Well, 2011 was certainly an interesting year. So what's the outlook for 2012?
In a word, not so good. We're expecting an initial pop in the first week of the New Year, but then volatility and probably a market downturn until the election.
Don't worry though, we'll be working overtime to bring you the best stock tips available on the Internet. Happy New Year!
Friday, December 30, 2011
Friday, December 23, 2011
Thursday, December 22, 2011
Wednesday, December 21, 2011
Tuesday, December 20, 2011
Friday, December 16, 2011
Thursday, December 15, 2011
Monday, November 7, 2011
Friday, November 4, 2011
Thursday, November 3, 2011
Tuesday, November 1, 2011
Friday, October 28, 2011
Wednesday, October 26, 2011
Friday, October 21, 2011
Sold TZA
Sold TZA at $36.61 for small loss. Up roughly 31% month to date. Looking for Monday to be an up day as we enter the most bullish part of the month.
Wednesday, October 19, 2011
Friday, October 14, 2011
Wednesday, October 12, 2011
Friday, October 7, 2011
Sold TZA
Sold TZA at $47.45. Concerned about a late day run up and don't want to be short over the weekend. We're not calling an exact bottom, but we do feel that the general thrust of the rest of the year will be bullish.
Wednesday, October 5, 2011
Sold TNA
Sold TNA at $34.84. We bought in TNA at what was really the worst possible price point, but we still managed to pull off a profit. Just goes to show what can happen when you stick with a good trading system.
Monday, October 3, 2011
Thursday, September 29, 2011
Wednesday, September 28, 2011
Friday, September 23, 2011
Sold TZA
Sold TZA at $53.49. Never like to hold short over the weekend, and we have a strong bottom forming signal. Hopefully we'll get a late day run-up as well.
Wednesday, September 21, 2011
Tuesday, September 20, 2011
Volatility Got You Spooked?
Confused by the fact that the stock market just keeps going up and down? Did you get burned taking on a leveraged position only to see the market completely reverse trend and wipe you out? Spooked by the New York Times front page article on volatility? Well don't worry, because we have an actual answer for you. Or rather, Adam Warner has a pretty good dissection of what's been going on lately over at http://www.schaeffersresearch.com/commentary/content/sky-high+volatility+slice+it+dice+it+and+its+gone/outsidethebox_blog.aspx
Friday, September 16, 2011
Sold TZA
Sold TZA at $41.03. Not 100% how this is going to go, but don't want to be short over the weekend.
Wednesday, September 14, 2011
Tuesday, September 13, 2011
Sold MPEL
Sold MPEL at $12.09. Somewhat disappointing trade. We believe it still has more upside and MPEL is still one of our intermediate term picks. However, it's not going up as fast as we'd like, so it's time to turn our sights on other stocks.
Friday, September 9, 2011
Thursday, September 8, 2011
Covered WLT
Covered WLT at $87.67 for 4.95% gain. Slightly disappointed since we had opportunities to do better but we kept on thinking the stock would crack further. We do still think WLT's headed lower, but we don't think the opportunity cost of holding is worth it.
Wednesday, September 7, 2011
Tuesday, September 6, 2011
Sold CVI
Sold CVI at $26.93. Just goes to show that even in a market like this it's always possible to go long and make a profit if you know what you're doing.
Monday, September 5, 2011
September Outlook
So as we come off the Labor Day weekend and enter September trading, what's the outlook?
Well, September is historically the worst month for stocks. This is somewhat counterbalanced by the fact that we're in year three of the Presidential cycle, which tends to be positive. Overall though, we expect to see plenty of volatility in September, so we'll be strongly defensive for the month.
That being said, if we do see opportunities to the long side some of the stocks we'll be looking at will be CVR Energy (CVI), HollyFrontier Corp (HFC), Melco Crown Entertainment (MPEL), and MineFinders Corp. (MFN). Happy trading!
Well, September is historically the worst month for stocks. This is somewhat counterbalanced by the fact that we're in year three of the Presidential cycle, which tends to be positive. Overall though, we expect to see plenty of volatility in September, so we'll be strongly defensive for the month.
That being said, if we do see opportunities to the long side some of the stocks we'll be looking at will be CVR Energy (CVI), HollyFrontier Corp (HFC), Melco Crown Entertainment (MPEL), and MineFinders Corp. (MFN). Happy trading!
Friday, September 2, 2011
Thursday, September 1, 2011
Can You Invest Like Warren Buffett? No. You Can Do A Whole Lot Better
So we read this article over at Slate the other day and were a little befuddled, to put it mildly. Just to get it out of the way, yes the article's central premise is factual. Buffett does have access that the average investor doesn't. He can call up pretty much any company and get a private tour of its plants, distribution channels, etc. He can directly speak to CEOs pretty much on a whim. The US government turned to him to help prevent the financial crisis. He can negotiate special deals and dividends for himself because his seal of approval on a company drives its stock price up. And in addition to his hard work, Buffett is also a very talented stock picker. All things being equal, he'll still outperform you in a head to head stock choosing matchup.
All of which sounds good until you see his performance in recent years. BRK.B has underperformed the S&P 500 over the last three years. These are the superhuman returns that get articles written about your special access? Anybody could have just bought SPY without putting any thought into the transaction and still beaten the Oracle of Omaha.
It would be one thing if Buffett were getting 25% a year like he used to. But he's down 12% over the last 12 months. If that's what being able to call up CEOs whenever you want gets you, then we'll pass.
The simple truth is that Buffett can't deploy his capital as efficiently as he used to because he's just got too much of it. So while the average investor has a stock universe of roughly 10,000 companies to choose from, he's severely restricted in where he can place his money. He also can't just jump out of a stock if it starts to turn against him. As the man himself said, "It's a huge structural advantage not to have a lot of money. I think I could make you 50% or more a year on $1 million. No, I know I could. I guarantee that."
So don't worry about all those special advantages he has, because they still don't get him the returns that can change your life. While we do offer a bunch of products to help average investors like you find good companies to buy, at the end of the day investing is pretty simple. Buy companies that are selling for less than they're worth, sell them when they reach fair value or you find an even cheaper company, rinse, and repeat. When you get to the point where you have so much money you can't find good places to put it anymore, then fly out to our beach house in Thailand and we'll all commiserate with you.
All of which sounds good until you see his performance in recent years. BRK.B has underperformed the S&P 500 over the last three years. These are the superhuman returns that get articles written about your special access? Anybody could have just bought SPY without putting any thought into the transaction and still beaten the Oracle of Omaha.
It would be one thing if Buffett were getting 25% a year like he used to. But he's down 12% over the last 12 months. If that's what being able to call up CEOs whenever you want gets you, then we'll pass.
The simple truth is that Buffett can't deploy his capital as efficiently as he used to because he's just got too much of it. So while the average investor has a stock universe of roughly 10,000 companies to choose from, he's severely restricted in where he can place his money. He also can't just jump out of a stock if it starts to turn against him. As the man himself said, "It's a huge structural advantage not to have a lot of money. I think I could make you 50% or more a year on $1 million. No, I know I could. I guarantee that."
So don't worry about all those special advantages he has, because they still don't get him the returns that can change your life. While we do offer a bunch of products to help average investors like you find good companies to buy, at the end of the day investing is pretty simple. Buy companies that are selling for less than they're worth, sell them when they reach fair value or you find an even cheaper company, rinse, and repeat. When you get to the point where you have so much money you can't find good places to put it anymore, then fly out to our beach house in Thailand and we'll all commiserate with you.
Thursday, August 25, 2011
Wednesday, August 24, 2011
Saturday, August 13, 2011
Risk Management
So which is more likely to kill you, an earthquake or a war? Getting bitten by an alligator or being shot by the police? Well according to the National Safety Council, your chances of being killed by an earthquake are a mere 1 in 153,000, while dying from a war related incident happens to 1 out of every 137,141 Americans. Getting bitten or crushed by a reptile carries with it a 1 in 3,839,935 chance of happening (making it the 50th most common cause of death in the US), while police shoot and kill 1 in 10,666 of their fellow citizens (that's more than die of alcohol poisoning, but fewer than drown in the bathtub).
Meanwhile, the number one killer of Americans is probably the most preventable. It's heart disease, which claims one out of every six deaths. Which just goes to show how bad we as humans are at risk management. You are actually more likely to die from contact with hot tap water than you are to die of AIDS, but when was the last time you heard a public service announcement about the dangers of water? Unfortunately for us we usually conflate the grisliness of a death with its likelihood of occurrence, which causes us to improperly evaluate our risk.
The same thing applies to this stock market. You generally get two types of traders. Those who always hope that their losing stocks will go down, and those who are so afraid their winning stocks will lose money that they sell way too early. We've had our fair share of hits and misses here at Royalty Trades, but we've always done well for ourselves in the long run. The key, as always, is to have a properly diversified portfolio, and be when other are fearful, and fearful when others are greedy. Follow these steps, and you'll be well on your way to funding the retirement of your dreams.
Meanwhile, the number one killer of Americans is probably the most preventable. It's heart disease, which claims one out of every six deaths. Which just goes to show how bad we as humans are at risk management. You are actually more likely to die from contact with hot tap water than you are to die of AIDS, but when was the last time you heard a public service announcement about the dangers of water? Unfortunately for us we usually conflate the grisliness of a death with its likelihood of occurrence, which causes us to improperly evaluate our risk.
The same thing applies to this stock market. You generally get two types of traders. Those who always hope that their losing stocks will go down, and those who are so afraid their winning stocks will lose money that they sell way too early. We've had our fair share of hits and misses here at Royalty Trades, but we've always done well for ourselves in the long run. The key, as always, is to have a properly diversified portfolio, and be when other are fearful, and fearful when others are greedy. Follow these steps, and you'll be well on your way to funding the retirement of your dreams.
Wednesday, August 10, 2011
Bottom Forming
We were a little early in our long call last week, but we do think that stocks are oversold at the moment and we'll see a bottom forming sometime between this Friday and the next. For the record we are currently long BGZ, but expect to exit that position in the near future.
Wednesday, August 3, 2011
Well That Was a Doozy . . .
As you can see, we got in a little early, what with BGU going for $68.03 at the time of this writing. But we're actually fairly confident the market starts turning around tomorrow. So stay tuned.
Friday, July 29, 2011
Friday, July 8, 2011
Chase Has Customer Thrown in Jail After He Tries to Cash Chase Check
In more banks behaving badly news, Chase had Ikenna Njoku thrown in jail after he tried to cash a check that they had issued to him. The bank somehow failed to recognize that their own check was legitimate, and because the investigating officer happened to be on his day off when they finally discovered their error, Mr. Njoku was forced to spend the weekend in jail. The system at work. As can be expected, Mr. Njoku now banks with Wells Fargo.
Charlie Munger Unleashed
Charlie Munger on the Wall Street Bubble:
It all started with an asinine bubble. The cause was a combination of megalomania, stupidity, insanity, and I would say evil on the part of bankers and mortgage brokers.
And it was widespread. Alan Greenspan was a smart guy, but he totally overdosed on Ayn Rand when he was young. You can't give bankers the freedom to create gambling games. That's what it was. Wall Street was a gambling house, and the house's odds were better than a Vegas casino. And real casino operators have to build parking lots, fly in entertainers, pay for bars and restaurants. It's expensive. Wall Street was like a casino with no overhead. It was hog heaven for them. But it created vast damage with terrible consequences to civilization.
None of us should fall for the idea that this was constructive capitalism. In the 1920s they called it bucket shops -- just the name tells you it's bad -- and they eventually made it illegal, and rightly so. They should do the same this time.
You can read more of Charlie's excellent musings over at The Motley Fool (don't forget to hit the second part as well), and you can read his parody of the financial crisis over at Slate.
Thursday, June 30, 2011
Envivio Postpones IPO
Envivio has indefinitely postponed its IPO due to "market conditions" according to its underwriters. Which is funny, because we happen to be in a short term rally at the moment. Of course, it could be because investors are not quite as dumb these days as they have been in the past, so they're not really falling for the "we don't make money and aren't sure how we're going to do so" business "plans" that so many companies seem to be throwing out these days. After all, look at what's happened to LinkedIn and Pandora.
For more IPO madness, check out Why Groupon is Poised for Collapse by Rocky Agrawal.
For more IPO madness, check out Why Groupon is Poised for Collapse by Rocky Agrawal.
Wednesday, June 29, 2011
The World Isn't Ending Yet
It seems like every day you hear another doom and gloom headline. Underwater mortgages. Debt ceiling crisis. Riots in Greece. Maybe even something like this.
"'Sally Cameron thought she had done everything right,' wrote Kevin Carey last week, retelling a story he read in the Washington Post. 'But when she hit the job market, her Ivy League management degree didn't seem to matter. The worst recession in decades had pushed the unemployment rate to nearly 10 percent and good jobs were scarce. Sally paid the rent by tending bar and filled her time with volunteer work.'"
But of course that quotation isn't from 2011, or even 2008. It's from 1982. Sally Cameron is currently a successful manager for a consulting company. Boom and past cycles come and go; the trick is to position yourself so that you can profit from them regardless of the overall market direction. A wise businessman named Levi Strauss made a fortune by selling equipment to prospectors. It didn't matter if the people who bought his tools found gold or not; Strauss made money either way. You can do the same if you stand apart from all the mad frenzies, the fear and greed, and dispassionately observe what's going on.
You can read about more apocalyptic predictions that failed to come to pass over at The Motley Fool.
"'Sally Cameron thought she had done everything right,' wrote Kevin Carey last week, retelling a story he read in the Washington Post. 'But when she hit the job market, her Ivy League management degree didn't seem to matter. The worst recession in decades had pushed the unemployment rate to nearly 10 percent and good jobs were scarce. Sally paid the rent by tending bar and filled her time with volunteer work.'"
But of course that quotation isn't from 2011, or even 2008. It's from 1982. Sally Cameron is currently a successful manager for a consulting company. Boom and past cycles come and go; the trick is to position yourself so that you can profit from them regardless of the overall market direction. A wise businessman named Levi Strauss made a fortune by selling equipment to prospectors. It didn't matter if the people who bought his tools found gold or not; Strauss made money either way. You can do the same if you stand apart from all the mad frenzies, the fear and greed, and dispassionately observe what's going on.
You can read about more apocalyptic predictions that failed to come to pass over at The Motley Fool.
Sunday, June 12, 2011
Bottom Forming?
So now that we've had six straight weeks of losses is it time to sell or buy? We just bought on Friday, and here are a couple of reasons why.
First of all, one of our proprietary indicators flashed that a bottom was forming. Then we saw this article. Whenever major figures start saying time to sell we strongly consider buying. And finally, as this article points out, what we're seeing is selling without a huge spike in volatility. That fact would seem to indicate that there's not a whole lot of conviction behind the selling.
All of that being said, there are a few caveats here. Nobody really knows what the end of QE2 means for the markets. Nobody's really sure that there won't be a QE3. Our overall disposition is to be bearish during the summer months. And we believe that our indicators are firing a little early, so we probably have a bit more downside to go. However, we'd rather be early than late to this party, and we firmly believe a short-term bottom is forming.
First of all, one of our proprietary indicators flashed that a bottom was forming. Then we saw this article. Whenever major figures start saying time to sell we strongly consider buying. And finally, as this article points out, what we're seeing is selling without a huge spike in volatility. That fact would seem to indicate that there's not a whole lot of conviction behind the selling.
All of that being said, there are a few caveats here. Nobody really knows what the end of QE2 means for the markets. Nobody's really sure that there won't be a QE3. Our overall disposition is to be bearish during the summer months. And we believe that our indicators are firing a little early, so we probably have a bit more downside to go. However, we'd rather be early than late to this party, and we firmly believe a short-term bottom is forming.
Tuesday, June 7, 2011
Yet Another Homeowner Forecloses on Bank
Apparently Bank of America didn't learn anything from the Wells Fargo mess. This time a Florida couple won a judgement against BofA after the bank tried to foreclose on their house, a house that they had bought with cash. Naturally BofA, which was in such a hurry to take back a house it didn't own, was a little tardy in cutting the couple a check for their lawyer fees.
That is until the couple showed up at their local branch with a moving truck and sheriff's deputies, armed with their own foreclosure notice and ready to take away the branch manager's desk and chair. Somehow BofA suddenly found the time to pay off their debts when the cops showed up. And so another victory for the little guy was won.
That is until the couple showed up at their local branch with a moving truck and sheriff's deputies, armed with their own foreclosure notice and ready to take away the branch manager's desk and chair. Somehow BofA suddenly found the time to pay off their debts when the cops showed up. And so another victory for the little guy was won.
Gold or the Stock Market?
You may have heard this story about the hundred year old woman whose bank account was opened in 1913. But what really caught our eye was this comment, "Gregg . . . received as gifts a $2.50 gold piece and a $5 gold piece, which went into the account. 'I wish I hadn't put those in,' she said, aware of gold's value. 'It was during the Depression, and my dad told me to put them in the bank.'"
Naturally gold bugs jumped all over that statement. "Of course she should have kept it because gold makes you rich!" they shouted. But in actuality the coins would be worth somewhere between $450 and $700.
Meanwhile, if she had invested that money in the stock market at an annualized return of 8.92%, she would have $6405.67 today. Stock market wins again.
Naturally gold bugs jumped all over that statement. "Of course she should have kept it because gold makes you rich!" they shouted. But in actuality the coins would be worth somewhere between $450 and $700.
Meanwhile, if she had invested that money in the stock market at an annualized return of 8.92%, she would have $6405.67 today. Stock market wins again.
Thursday, June 2, 2011
Yet Another Motley Fool Award
Another month, another Motley Fool Award. Today it's the Motley Fool CAPS Score Leader Award for calling the stocks NKA and MBND.
Friday, May 6, 2011
Time to Get Back into Silver?
Well that was fast. Far be it from us to brag, but we did call a crash in the silver market on 4/21. Actually our proprietary trading algorithms called for going bearish once the price was below $45.93, which occurred on 5/2 and would have gotten you out pretty close to the top.
Now Andrew Horowitz, whom we addressed in our last post, is looking to go back into silver. He was looking for SLV to hold its 50 day moving average, but it blew through that and it's now at $34.48. We personally have no indications for a reversal at this time, but we'll keep a look out.
Now Andrew Horowitz, whom we addressed in our last post, is looking to go back into silver. He was looking for SLV to hold its 50 day moving average, but it blew through that and it's now at $34.48. We personally have no indications for a reversal at this time, but we'll keep a look out.
Thursday, April 21, 2011
Upcoming Silver Crash?
Quite possibly. We've been saying stay away from precious metals as a long term investment for a while now (although we do occasionally swing trade gold etfs). But now we're seeing some indications that it might be a good time to consider shorting silver.
Market Vane has just reported that bullish sentiment for silver is over 90%. And now word comes that Disciplined Investor Andrew Horowitz, former winner of the MSN Strategy Lab stock picking contest, has begun shorting the metal. We've got a lot of respect for Andrew here, and while we may not be jumping on the bandwagon just yet, we find his reasoning to be pretty sound.
Market Vane has just reported that bullish sentiment for silver is over 90%. And now word comes that Disciplined Investor Andrew Horowitz, former winner of the MSN Strategy Lab stock picking contest, has begun shorting the metal. We've got a lot of respect for Andrew here, and while we may not be jumping on the bandwagon just yet, we find his reasoning to be pretty sound.
Four Things You Need to Know About Corporate Bonds
1. There is a significant amount of fraud in the Wall Street bond market. The bond market is much larger than the stock market, and because the number of individual investors is fewer there is far less transparency. Danny Moses, who worked for Steve Eisman, was known to ask Wall Street salesmen, "How are you going to fuck me?" when engaging in trades with them that saved too perfect.
2. Moody's, Standard and Poor's, and Fitch IBCA offer credit ratings to help you understand risk. One of Wall Street's dirty little secrets is that the people who rate financial products are the people who can't get jobs with the big firms. In other words, almost by definition the ratings people are less qualified to assess the security of bonds than the people selling them. Which explains why the ratings agencies rated mortgage backed securities so highly just before they plunged the world into a financial crisis.
3. When you buy a bond you may be assuming call risk. Some bonds are written so that the issuer has the right to pay off the bond after a certain specified time. It might want to do this if interest rates fall, since in that case it would be cheaper to pay off the bond and then refinance at a lower interest rate.
4. Bond purchasers also have to be aware of event risk. Aflac, for example, gets 70%+ of its earnings from Japan, so it was hit hard by the earthquake / tsunami / meltdown. More mundane risks can come from regulatory changes, or even corporate mismanagement.
Does this mean you should never invest in corporate bonds? Absolutely not. But as with everything, due diligence is a must.
2. Moody's, Standard and Poor's, and Fitch IBCA offer credit ratings to help you understand risk. One of Wall Street's dirty little secrets is that the people who rate financial products are the people who can't get jobs with the big firms. In other words, almost by definition the ratings people are less qualified to assess the security of bonds than the people selling them. Which explains why the ratings agencies rated mortgage backed securities so highly just before they plunged the world into a financial crisis.
3. When you buy a bond you may be assuming call risk. Some bonds are written so that the issuer has the right to pay off the bond after a certain specified time. It might want to do this if interest rates fall, since in that case it would be cheaper to pay off the bond and then refinance at a lower interest rate.
4. Bond purchasers also have to be aware of event risk. Aflac, for example, gets 70%+ of its earnings from Japan, so it was hit hard by the earthquake / tsunami / meltdown. More mundane risks can come from regulatory changes, or even corporate mismanagement.
Does this mean you should never invest in corporate bonds? Absolutely not. But as with everything, due diligence is a must.
Sunday, April 17, 2011
Federal Reserve Bank President Comments on QE3
William Dudley, President of the Federal Reserve Bank of New York, said the following about QE2 and QE3 while at a conference in Hong Kong. "I’d be very surprised if we didn’t complete QE2. After that, though, the hurdle for QE3 is higher . . . One reason we embarked on QE2 was we really were worried about the risk of deflation in the U.S . . . Now the risks of deflation are greatly diminished. So one of the motivations behind QE2 is no longer in place.”
So QE3 isn't a given, but we can't completely rule it out either. The unemployment rate continues to fall, but it's still not at a satisfactory level yet. Quantitative Easing allows the government to stimulate the economy without having to fight Congress for more money; it also makes Americans feel better about the economy, since the stock market keeps on going up, which is particularly useful when you're up for election in the near future. But of course you're going to get inflation with all of this printing money, so the administration has to decide just how much inflation it can create before it starts to derail the progress the economy is making.
That being said, as investors we're enjoying the benefits of QE in the market.
So QE3 isn't a given, but we can't completely rule it out either. The unemployment rate continues to fall, but it's still not at a satisfactory level yet. Quantitative Easing allows the government to stimulate the economy without having to fight Congress for more money; it also makes Americans feel better about the economy, since the stock market keeps on going up, which is particularly useful when you're up for election in the near future. But of course you're going to get inflation with all of this printing money, so the administration has to decide just how much inflation it can create before it starts to derail the progress the economy is making.
That being said, as investors we're enjoying the benefits of QE in the market.
Wednesday, March 30, 2011
Motley Fool Gives Royalty Trades Another Award
Motley Fool's CAPS competition has given Royalty Trades the Score Club 100 award. That means we've now entered the distinguished company of all those with picks that have beaten the S&P 500 by at least 100 points.
Friday, March 25, 2011
What Do We Think About Eddie Lampert's Stock Picks?
Edward "Eddie" Lampert is the chairman of Sears Holding Corporation (SHLD). He is 316th on Forbes's list of the world's richest people, and because of his value investing style has been called the next Warren Buffett by many. During the last quarter of 2010, he picked up the following stocks: CSCO, GPS, and HRB. So what do we think of his latest acquisitions?
Cisco Systems (CSCO): We're big fans of Cisco over here at Royalty Trades. It's not one of our Top Stock Picks, but we like it's PE and its momentum.
Gap Inc (GPS): We're not the hugest fan of retail stocks, but again, with its PE and momentum, we definitely think Eddie could have done worse.
H and R Block Inc. (HRB): Now here's where we have to part with Eddie. Like the previous two, HRB has a good PE and momentum. But its most recent quarterly earnings report missed analyst estimates by quite a bit. This might be a long term value play, but for now we'd stay away.
Cisco Systems (CSCO): We're big fans of Cisco over here at Royalty Trades. It's not one of our Top Stock Picks, but we like it's PE and its momentum.
Gap Inc (GPS): We're not the hugest fan of retail stocks, but again, with its PE and momentum, we definitely think Eddie could have done worse.
H and R Block Inc. (HRB): Now here's where we have to part with Eddie. Like the previous two, HRB has a good PE and momentum. But its most recent quarterly earnings report missed analyst estimates by quite a bit. This might be a long term value play, but for now we'd stay away.
Saturday, March 12, 2011
Balance the Budget
The New York Times lets you try your hand at balancing the budget. Not so easy, is it? http://nyti.ms/bLo4RF
Thursday, March 3, 2011
Homeowner Forecloses on Wells Fargo
Yes, you read that correctly. In a tale sure to warm the hearts of mortgage holders the world over, Philadelphia homeowner Patrick Rodgers, who sees himself as the Johnny Appleseed of these sorts of challenges, began foreclosure proceedings on a local Wells Fargo office. Wells Fargo had told him that he needed to take out a higher insurance policy on his house, and Rodgers vehemently disagreed. So he educated himself on the law, and here's where things got fun.
Rodgers sent a letter to Wells Fargo, asking for specific information about his mortgage. The company failed to acknowledge it had received the letter, even though it's required to do so within 20 days by federal law. So he sent two other letters reminding the company of its legal obligations. Naturally, there was no response.
Then Rodgers took them to small claims court and won a judgement, which the bank failed to pay. This led to his going to the Sheriff's office and beginning the process of initiating a public auction of the bank's possessions. At this point Wells Fargo only partially paid the judgement, so the process of foreclosure continued. Rodgers then sent notices to the media about the impending sale, and his story went viral. It was at this point that Wells Fargo contacted him and gave him a settlement that he "found quite acceptable".
Rodgers details how you too may be able to foreclose on your local bank here.
Rodgers sent a letter to Wells Fargo, asking for specific information about his mortgage. The company failed to acknowledge it had received the letter, even though it's required to do so within 20 days by federal law. So he sent two other letters reminding the company of its legal obligations. Naturally, there was no response.
Then Rodgers took them to small claims court and won a judgement, which the bank failed to pay. This led to his going to the Sheriff's office and beginning the process of initiating a public auction of the bank's possessions. At this point Wells Fargo only partially paid the judgement, so the process of foreclosure continued. Rodgers then sent notices to the media about the impending sale, and his story went viral. It was at this point that Wells Fargo contacted him and gave him a settlement that he "found quite acceptable".
Rodgers details how you too may be able to foreclose on your local bank here.
Warren Buffett Says "Trigger Finger is Itchy"
In yet another good sign for the economy, billionaire investor Warren Buffett has stated that "[Berkshire Hathaway] will need both good performance from our current businesses and more major acquisitions. We're prepared. Our elephant gun has been reloaded, and my trigger finger is itchy."
Warren Buffett Optimistic About US Economy
In an annual letter to his Berkshire Hathaway shareholders, Warren Buffett revealed that he believes America is on the road to economy. He sees a housing recovery in the next year, and noted, "Commentators today often talk of 'great uncertainty'. But think back, for example, to December 6, 1941, October 18, 1987 and September 10, 2001. No matter how serene today may be, tomorrow is always uncertain. Don't let that reality spook you."
Buffett also noted that he keeps $20 billion cash on hand for unforeseen events or investing opportunities that suddenly pop up. That's always been our policy here at Royalty Trades. We've often wondered why most investors don't keep at least a billion lying under the mattress just in case.
More seriously though, we're glad that the Oracle of Omaha agrees with our assessment that a market crash isn't around the corner. Like many already have, use this recent dip as a buying opportunity.
Buffett also noted that he keeps $20 billion cash on hand for unforeseen events or investing opportunities that suddenly pop up. That's always been our policy here at Royalty Trades. We've often wondered why most investors don't keep at least a billion lying under the mattress just in case.
More seriously though, we're glad that the Oracle of Omaha agrees with our assessment that a market crash isn't around the corner. Like many already have, use this recent dip as a buying opportunity.
Friday, February 25, 2011
Stock of the Day: Bank of America
Bank of America is a major player in the financial services industry of this country. So what's the Royalty Trades position on this stock?
Oooh, we are not fans. They missed their most recent quarterly earnings report by twenty cents a share. And we've seen insiders selling shares recently, which is always a major red flag for us. Aside from those two significant problems, you've got analysts decreasing earnings estimates, and a chart that just really doesn't have any momentum behind it. If you absolutely have to hold a bank, go with Goldman Sachs seeing as how they're as close to the Illuminati that one can get these days.
Oooh, we are not fans. They missed their most recent quarterly earnings report by twenty cents a share. And we've seen insiders selling shares recently, which is always a major red flag for us. Aside from those two significant problems, you've got analysts decreasing earnings estimates, and a chart that just really doesn't have any momentum behind it. If you absolutely have to hold a bank, go with Goldman Sachs seeing as how they're as close to the Illuminati that one can get these days.
Wednesday, February 23, 2011
Free Stock Tip of the Day: WNR
We've made quite a mint recently off Western Refining Inc (WNR). Aside from the fact that we've been bullish on oil for a bit, this stock's got great momentum to satisfy you technical analysts, and good sales and a goof forward PE to whet the appetites of all you fundamental analysts.
Tuesday, February 22, 2011
Royalty Trades Chosen As Motley Fool Score Leader
Royalty Trades has once again been chosen as a Motley Fool Score Leader, this time for the ETF RETS. For more winning stock picks, check out our web site.
Thursday, February 17, 2011
Five Ways to Profit Off Egypt
The turmoil in Egypt has brought out one of those classic either/or situations that you occasionally see in stocks. Either democracy will take root in the country and the world's largest Arab country will flourish, or something will derail the process and she will continue to stagnate. So how does one take advantage of this situation?
EGPT, the Market Vectors Egypt ETF, is the only pure Egypt ETF available right now, although others are coming online. If you think Egypt's destiny is assured, then this is the play for you. If you think rocky times are ahead, short it.
If you're bullish on Egypt but want to diversify your risk, consider a regional ETF such as AFK, PMNA, FRN, or GULF. All of these have between 10 and 19% allocations to Egypt, so you get the exposure with less of the risk.
EGPT, the Market Vectors Egypt ETF, is the only pure Egypt ETF available right now, although others are coming online. If you think Egypt's destiny is assured, then this is the play for you. If you think rocky times are ahead, short it.
If you're bullish on Egypt but want to diversify your risk, consider a regional ETF such as AFK, PMNA, FRN, or GULF. All of these have between 10 and 19% allocations to Egypt, so you get the exposure with less of the risk.
Wednesday, February 16, 2011
Three Reasons the Market Crash Isn't Around the Corner
Investor sentiment at all time highs, Google trying and failing to buy Groupon for $6 billion, and gold being purchased at the mall; all signs of a forthcoming stock apocalypse, right? So where is it?
We don't think it's coming, at least not for the next six months, and quite possibly not until next year. Yes, there are many signs that stocks are overbought, and gold certainly is. But there are a couple of things propping this rally up.
First, consumer confidence is pretty low at this point, which is a good contrarian indicator for the market. Stocks after all, are a leading indicator, so when consumers start to feel as though it's darkest the market knows that dawn is right around the corner. And rise as a result.
Second, the Fed is determined to print money and pump up the market. They're doing this partly because money needs to be spent to cement the economic recovery, but also because they want the rally to continue. When people see the market rise they feel richer, which is good for politicians.
Third, you're seeing a phenomenon in which people are determined to buy the dip. Right now, whenever there's a slight drawdown in the market investors see it as an opportunity, not a sign of crisis. Volatility is ridiculously low right now because as soon as stocks show the littlest sign of dropping people are rushing in to snap them up at what they think is a discount.
So for now the trend is up, it's your friend, and don't fight it. It'll be time to get nervous when your barber starts giving you stock tips. When the correction does come it will probably look like ten people playing a game of musical chairs with only one chair left. But until our proprietary indicators demonstrate that the panic is about to begin, we are more than comfortable using leveraged ETFs to make money in this market.
We don't think it's coming, at least not for the next six months, and quite possibly not until next year. Yes, there are many signs that stocks are overbought, and gold certainly is. But there are a couple of things propping this rally up.
First, consumer confidence is pretty low at this point, which is a good contrarian indicator for the market. Stocks after all, are a leading indicator, so when consumers start to feel as though it's darkest the market knows that dawn is right around the corner. And rise as a result.
Second, the Fed is determined to print money and pump up the market. They're doing this partly because money needs to be spent to cement the economic recovery, but also because they want the rally to continue. When people see the market rise they feel richer, which is good for politicians.
Third, you're seeing a phenomenon in which people are determined to buy the dip. Right now, whenever there's a slight drawdown in the market investors see it as an opportunity, not a sign of crisis. Volatility is ridiculously low right now because as soon as stocks show the littlest sign of dropping people are rushing in to snap them up at what they think is a discount.
So for now the trend is up, it's your friend, and don't fight it. It'll be time to get nervous when your barber starts giving you stock tips. When the correction does come it will probably look like ten people playing a game of musical chairs with only one chair left. But until our proprietary indicators demonstrate that the panic is about to begin, we are more than comfortable using leveraged ETFs to make money in this market.
Thursday, February 10, 2011
Stock of the Day: Alcoa
Alcoa is the world's third largest producer of aluminum. So what's the Royalty Trades position on this stock?
We're slightly bullish. Alcoa's got moderately accelerating earnings, good momentum, and a good earnings report. But the company's also facing some headwinds. We're really not loving the PE on this one, and there have been rumblings that they might not meet their earnings estimates.
Still, quite a few institutional investors have been snapping this one up, so we're bullish for the moment.
We're slightly bullish. Alcoa's got moderately accelerating earnings, good momentum, and a good earnings report. But the company's also facing some headwinds. We're really not loving the PE on this one, and there have been rumblings that they might not meet their earnings estimates.
Still, quite a few institutional investors have been snapping this one up, so we're bullish for the moment.
Friday, February 4, 2011
Stock of the Day: TLAB
Tellabs, Inc is a company that designs equipment and provides services to communications services providers around the globe. What is the Royalty Trades position on this stock?
We're not in love with it, frankly. On the one hand, TLAB does have a good price to earnings ratio. And . . . that's about it. On the con side we have not so great momentum, a high PE to five year growth multiple, and a bad quarterly earnings report. Topping it all off is the fact that insiders have been selling their shares lately, which is pretty much the most ominous sign to look out for. So for now, we'd stay away from TLAB.
We're not in love with it, frankly. On the one hand, TLAB does have a good price to earnings ratio. And . . . that's about it. On the con side we have not so great momentum, a high PE to five year growth multiple, and a bad quarterly earnings report. Topping it all off is the fact that insiders have been selling their shares lately, which is pretty much the most ominous sign to look out for. So for now, we'd stay away from TLAB.
Wednesday, February 2, 2011
They're Very Good at Turning Your Money into Their Money: Michael Lewis Discusses the Financial Crisis
Michael Lewis's the Big Short is one of the best books discussing the financial crisis. This interview is a little simplified; if you want more detail, check out The Crisis of Credit.
| The Colbert Report | Mon - Thurs 11:30pm / 10:30c | |||
| Michael Lewis | ||||
| ||||
Monday, January 31, 2011
5 Reasons Not to Gamble On Penny Stocks
You see the ads all the time (there's probably one on the right side of this page thanks to the magic of Google ads). 600% penny stock gains! Triple your money in one day! Before you go ahead and waste your hard earned dollars on such nonsense, check out the top five reasons why you shouldn't gamble your hard earned dollars away.
5: It's Like Riding a Roller Coaster.
Penny stocks can go up really fast; that's what makes them so attractive to people trying to make a quick buck. But they can also go down really fast, and all your hard earned gains can evaporate in minutes.
4. A Lot of Times They're Illiquid
Liquidity refers to how easily you can sell an asset. Because penny stocks don't trade on regular stock exchanges, they're not as easy to buy or sell as regular investments. This means that at best it's going to be difficult for you to get a good price on them, and at worst you won't be able to sell when the price goes down quickly. Entire hedge funds have collapsed because they got into investments that they couldn't sell and their assets quickly became worthless. Take a lesson from them and leave penny stocks alone.
3. You Get What You Pay For
If somebody told you that you could buy a painting for $1000 today and it would be worth $3000 tomorrow, would you buy it? No, then why would you do the same thing when investing in a business? A stock like Google trades for $600 a share because it's the dominant player in its field and everybody knows how it makes its money. A stock with random initials like ZXYH trades for five cents a share because somebody heard from a friend of a friend that it's going to someday maybe build jet packs that let people fly to the moon.
2. The People Who Are Hyping Them To You are Paid to Do So
That guy who's promising you a 600% return on your investment is most likely being paid by the penny stock owners to hype their company. Always read the fine print on any web site, and sometimes you'll catch them saying how they were paid. Even 50 Cent was recently caught hyping his own stock on twitter. Sometimes though, they won't even mention it. Just remember, the people running ads are there to make money for themselves, not for you.
1. It's a Fraudster's Paradise
There's a lot of fraud on regular old Wall Street where the SEC can see everything that's going on. Penny stocks are basically sold in the back alley of finance, a place where the cops rarely go. The classic pump and dump scam works like this: penny stock owners hype their stock through press releases and over the internet; sometimes they even get celebrities like 50 Cent and Shaq to endorse their product. Then, when a bunch of marks start buying and the stock reaches a high enough price they sell all their shares, make a profit, and laugh all the way to the bank while the people who fell for the scam watch as the value of their shares dwindles back to zero. Don't be one of those people.
5: It's Like Riding a Roller Coaster.
Penny stocks can go up really fast; that's what makes them so attractive to people trying to make a quick buck. But they can also go down really fast, and all your hard earned gains can evaporate in minutes.
4. A Lot of Times They're Illiquid
Liquidity refers to how easily you can sell an asset. Because penny stocks don't trade on regular stock exchanges, they're not as easy to buy or sell as regular investments. This means that at best it's going to be difficult for you to get a good price on them, and at worst you won't be able to sell when the price goes down quickly. Entire hedge funds have collapsed because they got into investments that they couldn't sell and their assets quickly became worthless. Take a lesson from them and leave penny stocks alone.
3. You Get What You Pay For
If somebody told you that you could buy a painting for $1000 today and it would be worth $3000 tomorrow, would you buy it? No, then why would you do the same thing when investing in a business? A stock like Google trades for $600 a share because it's the dominant player in its field and everybody knows how it makes its money. A stock with random initials like ZXYH trades for five cents a share because somebody heard from a friend of a friend that it's going to someday maybe build jet packs that let people fly to the moon.
2. The People Who Are Hyping Them To You are Paid to Do So
That guy who's promising you a 600% return on your investment is most likely being paid by the penny stock owners to hype their company. Always read the fine print on any web site, and sometimes you'll catch them saying how they were paid. Even 50 Cent was recently caught hyping his own stock on twitter. Sometimes though, they won't even mention it. Just remember, the people running ads are there to make money for themselves, not for you.
1. It's a Fraudster's Paradise
There's a lot of fraud on regular old Wall Street where the SEC can see everything that's going on. Penny stocks are basically sold in the back alley of finance, a place where the cops rarely go. The classic pump and dump scam works like this: penny stock owners hype their stock through press releases and over the internet; sometimes they even get celebrities like 50 Cent and Shaq to endorse their product. Then, when a bunch of marks start buying and the stock reaches a high enough price they sell all their shares, make a profit, and laugh all the way to the bank while the people who fell for the scam watch as the value of their shares dwindles back to zero. Don't be one of those people.
Thursday, January 27, 2011
So You Want to Be an Investment Banker
"How do I become an investment banker?" is a question we find ourselves answering all the time. First, watch this video just so you can understand exactly what effect Wall Street will have on your life. If you're still determined to enter this industry, then read on.
First make sure you study finance and math in undergrad, and get your Masters in Business Administration. That's mainly so you can understand exactly what it is your doing.
Next, it's important that you demonstrate excellence in multiple fields. Places like Goldman Sachs have so much money that they could literally hire every college graduate with perfect grades if they wanted to. So set yourself apart by demonstrating that you have depth. Do you speak French? Were you captain of the rowing team? Having multiple interests demonstrates that you can attack problems from multiple angles and that you'll bring more than a narrow-minded focus to the team.
It's also vitally important that you demonstrate intellectual curiosity during your interview. Betrand Russell once said, "Most people would rather die than think: many do." You want to show your potential employers that you can think for yourself, that you can help them innovate new products, and that you can actually grasp the risks and benefits that each investment poses to the bank.
The most important thing, though, is to network. Successful businesses are by and large driving by personal relationships. Steve Eisman, who made a fortune during the financial crisis, started out in life as a lawyer and eventually got a job as an analyst because his parents worked at the firm that hired him. The same firm also hired his nanny, again because of his parents. Dr. Michael Burry, a neurologist who went on to become a successful hedge fund manager, got his start by posting his trades online, and was discovered by famous investor Joel Greenblatt.
So get an internship on Wall Street and meet and befriend as many people as possible. Understand too that Wall Street is a hyper competitive environment where coworkers are more than willing to commit fraud and stab each other in the back because of the vast sums of money involved. The key to success there is having lots of allies who can recommend you for positions and protect your back.
First make sure you study finance and math in undergrad, and get your Masters in Business Administration. That's mainly so you can understand exactly what it is your doing.
Next, it's important that you demonstrate excellence in multiple fields. Places like Goldman Sachs have so much money that they could literally hire every college graduate with perfect grades if they wanted to. So set yourself apart by demonstrating that you have depth. Do you speak French? Were you captain of the rowing team? Having multiple interests demonstrates that you can attack problems from multiple angles and that you'll bring more than a narrow-minded focus to the team.
It's also vitally important that you demonstrate intellectual curiosity during your interview. Betrand Russell once said, "Most people would rather die than think: many do." You want to show your potential employers that you can think for yourself, that you can help them innovate new products, and that you can actually grasp the risks and benefits that each investment poses to the bank.
The most important thing, though, is to network. Successful businesses are by and large driving by personal relationships. Steve Eisman, who made a fortune during the financial crisis, started out in life as a lawyer and eventually got a job as an analyst because his parents worked at the firm that hired him. The same firm also hired his nanny, again because of his parents. Dr. Michael Burry, a neurologist who went on to become a successful hedge fund manager, got his start by posting his trades online, and was discovered by famous investor Joel Greenblatt.
So get an internship on Wall Street and meet and befriend as many people as possible. Understand too that Wall Street is a hyper competitive environment where coworkers are more than willing to commit fraud and stab each other in the back because of the vast sums of money involved. The key to success there is having lots of allies who can recommend you for positions and protect your back.
Wednesday, January 26, 2011
Four Reasons Not to Waste Your Money with Mutual Funds
Number 4: Market timing. Most mutual funds are required to stay fully invested in the market, even if it's crashing just as it did in 2008. Standing buy your fund in a bear market is a great way to lose your money.
Number 3: Transparency. Often it's difficult to understand exactly what your fund is invested in, or why it feels as though those stocks will bring you the best results. Even more importantly, if the star fund manager who got you those great returns over the past three years leaves, you may very well not know about it. And then you'll be sitting there, wondering why your money has suddenly started to disappear.
Number 2: Fees. Mutual funds don't make their money by making you rich. They make their money by charging you for the "privilege" of giving your money to them. And they'll keep charging you even if they're losing your money in a bear market or their star manager has moved on to better things.
Number 1: They just don't work. Period. Only one in three funds will beat their benchmark in any year, and more than 95% will fail to beat the market over ten years.
So unless you happen to like being charged to make a small amount of money, stay away from mutual funds. What should you do then? If you have only a small amount of money invest in an index fund that directly tracks the market. The fees are lower, and there's far less risk.
Number 3: Transparency. Often it's difficult to understand exactly what your fund is invested in, or why it feels as though those stocks will bring you the best results. Even more importantly, if the star fund manager who got you those great returns over the past three years leaves, you may very well not know about it. And then you'll be sitting there, wondering why your money has suddenly started to disappear.
Number 2: Fees. Mutual funds don't make their money by making you rich. They make their money by charging you for the "privilege" of giving your money to them. And they'll keep charging you even if they're losing your money in a bear market or their star manager has moved on to better things.
Number 1: They just don't work. Period. Only one in three funds will beat their benchmark in any year, and more than 95% will fail to beat the market over ten years.
So unless you happen to like being charged to make a small amount of money, stay away from mutual funds. What should you do then? If you have only a small amount of money invest in an index fund that directly tracks the market. The fees are lower, and there's far less risk.
Not Enemies, But Frenemies
I like this video more than some others because it points out a crucial fact that most people miss in all the hysteria about US debt and China's rise; China needs us just as much as we need them. There's a saying that when you owe the bank a thousand dollars the bank owns you. But when you owe the bank a million dollars, you own the bank. Both China and the US are too big to fail, and neither country can dictate policy to the other because they are so interdependent.
Saturday, January 22, 2011
5 Things to Do With $5000
One of the most frequent questions we answer is "I've got [insert small amount of money here] what do I do with it?" So let's say you've got $5000 and it's burning a hole in your pocket. Here's how you should consider spending it.
Number 5: Pay off your credit card debts. If you're walking around with a 20% interest rate on your credit cards, that's an instant 20% return. It's hard to beat that.
Number 4: See the world. Studies have shown that experiences make people happier than things. For about $5000 (plus airfare and other sundry expenses) you can actually travel to Antarctica. Sure the neighbors may have a nicer car, but chances are you're not going to run into anybody else who has seen penguins outside of a zoo.
Number 3: Put it away for your children's college. The average cost of a four year public college has increased nearly 51% over the past ten years. Many states have 529 Savings Plans that lets savings for higher education grow tax free.
Number 2: Donate it to buy Vitamin A and Zinc for malnourished children. How many chances do you get to help a hungry child grow up to be a healthy adult? Buying micronutrients has been advocated as being one of the most cost-effective ways to help the world.
Number 1: Invest it so that you can do all of those things in the future.
Number 5: Pay off your credit card debts. If you're walking around with a 20% interest rate on your credit cards, that's an instant 20% return. It's hard to beat that.
Number 4: See the world. Studies have shown that experiences make people happier than things. For about $5000 (plus airfare and other sundry expenses) you can actually travel to Antarctica. Sure the neighbors may have a nicer car, but chances are you're not going to run into anybody else who has seen penguins outside of a zoo.
Number 3: Put it away for your children's college. The average cost of a four year public college has increased nearly 51% over the past ten years. Many states have 529 Savings Plans that lets savings for higher education grow tax free.
Number 2: Donate it to buy Vitamin A and Zinc for malnourished children. How many chances do you get to help a hungry child grow up to be a healthy adult? Buying micronutrients has been advocated as being one of the most cost-effective ways to help the world.
Number 1: Invest it so that you can do all of those things in the future.
Friday, January 21, 2011
Facebook Raises $1.5 Billion
Facebook has managed to raise $1.5 billion from Goldman Sachs and Digital Sky Technologies as it comes ever close to that probable 2012 IPO. That amount gives the site a valuation of $50 billion, $35 billion more than it was valued at just 3 years ago.
Ben Bernanke: States Should Not Expect Loans From the Fed. Who Do You Think You Are, Banks?
| The Colbert Report | Mon - Thurs 11:30pm / 10:30c | |||
| State Budget Shortfalls - Christine Todd Whitman | ||||
| ||||
How Many Efficient Market Theorists Does it Take to Change a Light Bulb?
None. If the light bulb needed changing the market would have done it already.
Thursday, January 20, 2011
Crafty Wal-Mart Gets First Lady's Endorsement
So what do you do if you're a giant retailer that wants to expand into liberal enclaves on the west coast and north east but keeps running into opposition from labor unions? Jump on the first lady's healthy food initiative of course. Wal-Mart has announced that it will seek to reduce sodium and sugar content in the foods that its Great Value label sells. Michelle Obama expressed her delight by saying, "I believe this charter is a huge victory for folks all across this country."
We're currently bullish on Wal-Mart due to accelerating earnings, relatively low PE, and it's got momentum behind it. Add to the fact that Wal-Mart accounts for 33% of all grocery dollars spent in the US and potential for world-wide growth and you've got yourself a winner.
We're currently bullish on Wal-Mart due to accelerating earnings, relatively low PE, and it's got momentum behind it. Add to the fact that Wal-Mart accounts for 33% of all grocery dollars spent in the US and potential for world-wide growth and you've got yourself a winner.
Wednesday, January 19, 2011
The Top 5 Reasons Not to Invest in Gold
Number 5: You can now sell your gold . . . at the mall. That's almost as bad as when the banks were giving mortgages for $750,000 homes to migrant workers making $17,000 a year.
Number 4: George Soros called gold, "The ultimate asset bubble" and began reducing his position in it last year.
Number 3: Gold's historical return is actually close to 0, believe it or not. It's price always goes up during economic crises, and then deflates. As the economic outlook continues to improve, look for the price of gold to start declining.
Number 2: Dubai now has gold-dispensing ATMs. They also have an indoor ski slope . . . in the desert. If anybody symbolizes profligacy, it's Dubai.
Number 1: Just ask Warren Buffett: "You could take all the gold that's ever been mined, and it would fill a cube 67 feet in each direction. For what that's worth at current gold prices, you could buy all -- not some -- all of the farmland in the United States. Plus, you could buy 10 ExxonMobils, plus have $1 trillion of walking-around money. Or you could have a big cube of metal. Which would you take?"
Note: We will occasionally swing trade gold. But we would never consider it as a long term investment.
Number 4: George Soros called gold, "The ultimate asset bubble" and began reducing his position in it last year.
Number 3: Gold's historical return is actually close to 0, believe it or not. It's price always goes up during economic crises, and then deflates. As the economic outlook continues to improve, look for the price of gold to start declining.
Number 2: Dubai now has gold-dispensing ATMs. They also have an indoor ski slope . . . in the desert. If anybody symbolizes profligacy, it's Dubai.
Number 1: Just ask Warren Buffett: "You could take all the gold that's ever been mined, and it would fill a cube 67 feet in each direction. For what that's worth at current gold prices, you could buy all -- not some -- all of the farmland in the United States. Plus, you could buy 10 ExxonMobils, plus have $1 trillion of walking-around money. Or you could have a big cube of metal. Which would you take?"
Note: We will occasionally swing trade gold. But we would never consider it as a long term investment.
Goldman Sachs Profit Drops 53%; Pays Out Bonuses of $15.3 Billion
Goldman Sachs's fourth quarter profit dropped 53% due to falling bond trading revenue. Shares of GS were down over 2% in Wednesday morning trading. Not to worry though; Goldman's bonus pile fell only 5%.
Naturally, we are still bullish on Goldman. After all, they do basically run the world, making them as close to the Illuminati as you can get. Plus they've got a good PE ratio.
Naturally, we are still bullish on Goldman. After all, they do basically run the world, making them as close to the Illuminati as you can get. Plus they've got a good PE ratio.
Tuesday, January 18, 2011
Stock of the Day: GE
We're currently bullish on GE. Coming on the heels of its deal with Comcast regarding NBC, this stock has modestly increased quarterly earnings estimates and a pretty good price to sales ratio.
Starbucks Introduces New Big Gulp of Coffee
For all those caffeine addicts out there Starbucks has now introduced its new Trenta, 31 oz coffee. The Trenta is actually technically larger than the human stomach's holding capacity.
FCC Approves Comcast Takeover of NBC
And so media consolidation continues. Subject to multiple conditions, Comcast has been approved to take over NBC. What exactly this means for the future of online television content remains to be seen.
Steve Jobs Takes Medical Leave of Absence; Apple Shares Down 2.25%
On Monday Apple announced that its CEO Steve Jobs is taking an indefinite leave of absence. Apple shares promptly fell 2.25%, although they recovered about half that in after hours trading. The question of course is whether or not Apple can continue to hold on to its place as the second largest company behind Exxon Mobil without its visionary founder.
In a word, no. Just as Microsoft has stumbled after Bill Gates's absence, so too Apple is basically built around Steve Jobs's direction. Jobs happens to be that rare combination of techno-geek and artist; Apple's success hasn't been due nearly as much to technical innovation as it has been to its founder's unique ability to make technological innovation accessible to the masses. Apple didn't invent the GUI, the mouse, the MP3 player, the smart phone, or the tablet computer. What it did was perfect all of those things. When we first heard about the iPad, we thought dismissively, "Why would anybody want this? It's the Jitterbug of laptops." And that's when we truly understand Steve Jobs's genius; he had created a computer that the least technologically savvy people could use with ease.
Apple does have a commanding lead in the smartphone and table computer markets, but as we've posted before, it faces stiff competition from Google and other players. The company won't suddenly go bankrupt if Jobs does permanently step down from the CEO position, but we are looking at a situation where Apple becomes what Microsoft currently is. After all, look at what happened when Jobs was first fired from the position.
Still, in the short term we're bullish on Apple stock. It has a relatively low PE, and its Price to Sales Ratio looks very good as well.
In a word, no. Just as Microsoft has stumbled after Bill Gates's absence, so too Apple is basically built around Steve Jobs's direction. Jobs happens to be that rare combination of techno-geek and artist; Apple's success hasn't been due nearly as much to technical innovation as it has been to its founder's unique ability to make technological innovation accessible to the masses. Apple didn't invent the GUI, the mouse, the MP3 player, the smart phone, or the tablet computer. What it did was perfect all of those things. When we first heard about the iPad, we thought dismissively, "Why would anybody want this? It's the Jitterbug of laptops." And that's when we truly understand Steve Jobs's genius; he had created a computer that the least technologically savvy people could use with ease.
Apple does have a commanding lead in the smartphone and table computer markets, but as we've posted before, it faces stiff competition from Google and other players. The company won't suddenly go bankrupt if Jobs does permanently step down from the CEO position, but we are looking at a situation where Apple becomes what Microsoft currently is. After all, look at what happened when Jobs was first fired from the position.
Still, in the short term we're bullish on Apple stock. It has a relatively low PE, and its Price to Sales Ratio looks very good as well.
Friday, January 14, 2011
Latest Sign of the Techapocalypse: Groupon IPO
It appears that banks are currently competing to underwrite Groupon's IPO.
As we've said before, we think Groupon's more of a fad that's going the way of Gowalla. Shades of 1998 anyone?
As we've said before, we think Groupon's more of a fad that's going the way of Gowalla. Shades of 1998 anyone?
BP Agrees to $8 Billion Stock Swap with Russian Company
BP has further strengthened its ties to Russia through an $8 billion stock swap with Rosneft. Russia already accounts for a quarter of BPs output, and the deal will allow the two firms to to drill together in the Artic Ocean.
As we've stated before, we're still neutral on BP stock. The stock is still down roughly 20% since the oil spill, and it's got decelerating earnings growth.
As we've stated before, we're still neutral on BP stock. The stock is still down roughly 20% since the oil spill, and it's got decelerating earnings growth.
JP Morgan Profit Jumps 47%
JP Morgan declared a 47% jump in fourth-quarter profits, largely thanks to increased credit demand.
We're pretty bullish on this stock, thanks to both the recovering economy and the fact that it's got a relatively low PE.
We're pretty bullish on this stock, thanks to both the recovering economy and the fact that it's got a relatively low PE.
Beatles Sell More than Five Million Songs in Two Months
A lot of people felt the Beatles/iTunes deal was overhyped, wondering just how many fans hadn't already downloaded their favorite songs. Well once again Steve Jobs has proven his critics wrong, as the Fab Four have sold more than five million of their songs online in the past two months.
Just in Case You Were Worried About Wall Street Traders' Finances
Declining bonuses may have saddened some Wall Street traders this month, but they can still take heart: their pay still tops that of neurosurgeons and generals. Although to be fair, those traders are still ineligible for the extra $225 a month a soldier gets for serving in Afghanistan.
Thursday, January 13, 2011
Government Report: Citigroup Still too Big to Fail
The Inspector General of the Troubled Asset Relief Program (TARP) recently released a report stating, "When the Government assured the world in 2008 that it would not let Citigroup fail, it did more than reassure troubled markets -- it encouraged high-risk behavior by insulating risk takes from the consequences of failure." The report also says that Citi is still too big, too interconnected, and too vital to global finance to be allowed to fail.
So now even the government admits that the system is government protection of the rich, and free markets for the rest of us.
So now even the government admits that the system is government protection of the rich, and free markets for the rest of us.
Intel Reports Net Income of $4.3 Billion
The folks at Intel have done it again. They reported a fourth quarter net income of $4.3 billion, beating the Street's estimates by 6 cents a share. That's a 16% gain over 2009.
Stock of the Day: BP
We happen to neutral on BP at the moment. Yes, it's got a decent looking chart and oil's still climbing. But we've also got decelerating earnings growth, and it still has all those oil spill issues to deal with.
Fitty Now Short for Fidelity Investments
| The Colbert Report | Mon - Thurs 11:30pm / 10:30c | |||
| 50 Cent Makes Money on Twitter | ||||
| ||||
Wednesday, January 12, 2011
Stock of the Day: GOOG
We just wrote about this stock the other day, but it came back up on our radar, so Google gets to be the stock of the day. We're slightly bullish on this stock, what with its having good earnings growth and a decent looking chart. Its PE is a little high, but overall we're bullish on GOOG.
Royalty Trades Awarded CAPS Underdog Charm
The Motley Fool's CAPS site has awarded us the Underdog Charm. Check it out.
Tuesday, January 11, 2011
Stock of the Day: C
Citigroup is fresh from being released from its thralldom to the US government and is releasing earning January 18th. So what's the Royalty Trades position on this stock?
Citi's got good earnings growth and positive insider trading. Plus once it hits above $5 it starts to get acquired by mutual funds, further boosting the stock. So we're in the bullish column on this one.
Citi's got good earnings growth and positive insider trading. Plus once it hits above $5 it starts to get acquired by mutual funds, further boosting the stock. So we're in the bullish column on this one.
A Simplified Explanation of the Credit Crisis
The Crisis of Credit Visualized from Jonathan Jarvis on Vimeo.
This is a pretty simple explanation of what happened. The creator misses a few points though. First of all, don't believe the Wall Street lie that this was somehow the fault of the Fed, Fannie Mae, or the American homeowner. That's basically a banker going 75 in a 35, running over a bunch of people in his porsche, and then blaming the government for setting the speed limit so high. Yes, all of those played their part, but it was Wall Street greed and fraud that manufactured this crisis. As Steve Eisman, who made $1.5 billion shorting these CDOs said, "What-the entire American population woke up one morning and said, 'Yeah, I'm going to lie on my loan application'? Yeah, people lied. They lied because they were told to lie." Eisman and the others like him who made fantastic sums off this crisis weren't betting against people or the government; they were betting against the greed and mendacity of Wall Street.
Anyway, the author leaves out that Wall Street firms were deliberately gaming the ratings agencies. The agencies didn't actually know what was in these bonds; in a lot of cases they just went off the average FICO score on each. So the firms matched people with high FICO scores but short credit histories with people with low FICO scores to increase the average score, and get the agencies to rate this stuff higher. The high ratings then convince lay investors that the bonds are safe, and that's how the fraudsters manage to get away with selling financial instruments that were really just ticking time bombs.
Be Fearful When Others are Greedy
That's sound advice from Mr. Buffett himself. Here's just a few signs that we may be nearing a correction in the next few months.
Facebook's value jumps to $56 billion: It was only $35 billion a few weeks ago. This one may not be that off. After all, if Facebook were a country it would be the third most populated, behind India and then China. What other company can say that? That being said, remember MySpace? How about AOL?
Twitter's value is supposedly $3.7 billion: This one makes less sense. Twitter has plans to generate revenue. Most people also make plans to lose weight after New Year's. We'll see which one is more successful.
Groupon Rejects Google: Half of startup business models are focused on getting bought out by Google. So when the search giant shows up with $6 billion in cash, who in their right mind says no? Actually, it seems that the main issue was that Groupon was afraid Google would get caught up in anti-trust litigation and so demanded a kill fee that Google wasn't willing to pay. Still, $6 billion for a service that spams its users with deals, just happens to be operating during the one time when Americans are most likely to use coupons, and turns off 40% of the merchants who participate in it?
FourSquare Worth $95 million: Another fad service that happens to be operating in an environment in which both Facebook and Google have the potential to quickly dominate it. Remember back to every bubble when people were saying, "This time it's different"? It never is.
Facebook's value jumps to $56 billion: It was only $35 billion a few weeks ago. This one may not be that off. After all, if Facebook were a country it would be the third most populated, behind India and then China. What other company can say that? That being said, remember MySpace? How about AOL?
Twitter's value is supposedly $3.7 billion: This one makes less sense. Twitter has plans to generate revenue. Most people also make plans to lose weight after New Year's. We'll see which one is more successful.
Groupon Rejects Google: Half of startup business models are focused on getting bought out by Google. So when the search giant shows up with $6 billion in cash, who in their right mind says no? Actually, it seems that the main issue was that Groupon was afraid Google would get caught up in anti-trust litigation and so demanded a kill fee that Google wasn't willing to pay. Still, $6 billion for a service that spams its users with deals, just happens to be operating during the one time when Americans are most likely to use coupons, and turns off 40% of the merchants who participate in it?
FourSquare Worth $95 million: Another fad service that happens to be operating in an environment in which both Facebook and Google have the potential to quickly dominate it. Remember back to every bubble when people were saying, "This time it's different"? It never is.
Has Google Gotten Too Big?
Nexus One. Google Wave. Google TV. Google Buzz. What do these four products have in common? They were all listed in Business Insider's 15 Biggest Flops in Tech for 2010. They've declared that "Don't Be Evil" never was a real motto, engineers are fleeing the company for Facebook, and they've even (gasp!) lost search engine market share to Microsoft. What's going on?
Simple. Just like every empire business or otherwise that's ever preceded them, they got big. And slowly that muscle that once defined them turned to fat. Bureaucracy sets in, and the geniuses leave for greener pastures where they don't have to report to a manager every time they want to use a for loop instead of an if statement.
We're still bullish on this stock, though. They are one of the gatekeepers of this not so far-off world in which the Internet is tamed and mostly ruled by corporations. Their earnings growth has accelerated moderately in the past year, and the fact that they're coming up with new products to flop indicates that they still retain the daring to try new things. Still, they're going to have to trim some of that fat if they want to stay ahead of their competitors. Remember when people made movies about AOL? Remember when only people in graphic design bought products from Apple? Cataclysms can come suddenly in the tech world, and Google will have to continue to innovate if it wants to stay alive, not just profit.
Simple. Just like every empire business or otherwise that's ever preceded them, they got big. And slowly that muscle that once defined them turned to fat. Bureaucracy sets in, and the geniuses leave for greener pastures where they don't have to report to a manager every time they want to use a for loop instead of an if statement.
We're still bullish on this stock, though. They are one of the gatekeepers of this not so far-off world in which the Internet is tamed and mostly ruled by corporations. Their earnings growth has accelerated moderately in the past year, and the fact that they're coming up with new products to flop indicates that they still retain the daring to try new things. Still, they're going to have to trim some of that fat if they want to stay ahead of their competitors. Remember when people made movies about AOL? Remember when only people in graphic design bought products from Apple? Cataclysms can come suddenly in the tech world, and Google will have to continue to innovate if it wants to stay alive, not just profit.
Subscribe to:
Posts (Atom)