of China stock market crash 2008.
Chinese capital markets are still evolving constantly. In Oct 2009, ChiNext was launched as the market platform for innovative enterprises in China to list their shares.
Featured Stock
Industrial and Commercial Bank of China or ICBC in short, is the latest state owned bank to go public in China. The ICBC IPO, raising $21.1 billion, is the biggest in the world as of Nov. 2006. It surpassed a previous record held by NTT DoCoMo of its $18 billion IPO in 1998. It is the hot China stock in 2006.
China Life Insurance Corp is another stellar performer among large China stocks ADR in 2006. China life stock was up by more than 100% after stock split.
In 2007, Chinese IPO stocks in US market continued to perform pretty well. One of the new Chinese IPO stock, WuXi PharmaTech (Cayman) Inc. (WuXi), has more than doubled its IPO price after raising over $160 million by selling ADR on the NYSE.

Showa Shell Solar Establishes European Base in Germany

Berlin – Japanese solar company Showa Shell Solar has announced a new investment in Germany. Along with the company's renaming to Solar Frontier, the CIS (copper-indium-selenium) photovoltaic module manufacturer will open its first European office in Munich in 2010. Germany Trade & Invest supported the company with its investment plans.

 

Aiming to ramp up production to reach a sales goal of 1 million kilowatts worldwide in 2012, the Munich office, alongside a new American counterpart in California, will play an integral role in achieving this mark. The company's production figures will increase by more than ten times its current level, strengthened by an additional plant that will begin production in mid-2011.

 

Solar Frontier CEO Shigeaki Kameda: "The German priority on both economic and ecological criteria precisely matches Solar Frontier's top design and production mandates. Germany is also the world's largest market, so we have three very critical reasons to invest here: the German priority on economy, the German priority on ecology, and the German market size. We therefore expect to fulfill very strong demand."

 

Solar Frontier's decision to invest in Germany also serves it well for access to growing photovoltaic markets across Europe. Germany is home to approximately half the solar modules in operation worldwide, based on recent industry estimates. This market continues to grow as 2009 installations exceeded expectations, likely surpassing 3.0 GW.

 

Germany is home to the largest solar cluster in the world that encompasses a wide range of manufacturers, suppliers, and research institutes. Together, these innovators create a synergy that has added photovoltaics to the long tradition of the "Made in Germany" label, a symbol for high quality and innovation.

 

Solar Frontier manufactures proprietary thin-film modules that substitute silicon with the key ingredients copper, indium, and selenium. The company benefits from competitive material prices compared to conventional silicon wafer-based modules. The thin-film modules are expected to reach a 14.2 percent efficiency level by 2011. Solar Frontier was assisted by Germany Trade & Invest and Invest in Bavaria, the economic development agency for the federal state of Bavaria. Germany Trade & Invest is currently showcasing the latest opportunities available in the world's largest solar market at this year's PV Expo (East Hall 4, Stand no. 26-22), taking place March 3 – 5 in Tokyo, Japan.

Borrowing Money to Buy Shares and Marging Lending

The rich rule over the poor and the borrower is the servant to the lender!

Borrowing money to invest in shares is not for the faint hearted. While it may seem a smart way to build a share portfolio, using someone else's money to invest, or margin lending, has its pitfalls for the unwary.

And, if you don't have a healthy stable income, or you are heavily in debt elsewhere, it is one area which you should not even try to understand. That is because margin lending, like any investment which offers high returns, carries high risks.

Investors are drawn to it because there is the chance of multiplying any sharemarket rises and increasing diversification.

Investors need to be wary because not only could the value of their investment deteriorate, but also because their obligation to maintain the loan level increases if the sharemarket takes a tumble.

Using someone else's money to make profits is a great idea but if those investments incur losses, the problems compound!

What Is Margin Lending?

Margin lending involves borrowing money against shares you own - in order to purchase more shares. In effect it enables you to build a portfolio where, depending on your specifications and the financial institution, your borrowing level can range between 30 - 80 per cent of the portfolio's value.

Once the investor specifies how much of the portfolio they want to leverage, a loan level is set to buy shares up to that leverage level, and interest is payable on that sum. Financial institutions set minimum loan levels for margin lending.

 

The Benefits!

Of course the more money you have invested, the more you stand to gain if shares in your portfolio go up in value.

Any rise in the value of your portfolio also means that your leverage level goes down, giving you the capacity to borrow even more, using the increased value of your shares as security.

Another plus of margin lending, is by having more money to invest in shares, you can afford to diversify more - reducing your downside risk.

 

The Dangers!

The danger, just like the attractiveness of this investment, is sharemarket volatility. If the sharemarket falls, not only will the capital value of your shares drop, but you could be forced to maintain the level of security for the loan if your gearing level breaches a preset level.

This is known as a margin call, and would involve an up-front cash payment, a sell-off of shares at a loss, or the purchase of additional shares ( if you have the luxury of spare cash).

A margin call usually has to be met within 24 hours. In the event the investor can't be contacted, the broker has the right to sell down the portfolio.

If your share portfolio is worth 75 percent of the loan and the sharemarket falls, you have to kick in more money to make sure that 75 percent is maintained.

In effect, any drop in the paper value of your investment increases your obligation to the lender. For this reason, any margin lending investment needs to be constantly monitored.

New BEA Report Shows Recession Zapping Profits

They fear the economic contraction that began December 2007 will become a vengeful Son of Frankenstein, better known as the Great Depression of the 1930s.

The current downturn is now in its 20th month; and, while showing signs of abating, it is emitting enough gasps and screeches to keep the nation - if not the world - guessing about the long-term outcome.

Economic Expansion of 1990s Was Longest Since WWII
When the American business expansion topped out in December 2007, and the recession commenced, the economy had grown for 73 consecutive months. While that was one of the strongest expansions since WWII, it is only in fifth place. The expansion during the 1990s was the champion, lasting 120 months, according to the National Bureau of Economic Research NBER.

The combination of those two expansions represents almost 16 years of near-continuous growth. Consumer credit juiced the spending of Americans, during those times. The Federal Reserve Bank reports in both 2002 and 2003, consumer loans- including credit card borrowing- jumped from 5.36% of personal disposable income to 6.84%.

Corporate Profits Not a Pretty Picture - Wholesaler Performance Best
The Bureau of Economic Analysis (BEA) recently released corporate profits for the first quarter of 2009. Only three industrial sectors finished the five quarters with higher profits. No Manufacturers had profit gains

Best results were Wholesalers' profits of $94.0 billion, which showed a 23.7% increase. They sell to Retailers and their activity usually leads retail activity, as store inventories are depleted and restocked. Retailers' profits dropped from $102.4 billion to $83.1 billion, a decrement of 18.8 percent. Evidently, their slowdown has not backed up to Wholesalers yet.

Largest stock capitalizations among Wholesaler stocks, with stock symbols in parentheses, are:

SIMS METAL MGMT LTD (SMS)
VINA CONCHA Y TORO (VCO)
United Stationers Inc. (USTR)
Central Garden & Pet Company([CENT)
School Specialty, Inc. (SCHS)
Foods, Beverages and Food Were Next
Corporate profits for Foods, Beverages and Tobacco products climbed from $29.8 to $34.9 billion, an increment of 16.6 percent. It was a performance suggesting that consumers might be having their last fling.

Food companies having the largest market capitalizations are:

KRAFT FOODS INC (KFT)
HEINZ H J CO (HNZ)
Lancaster Colony Corporation (LANC)
AFC Enterprises, Inc. AFCE]
AMERICAN HOME FOOD (AHFP.OB)
Utilities Manage 4.7% Increase
Net profits of Utilities edged upward, from $51.2 to $53.6 billion, a 4.7% gain in the five quarters. The largest diversified Utilities, ranked by market caps are listed below:

SOUTHERN CO (SO)
F P L GROUP INC (FPL)
DOMINION RES NEW (D)
DUKE ENERGY CP HL CO (DUK)
CENTRAIS ELC BRAS SP (EBR)
Automobiles and Financial Industries Are Special Situations
There are two special cases in the perilous passage of the American economy through the shoals of recession: (1) the reformed and retooling Automobile sector, including Bodies, Trailers and Parts; and (2) the federally-rescued Goliaths and rapacious financial industries, led by executives who thought bonuses were rewards for nearly wrecking the financial system.

Dismal news of the Big Three auto makers- General Motors, Ford and Chrysler- has dominated their group since the recession began. Chrysler filed a government-mandated bankruptcy April 30, 2009 and GM emerged from a government-ordered bankruptcy on July 10. The future is uncertain for them as well as Ford, so far free of a bailout and government intervention.

Could New "Big Three" Be Forming Among Auto Makers ?

Largest market caps among major auto makers - perhaps signaling the forming of a new Big Three- with bankruptcy courts wringing out the assets of General Motors and Chrysler, are:

TOYOTA MTR CP ADS (TM)
HONDA MOTOR CO ADR(HMC)
DAIMLER AG (DAI)
FORD MOTOR CO (F)
TATA MOTORS INC (TTM)
Bank Profits Fall Less Than Insurance
From the fourth quarter of 2007 to the first quarter of 2009, Bank profits dropped from $38.2 billion to $28.8 billion, or 24.6%; other Financial service vendors, like insurance companies and brokerages, slid from $346 billion to $225.1 billion, or 35.0%.

Largest market caps and stock symbols among Banks are:

BK OF AMERICA CP (bac)
SUNTRUST BANKS (sti)
KEYCORP (key)
P N C FIN SVCS GR (pnc)
WELLS FARGO & CO NEW (wfc)
The giants among Life Insurance stock market caps are:

AXA ADS (AXA)
CHINA LIFE INS CO (LFC)
PRUDENTIAL PLC SC (PUK)
MANULIFE FIN CORP (MFC)
METLIFE INC (MET)
Divergent Opinions on What Happens Next
Some FED officials believe the recession will end this year, with inflation then becoming the problem. Others disagree, and financier George Soros says the recession could last forever. The billionaire was talking about never returning to the good old days, in an article by Joe Weisenthal, in Business Insider's "Clusterstock" zine of March 29.

How's that for a difference of opinion?

Investments, Money and Ethics

"The higher the buildings, the lower the morals."
Noel Coward (1899 - 1973)

 

Money is a symbol of energy and sometimes power. As such it has no real intrinsic value. It is neither good nor bad, positive nor negative ...

 

It is 100% impartial!

 

In life we are always on a constant quest and we have built a complexity of myths around investments and money. We have given it characteristics as if it were a savior.

 

How many times have we said, "If only I had enough money!" In this way we end up both desiring and fearing money.

The basis for understanding and being comfortable with money is just one more aspect of our self-awareness.

We know that one of the factors by which we judge ourselves and others is money -- how much we made, how we made it, how we spent it and etc.

This judgement constitutes part of our market value and speaking of money is sometimes reflecting our value in society.

Although everyone wants more money, the idea of having wealth is sometimes tainted. On one side of the coin, money is thought to be highly desirable; on the other side, it is considered bad and almost dirty!

Most of the cultural arguments that make prosperity a moral issue are never made out loud. The ideas that we can't or shouldn't be financially prosperous are projected subliminally in the form of myths, ethics or beliefs.

 

Whether we believe it or not, one of our strongest beliefs is that hard work is a reward by itself. It is also part of our tradition that poverty is a virtue and certain religious teachings from the Bible have even been interpreted as confirming that poverty is somehow holy!

It has been remarked that the best thing we can do for the poor is not to be one of them!

Well, by all means, this is not being unloving!

It is a statement of not accepting poverty as inevitable.

Poverty helps no one!

Some Thoughts on Index Fund Investment

During the week, Monday through Friday, you may expect to find me immersed in financial matters, be it real estate, corporate securities, mortgage lending, or similar enterprises. This is how my time is spent. But of course, what else? Investment is my business. So when the weekend arrives, I can then devote myself to the things I truly enjoy. And what is my diversion? Well, a good bit of my relaxation time is devoted to—perhaps you guessed it—financial matters. Actually, it's not unusual for a person's free time to be spent in following or observing one's usual occupation. This is a common practice, long referred to as a busman's holiday. In any event, this explains why I tune in regularly to financial radio programs. You can never tell when an important concept will be analyzed, or a useful tidbit thrown out.

That brings us to a recent Sunday. Before my wife and I joined friends for dinner, I spent a couple of hours hiking the hills nearby my home—with the earplugs of my Sony Walkman inserted securely. Tuning in to my favorite financial call-in show always makes the walk more brisk and the hills less steep. Though I'm often dismayed by the problems presented by callers, and sometimes take issue with the advice given, I consider the hours well spent. This time proved no exception. One call in particular made an impact, though its significance took a while to sink in.

The dilemma faced by this clearly middle-aged caller seemed basic. He possessed a few hundred thousand dollars in soon-to-mature certificates of deposit, and wanted to know where the proceeds should be invested until his scheduled retirement in fifteen years. The question symbolizes the quandary that clearly bedevils many Americans. I can think of no more fundamental problem: what to do with a sizeable chunk of money when retirement is a defined number of years in the future. I awaited the talk show host's response as eagerly as did the caller.

 

The advice, though circuitous in its delivery, ended up pretty clear-cut. Place all or most in no-load index funds, with minimal maintenance fees, comprising a mix of securities similar to the S&P 500 or Wilshire 5000 Total Market Index. He went on to explain that equity investments of this sort avoid serious risk. His argument ran like this: The unpredictability of individually selected stocks, the uncompetitiveness of interest-bearing obligations, and the perils of an uncertain economy dictate the tying of financial future to the nation's corporate dynamism. While acknowledging that such a program surely reflects the vagaries of the market, he maintained that over the long haul, no other strategy proved as effective.

 

My immediate reaction was one of incredulity. This is certainly not what I would have recommended, particularly during the early years of what appears to be a secular bear market. As such, it's not unreasonable to anticipate a decade or more with little, if any, stock appreciation. This caller might well find himself, fifteen years hence, with no discernable increase in net worth—definitely not the way to plan for retirement.

 

My thoughts then drifted to the plethora of investment opportunities available. Careful selection of corporate stock in sound industries paying reasonable dividends seemed a better option. Another ignored possibility: astutely chosen corporate bonds with generous returns of interest. Better yet, soundly backed mortgage investments to generate attractive yields. Or why didn't the host mention rental real estate to provide an attractive cash return and future appreciation? As I continued my trek, I tuned out the flow of words as I focused more on my dissatisfaction. By God, if that call had come to me, I would've handled it differently. That caller would have gotten the straight dope. Total market index funds . . . humph!

 

It's a few days later and I've taken time to reflect. My initial certainties don't seem quite so certain now. Though I hate to admit it, the talk show host's advice probably came closer to the intended mark than my ruminations. And why? Because of my grievous omission. I failed to consider the source.

 

Take a closer look at the question and from whom it came. It constituted a plea for guidance from a citizen who managed to accumulate several hundred thousand dollars in certificates of deposit over a half century. Nothing in his tone suggested an intimacy with securities or their selection. Neither did he display any familiarity with mortgage loans or display an interest in rental property. The odds are that, had he developed any such expertise over the past three decades, he would now be pursuing exactly those programs. The mere fact that he solicited advice on a call-in talk show confirmed that neither careful selection nor astute analysis entered into his investment pattern. The host, understanding this instinctively, provided exactly the correct advice: something to cause this fellow as little uncertainty as possible. It's no doubt preferable that his assets simply drift around at the convenience of the market over the next fifteen years, than that he follow a more aggressive agenda and get into real trouble.

 

A final word: Successful investment is an endeavor that requires direction and persistence. Many people will never put forth the effort to pull it off. It is for these persons that mutual funds—particularly the index funds—were designed.

Scalp Trading

Scalp trading is a style of trading that is designed to capitalize on small percentage moves.

It uses price setups that present exceptionally low risk opportunities.It also uses positions initiated and closed out in the same trading session.

The typical objective for a scalp trade is 1% to a 2% or sometimes even more.

Scalping demands the familiarity as well as the use of a direct access trading system for instant order execution.

The best scalping opportunities are found in liquid stocks.

Scalping is the method that usually sends you home free without having to think about your tomorrow!

 

Stock Market:Bull and Bear Markets

When we talk about bull and bear stock markets reminds me that it's a zoo out there. And, like any zoo, there are quite a few wild  species to be found!

The first two are the bulls and the bears. We do know that a bull market is when stock prices are climbing strongly and a bear market is when they're languishing.

One common myth is that the terms "bull market" and "bear market" are derived from the way those animals attack a foe, because bears attack by swiping their paws downward and bulls toss their horns upward.

This is a useful mnemonic, but is not the true origin of the terms.

Long ago, "bear skin jobbers" were known for selling bear skins that they did not own; i.e., the bears had not yet been caught. This was the original source of the term "bear."

This term eventually was used to describe short sellers, speculators who sold shares that they did not own, bought after a price drop, and then delivered the shares.

Because bull and bear baiting were once popular sports, "bulls" was understood as the opposite of "bears." I.e., the bulls were those people who bought in the expectation that a stock price would rise, not fall.

Both bull and bear markets are inevitable!

Smart investors try to anticipate both events to profit from their eventuality.

Bear markets are generally shorter in duration than bull markets. To avoid being hurt by bear markets you must recognize the signs early and move part of your assets into cash equivalent investments.

We do recommend that you invest for the long term. Don't let the bears get you down!

Abraham Lincoln (1809 - 1865) once said: "When you have got an elephant by the hind legs and he is trying to run away, it is best to let him run!"

The same thing is true of bears - don't panic and sell low. Let the bear market run its course, which history tells us is likely to be short.

On the other hand, a bull market can leave many investors feeling pretty good about their ability to prosper.

Their confidence bolstered by the good times ...

Some even find themselves swept up in "Bull Market Myopia" and forget the basic tenets of smart investing, like asset allocation and portfolio diversification.

Holding good stocks through bull and bear markets is a prudent strategy. However, many investors feel that they do not want to be in the market during a bear market. It is difficult to predict when to move in and out of the market.

When a bear market ends, a strong upward move can occur in a short time. If you are not in the market you will miss the move. The probability that your timing will be wrong is very high.

Unlike slow-starting bull markets, bear markets may start with a mini-crash - a major drop within a few days when investors least expect it.

Many investors are afraid to get out of a bull market for fear of missing "big profits" at the top of the market.

This is a recipe for disaster!

It is also known as greed!

As a bull market continues to increase, investors should start to decrease their stock holdings and move them into cash or money markets accounts.

Now, besides bulls and bears there are two other animals in our zoo to keep watch for!

Ostriches:

Are investors who stick to their old strategies, oblivious to changes in the world around them.

And then there are the Hogs:

Bulls can make money ...

Bears can make money ...

But hogs are investors who are too greedy and usually get slaughtered!

 

Advice for New Investors

Advice for New Investors

Investing is just one aspect of personal finance. People often seem to have the itch to try their hand at investing before they get the rest of their act together.

 

This Is a Big Mistake!

 

For this reason, it's a good idea for "new investors" to hit the library and read maybe three different overall guides to personal finance -- three for different perspectives, and because common themes will emerge sice repetition implies authority!

 

Personal finance issues include making a budget, sticking to a budget, saving money towards major purchases or retirement, managing debt appropriately, insuring your property, etc.

Many "beginning investors" have no business investing in stocks!

Only after learning about personal finance they should explore particular investments. If someone needs to unload some cash in the meantime, they should put it in a money market fund, or yes, even a bank account, until they complete their basic training.

Investments, Growth, Yield and Income

You've probably been listening all over about the fortunes being made in the stock market. With enough patience and a lot of discipline, you are almost guaranteed to make a considerable amount of money in the markets!

You merely need a willingness to put your savings to work in a balanced portfolio of securities tailored to your age and circumstances.

But you do have to understand how investing works. Investing is not about throwing all your money into the XYZ stock hoping to make a killing. Investing has nothing to do with getting a stock tip from your brother-in-law! Investing isn't gambling or speculation.

Investing is taking reasonable risks to earn steady rewards.

Investing works because it allows you to participate in the relentless growth of the world's economy, which hardly follows a straight line, but does trend upward over time. It's also true that the longer you stay invested, the faster your money will grow!

When you are determining your investment strategy you will always have to consider the following three elements:

1. Growth:

Growth is the rate at which your money appreciates during the time it is invested.

If you think you will need access to your funds sooner rather than later, look for an investment that provides a fairly safe and steady growth rate.

Long-term investments that are influenced by factors such as the inflation rate may lose money in the short term, but they can still grow over long-term.

What will matter is not a slow growth rate (or even a loss) during a particular period, but a higher growth rate over time.

2. Yield:

Yield is the interest or dividends paid on your investment. Like growth, it can vary in importance depending on your needs.

If you are retired and your investment is funding your retirement, your investments should generate enough yield to let you live on the interest.

Savings accounts tend to yield small percentages. Stocks can yield the highest percentages but also have the greatest risk.

3. Income:

Income is closely related to yield. Does your investment, or the yield from your investment, make up a significant portion of your income?

If so, you may want to be more conservative with your investment choices to ensure that the amount of yield it produces remains consistent and reliable.

You should give careful consideration to where and how often you want to reinvest your money, as it could effect your financial security.