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DailyFinance today: banks in trouble highest since ’94, airlines charging for bathrooms, four day workweeks, and worried hotels

Tobias Buckell — Fri, 27 Feb 2009 23:05:00 +0000

	Hotels worried that business travel now seen as wasteful perk
	Can a four-day workweek help fight jobs crisis?
	Airlines take the next step: Charging for bathrooms!
	Banks in trouble highest since 1994

DailyFinance today: banks in trouble highest since '94, airlines charging for bathrooms, four day workweeks, and worried hotels originally appeared on BloggingStocks on Fri, 27 Feb 2009 18:05:00 EST. Please see our terms for use of feeds.

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Chasing Value: GE slashes dividend 68%

Sheldon Liber — Fri, 27 Feb 2009 22:50:00 +0000

Most market watchers will not be surprised to learn that General Electric Company (NYSE: GE) will be slashing its dividend by 68% from 31 cents per share to 10 cents. GE decided to increase it's flexibility in these difficult times and although there have been indications that it could lose it's AAA financial rating, this could prevent or at least might forestall that possibility.

General Electric was included in my picks for the year and has not been holding up well because of its financial division, its largest entity, and the doubt cast by anything with leverage.

The dividend yield on a trailing basis at today's closing price of $8.51 per share was 10.84%. The cut brings it down to about 3.4% which is much closer to GE's long term yield. This should remain attractive to many investors and will leave long term shareholders with some income.

It was only a few days ago I posted Chasing Value: Will we be eating out of trash cans?, and given today's news, there are probably a few more people around now that believe we might.

Sheldon Liber is the CEO of a small private investment company and the principal for design and research at an architecture & planning firm. He writes the columns Chasing Value and Serious Money. Disclosure: I own shares of GE and have open options as well.

Filed under: Bad news, Management, Competitive strategy, General Electric (GE), Chasing Value, Recession, Financial Crisis

Chasing Value: GE slashes dividend 68% originally appeared on BloggingStocks on Fri, 27 Feb 2009 17:50:00 EST. Please see our terms for use of feeds.

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Chasing Value: Anglo American upgrade/downgrade

Sheldon Liber — Fri, 27 Feb 2009 22:35:00 +0000

Today one of my picks for the year, Anglo American ADR (NASDAQ: AAUK), was upgraded from neutral to buy at the investment bank now regular bank Goldman Sachs Group, Inc. (NYSE: GS).

It was only yesterday that AAUK was downgraded from neutral to underweight by JPMorgan Chase & Co. (NYSE: JPM). No doubt they were responding to the news that Standard & Poors cut Anglo's rating two notches to 'BBB' based on it's 40% leverage and the potential for its cash-flow and income to be impacted by continuing soft markets throughout the year in many commodities.

In my view S&P is taking the conservative view, as they should -- because they were embarrassed and chastised for being complicit in the financial melt-down we are now experiencing, through their miscalculation of the risks associated with CDO's and other toxic financial instruments.

Goldman Sachs is probably responding to the stock's lower price after the downgrade, and like me sees upside potential when commodity prices eventually turn around. And they will -- just look at the trillions of dollars being introduced into the economy every month. Dollars not counterbalanced by increased productivity, goods, or services.

I have heard many discussions about the pricing of commodities, government spending, and even lackluster markets lasting for years, but I have heard scant conversations promoting the idea that you could print trillions of dollars with no inflationary effect.

Last week I reported Chasing Value: Anglo American cuts 19,000 jobs & dividend and believe the company is not hiding from the market reality it is faced with. I am sticking with this stock and ignoring the noise on the street for now.

Sheldon Liber is the CEO of a small private investment company and the principal for design and research at an architecture & planning firm. He writes the columns Chasing Value and Serious Money. Disclosure: I own shares of AAUK and options.

Filed under: International markets, Analyst upgrades and downgrades, Competitive strategy, JPMorgan Chase (JPM), Goldman Sachs Group (GS), Chasing Value, Anglo Amer ADR (AAUK), Best Stocks for 2009

Chasing Value: Anglo American upgrade/downgrade originally appeared on BloggingStocks on Fri, 27 Feb 2009 17:35:00 EST. Please see our terms for use of feeds.

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Dell no longer best of breed

Jamie Dlugosch — Fri, 27 Feb 2009 22:20:00 +0000

There was a time when Dell Inc. (NASDAQ: DELL) was the cream of the crop in the PC business. Its college dorm beginnings and customization model allowed the company to separate itself from a host of other competitors.

It is hard to say what exact magic it was that allowed the DELL story to unfold, but suffice it to say the company was the best in the business at selling computers to individuals and small businesses. But I'm not so sure that is the case any longer. The heady days of the dot-com boom were when this company reached its prime. It has been a slow death ever since.

At its peak, DELL traded for a split adjusted price of nearly $60 per share in the early part of this decade. Today you can buy shares for less than $10. If you have stuck with the company, you have endured a lot during the last nine years.

The reasons for the decline are many, and exemplify a common theme for growth companies. Domination in a sector causes a star to shine brightly. That strength attracts competitors. Each and every day your competition wants to bring you down.

At the same time, you get fat and lazy. You're sitting at the top of the food chain and the behavior that led to you rising to the top slips by the wayside.

In addition, no business is immune from the business cycle. If you are not prepared to deal with declines in your business, you will suffer. Companies, even those at the top, must constantly innovate and diversify their revenues stream.

A great example of a company that is successful in this game is Apple Inc. (NASDAQ: AAPL). The company never rests on its laurels. It is always innovating and, as such, it stays at the top.

Dell did not innovate. They sat on their assembly line business and figured that was good enough. Clearly it was not.

After the bell yesterday, Dell announced fourth-quarter results for the period ending Jan. 30. Profits fell by 48% to 18 cents per share. Excluding items, the number was 29 cents -- one penny above analyst expectations.

Revenues fell by 16% to $13.4 billion versus a forecast of $14.06 billion.

These results reinforce traders that had pushed the valuation of Dell to a 10-year low. Shares were higher today, though, because the results could have been much worse. The company appears to be on a strategy of forgoing market share in favor of cost cutting.

Is this company still relevant? Are the results due to the economy or something deeper?

Only time will tell.

Louis Navellier's PortfolioGrader Pro, which offers free ratings for nearly 5,000 Wall Street stocks, rates DELL a D or Sell.

Jamie Dlugosch is a contributor to OptionsZone.com.

Filed under: Earnings reports, Apple Inc (AAPL), Dell (DELL), Stocks to Sell, Recession

Dell no longer best of breed originally appeared on BloggingStocks on Fri, 27 Feb 2009 17:20:00 EST. Please see our terms for use of feeds.

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General Motors cancels NCAA Final Four festivities

Zac Bissonnette — Fri, 27 Feb 2009 22:05:00 +0000

While its auditors are busy expressing doubt about the company's ability to continue as a going concern, General Motors Corporation (NYSE: GM) announced that it will not be using its company suites at the NCAA's Final Four basketball event. The seats are part of the sponsorship package, but GM is now talking with the NCAA about what to do with the suites.

This is a relatively small example of the kind of wasteful spending that GM engaged in, with private jets and excessive executive compensation being better examples.

It's all well and good that GM isn't using the suites this year but we should keep in mind that GM has been in trouble for a long, long time. Even when the company's SUV sales were propping up performance, the balance sheet was still an absolute disaster, and the company should have been looking at every option possible for reducing its debt load. Renting out suites to entertain dealers and customers has not been something GM could prudently afford for a long time.

It's yet another very small example of the poor management that has led this company into its current situation and, miraculously, is still allowed to run the show even as taxpayer cash is shoveled in.

Filed under: General Motors (GM)

General Motors cancels NCAA Final Four festivities originally appeared on BloggingStocks on Fri, 27 Feb 2009 17:05:00 EST. Please see our terms for use of feeds.

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How to get rid of your bad luck

Connie Madon — Fri, 27 Feb 2009 21:50:00 +0000

Have you ever asked yourself? "is there a spirit of poverty? If you go to Japan the answer is: "yes." If you drive to the Bimbo Gami shrine in the mountains about a four hour drive from Tokyo, you will come face to face with the "god of poverty." The god of poverty is a wooden statue believed to be that of a a thin, filthy man who represents the "state of poverty."

So, you are here along with about 500 other people and you want to chase poverty out of your life. You walk up to the statue and beat it several times with a bat, then you kick it as hard as you can and throw beans at it to drive away negative spirits and bad luck.

On man in his 70's said: "I feel like I've been able to get rid of the rancor of the past 50, 60 years."

The elderly couple who created the statue were themselves involved in several failed businesses until they built this shrine. Now the "god of poverty" has proven lucky for the couple. They now have a stable income and live off their good luck by selling charms to visitors.

Do you believe the "spirit of poverty?"

Filed under: Good news

How to get rid of your bad luck originally appeared on BloggingStocks on Fri, 27 Feb 2009 16:50:00 EST. Please see our terms for use of feeds.

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Today’s best income ideas: A dozen experts look for yield

Steven Halpern — Fri, 27 Feb 2009 21:35:00 +0000

With stock prices near decade lows and fear at generational highs, many market participants are looking for harbors in the storm -- and turning their eye from high risk growth stock opportunities to what are generally more conservative income ideas.

For those looking to broaden their holdings to include yield-generated income, we turned to a dozen leading newsletter advisors who in turn offered a wide variety of income-oriented ETF and fund favorites.

Yes, fixed income holdings have their own risks. But in general, a diversified portfolio -- balanced between stocks and bonds -- has proven a more defensive posture. In addition, the selections in this report are funds and ETFs; as such the investments themselves are diversified among many holdings.

Muni bonds -- which offer tax-free income -- top the list for two advisors. Income specialist Carla Pasternak looks at a pair of favorite muni bond closed-end funds offering yields of 7.9% and 11.1%

For more, read: High returns from tax-free muni bond funds

Brandon Clay also like the muni area, but choose a newly-launched ETF that specializes in Pre-Refunded Municipals as a risk averse holding.

For more, read: New ETF buys pre-refunded muni bonds

In addition to a favorite fund in the muni sector, Keith Fitz-Gerald offers favorite income funds for Treasury-inflation propected securities (TIPs) as well as high yield corporate bonds.

For more, read: TIPs, munis & corporates: ETFs for income

Steven Leeb also offers a trio of ideas, selecting a favorite total return fund, a top pick among tax-exempt bonds, and a favorite for those seeking exposure to high quality corporates.

For more, read: Income trio: Favorite funds for yield

Exchanged-traded fund specialist Carl Delfeld recommends a currency-based vehicle that invests in the Australian Dollars and offers a yield above 7%.

For more, read: Aussie dollars: High yields from down under

An area that one may not expect income is the gold and natural resource sector. But growth & income expert Bryan Perry offers a closed-end gold & resources fund from the Gabelli fund family that provides the opportunity for continued high yields.

For more, read: Golden returns: Gabelli Global (GGN)

Master limited partnerships offer both income potential and tax advantages. Energy sector expert Elliott Gue offers his two favorite MLPs as well as a closed-end fund that invests across this sector.

For more, read: Pipeline profits: High yields from MLPs

Eric Roseman sees opportunity for more speculative income investors in mortgage-backed securities and offers a fund from BlackRock offering potential double-digit returns.

For more, read: Blackrock Income (BKT): Mortgage-backed income

Mark Salzinger reveals his favorite picks from his model portfolios, looking to a corporate bond fund for those building long-term wealth and a dividend-focused fund for pre-retirement investing.

For more, read: Best income buys: Wealth building and pre-retirement

For the utmost in safety, Martin Weiss suggests that conservative investors stay with only the shortest term Treasury securities and offers his best buys among Treasury-only money funds.

For more, read: Stay short-term for safety in Treasuries

Finally, two of our advisors are speculative on rising interest rates and offer fund choices that move in the opposite direction from long-term rates. Nick Vardy looks at an inverse government bond fund to play this expected trend.

For more, read: Government bonds: An 'inverse' strategy

Meanwhile, while Jack Adamo offera a leveraged ETF that is also betting on higher rates down the road.

For more, read: ETF banks on a bubble in Treasuries

As always, the recommendations from newsletter advisors should be considered a starting place for you to do your own research. Only buy investment vehicles that match your own investment profile, time horizon and risk parameters.

And importantly -- particularly so with income vehicles -- make sure you fully understand the tax implications of these investments.

Steven Halpern's TheStockAdvisors.com offers a daily look at the latest market commentary and favorite stock picks and investment ideas from the nation's leading financial newsletter advisors.

Filed under: Forecasts, Newsletters, Mutual funds, ETF Investing, Commodities, Oil, Stocks to Buy, Housing, Recession, Financial Crisis

Today's best income ideas: A dozen experts look for yield originally appeared on BloggingStocks on Fri, 27 Feb 2009 16:35:00 EST. Please see our terms for use of feeds.

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Global Q&A: Using both fundamentals and momentum

Nancy Zambell — Fri, 27 Feb 2009 21:20:00 +0000

I am the Global Editor at MoneyShow.com and each week I interview an investing expert. This week, I spoke with Cynthia Tusan, president of Strategic Global Advisors -- a woman-owned asset management firm -- who discusses her approach to global investing.

Q. Cynthia, your stated strategy is a fundamental, bottom-up approach, focusing on international companies. With that in mind, which are the three most important criteria that you use to determine whether a company's stock has the right stuff?

A. Our approach is both fundamental and quantitative, but we focus mainly on company-specific factors. Over the years we have consistently focused on four areas: valuation, growth, quality, and sentiment. For 2008, we were more active in looking at debt levels of companies and price momentum.

Debt levels were important in making sure that our portfolios could weather this economic storm. Price momentum was important in keeping an eye on companies that may have had problems that were not uncovered. Yet price sometimes is the only thing we have to go by when the environment is changing rapidly. According to some analyses already published, price momentum was indeed an important predictor for 2008 and valuation was not enough, and in some cases was a trap for investors.

Q. How much importance do you give to industry or sector analysis?

A. Industry and sector were important for 2008. [Industries that had] strong cash flow, even if growth prospects were not great, did well. Utility stocks, for example, and telecom stocks were safer havens.

Q. What additional criteria, such as country risk factors, do you take into account when looking at international stocks?

A. Political factors are always important in international investing. We tend to avoid countries that have unstable governments such as Thailand.

Q. For individual investors, what would you suggest is the best approach to international investing-individual stocks on foreign exchanges (where available), American Depository Receipts (ADRs), exchange traded funds (ETFs), or mutual funds? And why?

A. Individual investors may not have a choice, since most brokers do not offer retail investors the ability to buy stocks on their local exchanges. ADRs are a good alternative, as long as investors realize that they tend to have more emerging markets in that universe, and they should avoid inadvertently tilting towards emerging markets (unless that is their plan). ETFs are also a good alternative, but can be overwhelming since choices there are numerous. We have an ADR product that is available on the Schwab platform and a country allocation product that utilizes ETFs for retail investors.

Q. How do you find potential stocks?

A. We have developed a methodology to rank stocks across 14 factors. They are ranked amongst their industry peers and we try to own the best names within their industry or peer group. We use research from a variety of top tier global research firms including Merrill Lynch, Goldman Sachs, and Citigroup.

Q. How were your client returns in 2008? Would you have done anything differently, in hindsight?

A. Our performance was close to our benchmark, which was a success for us. (Editor's Note: Three of the four international funds run by Strategic Global Advisors trailed their MSCI benchmarks slightly, while its International Country Allocation Equity fund outperformed.)

Typically in these types of irrational markets one can get into value traps. We were able to avoid being adversely impacted in a substantial way by maintaining our discipline and stepping up our risk control. For example, it might be tempting to avoid financial stocks, but financial stocks can be the best performers when coming out of a bear market. Since we do not know yet where the bottom is, it is important to keep your financials, but be prudent and diversified in what you own.

Editor's Note: Following are the top holdings (as of December 31, 2008) in each of the SGA portfolios noted below:

International Large Cap Core, primarily stocks traded on foreign exchanges: Royal Dutch Shell (LSE: RDSA.L), Total (Paris: FP.PA), Reckitt Benckiser Group (LSE: RB.L)

International Small-Mid Cap Core, primarily stocks traded on foreign exchanges: Hokuhoku Financial Group (Tokyo: 8377), SES (Lux.SE: SESG), Nippon Soda (Tokyo: 4041)

International Large Cap Core ADR, stocks traded in the US as ADRs: Total (NYSE: TOT), Nestle (OTC: NSRGY), Unilever (NYSE: UL)

US Large Cap core, domestic companies traded in the US: Exxon Mobil (NYSE: XOM), Chevron (NYSE: CVX), Johnson & Johnson (NYSE: JNJ)

Nancy Zambell edits the Global Investing page for MoneyShow.com. Her opinions are her own and not necessarily the views of InterShow or MoneyShow.com.

Filed under: International markets, Exxon Mobil (XOM), Johnson and Johnson (JNJ), Chevron Corp (CVX), Unilever ADR (UL), Stocks to Buy

Global Q&A: Using both fundamentals and momentum originally appeared on BloggingStocks on Fri, 27 Feb 2009 16:20:00 EST. Please see our terms for use of feeds.

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Closing Bell: When a loss is s win (GE, C, ADSK, IBKC, DELL)

Jon Ogg — Fri, 27 Feb 2009 21:05:00 +0000

The market was down almost all day, although it did make a few runs at going positive. The Q4 GDP data was even far worse than the revision estimates. While there is very little good news on the headlines, it does seem as though buyers are starting to nibble on positions. The end of day drop today looks like it was an index rebalance issue for month-end, although there could always be the fear of holding into the weekend. In that case, today almost felt like a win. Here are today's unofficial closing bell levels:

Dow 7,068.66 -113.42 (-1.58%)
S&P 500 735.50 -17.33 (-2.30%)
Nasdaq 1,377.84 -13.63 (-0.98%)

Top Analyst Downgrades
Top Analyst Upgrades
General Electric Company (NYSE: GE) did finally cut that dividend. It cut it by more than two-thirds down to $0.10. Moody's also covered it, but with no new outcome.

Autodesk, Inc. (NASDAQ: ADSK) was down almost 10% before the close at $12.70. The company posted a net loss after items for the last quarter, and if you read into the pro forma figures, you might expect losses again.

Citigroup, Inc. (NYSE: C) went through a rollercoaster day. Unfortunately it was not a coaster that went up. The government has reached a deal to convert its preferred stake into common stock. Shares were down 40% at $1.45 right before the closing bell. This figure will shock you: 1.65 billion shares had traded hands as of 3:42 PM EST.

IberiaBank (NASDAQ: IBKC) saw a monster day and we hope other banks will follow suit. It is giving the money back as it tells Uncle Sam "Take this TARP and stick it!" Shares were up almost 5% at $43.06.

Dell, Inc. (NASDAQ: DELL) was actually up today. Its earnings were atrocious, and it offered no longer term feel-good items for investors. But the traders are deciding to nibble on the stock even as PC's are being commoditized. The stock was up over 5% at $8.66 before the close.

Filed under: Dell (DELL), General Electric (GE), Citigroup Inc. (C)

Closing Bell: When a loss is s win (GE, C, ADSK, IBKC, DELL) originally appeared on BloggingStocks on Fri, 27 Feb 2009 16:05:00 EST. Please see our terms for use of feeds.

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Doomsday Scenario: U.S. economy shrinks by 6.2% in quarter, retailers are toast

Alex Salkever — Fri, 27 Feb 2009 20:50:00 +0000

Just when you thought the U.S. economy couldn't possibly get any worse, a daily does of Doomsday news. Bloomberg reporting the U.S. economy shrank 6.2% in the most recent quarter, a shocking amount. Look for retailers, already wobbly, to get pummeled in their upcoming quarterlies as even the mini-bounce turns into a falling feline. From Zero Hedge, we get even MORE bad news out of autos with Ford (NYS: F) admitting it has no idea where the bottom is. Yikes.Economic problems in Europe starting to cause social unrest, as the ugly scenario of economics bleeding into politics looks more likely. General Electric (NYS: GE) FINALY cuts its dividend as the dividend downsizing parade continues. More doom and gloom to come next week. Have a great weekend, folks!

Alex Salkever is the Director of Research at Piqqem.com, a Wisdom of Crowds stock research tool and online investing community. He sometimes smiles when he eats chocolate.

Filed under: Bad news, General Electric (GE), Ford Motor (F), Economic data, Recession, Financial Crisis

Doomsday Scenario: U.S. economy shrinks by 6.2% in quarter, retailers are toast originally appeared on BloggingStocks on Fri, 27 Feb 2009 15:50:00 EST. Please see our terms for use of feeds.

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