http://blog.macroaxis.com Macroaxis Blog Thu, 09 Feb 2012 07:51:05 +0000 en hourly 1 http://wordpress.org/?v=3.3.1 http://blog.macroaxis.com/2012/01/10/five-stocks-to-avoid-like-the-plague/ http://blog.macroaxis.com/2012/01/10/five-stocks-to-avoid-like-the-plague/#comments Tue, 10 Jan 2012 10:00:51 +0000 Keith Fitz-Gerald http://moneymorning.com/?p=61395
I know this may not be your first rodeo and chances are you've already done at least a little thinking about how your investments came through 2011, and what you'd like to achieve in 2012.

If not, there's no time like the present.

Especially when it comes to something I call "Ditching the Dogs," which is a variant of the well-known and very popular "Dogs of the Dow." You've probably already guessed from the name that I'm talking about unloading those investments that have underperformed, or which are likely to hold my portfolio back in the next twelve months.

Obviously this is a highly personal process and every investor is different, but here are five stocks I'd avoid like the plague right now (and the reasons why):

1. Sears Holdings Corp. (Nasdaq: SHLD) - Long a bastion of American retailing success, I've been leery of the company for a long time. In fact, I've steered clear of it since hedge fund investor Eddie Lampert used more than a little financial wizardry to create Sears Holdings. At the time, his goal was to tap into the vast real estate empire underlying Sears and subsequently K-mart when that company emerged from bankruptcy and he snapped up shares. The stock hit $190 a share in early 2007 on the assumption that it would.

Now, though, it's a very different story. With real estate in the toilet and the value of his "collateralized" debt circling the drain, he plans to fire employees, cut more than 120 stores and sell property. Same store sales are down sharply as is profitability. Fitch Ratings Inc. has cut the company's bond to junk status, and it's likely to have hundreds of millions in writedowns ahead. I think the company is going to restructure, and net income is going to fall to the tune of billions when now-litigation conscious accountants have their day.

2. Research in Motion Ltd. (Nasdaq: RIMM) - Once the darling of connectivity and a status symbol for the cognoscenti, RIMM's share of the smartphone market continues to evaporate like fog on a hot morning. I recommended shorting the company a few years back but was early to the party on several occasions; somehow the stock seemed to fight back. The stock is down 89.52% from its peak of $144.56 in early 2008 and up a creek without a paddle...and you know which creek I am talking about.

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]]> http://blog.macroaxis.com/2012/01/10/five-stocks-to-avoid-like-the-plague/feed/ 0 http://blog.macroaxis.com/2012/01/10/five-stocks-to-avoid-like-the-plague/ http://blog.macroaxis.com/2012/01/10/five-stocks-to-avoid-like-the-plague/#comments Tue, 10 Jan 2012 10:00:51 +0000 Keith Fitz-Gerald http://moneymorning.com/?p=61395
I know this may not be your first rodeo and chances are you've already done at least a little thinking about how your investments came through 2011, and what you'd like to achieve in 2012.

If not, there's no time like the present.

Especially when it comes to something I call "Ditching the Dogs," which is a variant of the well-known and very popular "Dogs of the Dow." You've probably already guessed from the name that I'm talking about unloading those investments that have underperformed, or which are likely to hold my portfolio back in the next twelve months.

Obviously this is a highly personal process and every investor is different, but here are five stocks I'd avoid like the plague right now (and the reasons why):

1. Sears Holdings Corp. (Nasdaq: SHLD) - Long a bastion of American retailing success, I've been leery of the company for a long time. In fact, I've steered clear of it since hedge fund investor Eddie Lampert used more than a little financial wizardry to create Sears Holdings. At the time, his goal was to tap into the vast real estate empire underlying Sears and subsequently K-mart when that company emerged from bankruptcy and he snapped up shares. The stock hit $190 a share in early 2007 on the assumption that it would.

Now, though, it's a very different story. With real estate in the toilet and the value of his "collateralized" debt circling the drain, he plans to fire employees, cut more than 120 stores and sell property. Same store sales are down sharply as is profitability. Fitch Ratings Inc. has cut the company's bond to junk status, and it's likely to have hundreds of millions in writedowns ahead. I think the company is going to restructure, and net income is going to fall to the tune of billions when now-litigation conscious accountants have their day.

2. Research in Motion Ltd. (Nasdaq: RIMM) - Once the darling of connectivity and a status symbol for the cognoscenti, RIMM's share of the smartphone market continues to evaporate like fog on a hot morning. I recommended shorting the company a few years back but was early to the party on several occasions; somehow the stock seemed to fight back. The stock is down 89.52% from its peak of $144.56 in early 2008 and up a creek without a paddle...and you know which creek I am talking about.

To continue reading, please click here...

]]> http://blog.macroaxis.com/2012/01/10/five-stocks-to-avoid-like-the-plague/feed/ 0 http://blog.macroaxis.com/2011/12/22/how-the-european-debt-crisis-could-smother-fiat-s-p-a-pink-fiaty/ http://blog.macroaxis.com/2011/12/22/how-the-european-debt-crisis-could-smother-fiat-s-p-a-pink-fiaty/#comments Thu, 22 Dec 2011 10:00:01 +0000 Jack Barnes http://moneymorning.com/?p=60950 Eurozone debt crisis would trample the Italian economy and take carmaker Fiat S.p.A. (PINK: FIATY) down with it.

To profit from this debacle, I told you to short Fiat. Since then, the stock has tumbled 76%, from $19 a share to yesterday's (Wednesday's) closing price of $4.66.

Fiat is a perfect example of how an unstable home market - like Italy - will kill a struggling company's stock. Fiat is Italy's largest private sector employer, and the past year's market performance mirrors the weakness unleashed by the European debt crisis.

Sadly, Fiat won't be the only company whose shares will plunge.

TheEuropean debt crisis has grown from a problem on the edge of Europe to a problem inside the region's core. You only have to look at the series of bank stress tests that Europe has rolled out to see that things are getting worse, not better.

In fact, the European Central Bank (ECB) announced yesterday that it would provide $638 billion (489 billion euros) in three-year loans to more than 500 banks in the Eurozone. More than a dozen Italian banks borrowed $143.52 billion (116 billion euros).

But the solution is only short term, and the region's grim long-term outlook hasn't changed. We're heading toward a point of maximum pessimism - one I think we'll reach sooner rather than later.

So, it's time to thank the Eurozone, Italy, and Fiat S.p.A. for a great short trade and close it out. While the stock could go all the way to $0, the meat of the move is over, and we want to take profits before a major short-covering event gives the share price a temporary boost.

Fiat S.p.A.: Stung by the European Debt Crisis

The European Central Bank forecasts Eurozone growth will slow to a near standstill next year, with gross domestic product (GDP) only expanding 0.3%. The ECB said area-wide inflation will reach 2.7% in 2011.

This slow-growth, higher-priced environment won't bode well for the region's automakers, which are already feeling the effects.

Automobile registrations in Europe in November dropped 3% to 1.07 million vehicles from 1.10 million a year earlier. That's the biggest decline since June, according to the Brussels-based European Automobile Manufacturers Association. The Italian auto sales market led the region's declines, slipping 9.2%. France was close behind at 7.7%.

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Fiat's U.S. arm, Chrysler Group LLC]]> http://blog.macroaxis.com/2011/12/22/how-the-european-debt-crisis-could-smother-fiat-s-p-a-pink-fiaty/feed/ 0 http://blog.macroaxis.com/2011/12/16/zynga-ipo-flop-proves-social-media-listings-are-still-suspect/ http://blog.macroaxis.com/2011/12/16/zynga-ipo-flop-proves-social-media-listings-are-still-suspect/#comments Fri, 16 Dec 2011 19:59:55 +0000 Kerri Shannon http://moneymorning.com/?p=60799 http://blog.macroaxis.com/2011/12/16/zynga-ipo-flop-proves-social-media-listings-are-still-suspect/feed/ 0 http://blog.macroaxis.com/2011/11/29/are-you-outraged-yet/ http://blog.macroaxis.com/2011/11/29/are-you-outraged-yet/#comments Tue, 29 Nov 2011 10:00:19 +0000 Shah Gilani http://moneymorning.com/?p=59340 [Editor's Note: Shah Gilani really struck a chord with a special Thanksgiving edition of his Wall Street Insights & Indictments service. In fact, the response was so overwhelming we've decided to share the article with you. To be sure you're receiving all of Shah's Insights & Indictments, click here.] Happy Thanksgiving, America!

If you're not feeling very "happy," remember, no matter how bad things are, they could always get worse (and we may be going there). So, whatever you have now, be thankful for that.

Speaking of thanks and of things getting worse, here's a shout out to the so-called "Super Committee":

Thanks for nothing!

What a bunch of losers.

Hmmm, speaking of losing... I wonder if anyone on the Supercilious Committee shorted the market before their announcement that they had nothing to announce. Hey, maybe they waited until the end of the day on Monday - when it was already known that they had sold America short - to break the news, so they could add to their shorts as stocks broke support levels.

No "maybe" about, it in my book.

Oh, you don't think they would do that - short the market? You think that would be unethical? You think that would be illegal? You think that's insider trading?

It's not any of those things, according to Congress.

If you're about to sit down to your big Thanksgiving dinner and are scared you'll eat too much, don't worry. You're about to lose your appetite, and probably get sick, too.

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]]> http://blog.macroaxis.com/2011/11/29/are-you-outraged-yet/feed/ 0 http://blog.macroaxis.com/2011/11/25/your-vote-will-help-us-put-the-squeeze-on-congress/ http://blog.macroaxis.com/2011/11/25/your-vote-will-help-us-put-the-squeeze-on-congress/#comments Fri, 25 Nov 2011 10:00:18 +0000 Kerri Shannon http://moneymorning.com/?p=59245
Despite failing to deliver on a number of promises and assignments, like developing a debt-reduction plan, members of the House of Representatives and the Senate will still receive their annual salary of $174,000.

Plus, many will make millions more through investment gains.

If you are surprised to discover that 58% of our congressional leaders have the investment savvy to turn a six-figure salary into millions, don't feel bad.

You see, there's more to that story: Our friends in Washington aren't competing on a level playing field .

According to a Nov. 13 CBS News "60 Minutes" report, our elected leaders in Congress may be using information gained from their "insider" positions to make highly profitable trades in the stock market.

If you or I used "inside" information to profit in the U.S stock market, we could expect a visit from the Securities and Exchange Commission (SEC) and the U.S. Justice Department. And those "visits" would only represent the start of our troubles.

The same would be true for a corporate executive, a member of the executive branch , or even a federal judge. In every case, the use of inside information would be considered a punishable criminal act.

But, it's a completely different story for Congress, where those same laws simply don't apply. For those elected leaders in Congress, this form of insider trading may well be unethical. But it's also completely legal.

Congressional leaders, even though privy to non-public information, are not considered corporate insiders, and so can trade on such insights and escape penalty. Congressional staffers and lobbyists also are exempt.

Just look at U.S. Rep. Spencer Bachus, R-AL, chairman of the House Financial Services Committee.

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]]> http://blog.macroaxis.com/2011/11/25/your-vote-will-help-us-put-the-squeeze-on-congress/feed/ 0 http://blog.macroaxis.com/2011/11/23/dont-let-the-active-ipo-market-fool-you/ http://blog.macroaxis.com/2011/11/23/dont-let-the-active-ipo-market-fool-you/#comments Wed, 23 Nov 2011 10:00:29 +0000 David Zeiler http://moneymorning.com/?p=58889
Encouraged by Groupon Inc.'s (NYSE: GRPN) successful IPO Nov. 5 as well as the October rebound in the stock markets, eight stocks went public last week. They include such well-known names as Angie's List Inc. (Nasdaq: ANGI) and Delphi Automotive PLC (NYSE: DLPH).

With so many companies in the pipeline to go public - 179, according to Dealogic - it didn't take much to incite a stampede to market.

"When underwriters see a window like this, whether really open or not, they just stuff the IPO channel," Scott Sweet of research firm IPO Boutique told Reuters.

Companies also know that they only have a few weeks before the end of the year to launch an IPO, with the market essentially dormant from mid-December to mid-January. And by then, conditions could again turn too negative for comfort.

Many companies no doubt are tired of waiting on the sidelines. While the IPO market was thriving early in the year - 44 companies went public in the second quarter - activity slowed dramatically in the second half of the year. Companies were dissuaded by the raft of bad news over the summer, from the debt ceiling crisis and worries of a double dip recession in the United States to concern over the possibility that Greece would default on its sovereign debt.

After an especially volatile August, not a single IPO launched in September. That kept the number of companies going public in the third quarter to just 18, and even with last week's burst the current quarter's total stands at just 16.

Some think the sudden surge in the IPO market may signal a turnaround for stocks in general, or at least for IPOs, but many of the summer's concerns continue to hang over the markets.

"It's too early to tell which position we're in," said Money Morning Capital Waves Strategist Shah Gilani. "We could be at the starting gate for a stronger, more robust market ahead, which would be good for IPOs. Or, we just as easily could be seeing a grab for cash before the market hits the fan."

What the launch of so many IPOs in the same week gives investors is a few clues about the health of the markets - and a look under the surface shows all is not well.

Gauging the IPO Market

Even though last week saw a flurry of IPO activity, some companies are still holding off.
Bluestem Bands and WhiteSmoke are just two that had intended to go public last week or this week and instead postponed their offerings.

Also, five of last week's eight IPOs priced significantly at the low end, or below, their expected range. Of the eight that did launch, half fell on their debuts and one, Manning & Napier Inc. (NYSE: MN), was flat.

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]]> http://blog.macroaxis.com/2011/11/23/dont-let-the-active-ipo-market-fool-you/feed/ 0 http://blog.macroaxis.com/2011/11/17/while-the-middle-class-suffers-congress-is-getting-richer-%e2%80%93-with-help-from-legal-insider-trading/ http://blog.macroaxis.com/2011/11/17/while-the-middle-class-suffers-congress-is-getting-richer-%e2%80%93-with-help-from-legal-insider-trading/#comments Thu, 17 Nov 2011 10:00:55 +0000 Kerri Shannon http://moneymorning.com/?p=58600
A Roll Call analysis of Congress members' financial disclosure forms showed their collective net worth was more than $2 billion in 2010 - a 25% leap from 2008. Minimum net worth in the House of Representatives rose to $1.26 billion, with minimum Senate net worth at $784 million.

With a median net worth of $891,506, Congress members are nine times wealthier than the average American household - and some Congressional leaders are exceedingly richer.

About 11% of Congress has net worth of more than $9 million, landing them in the top 1% of America's wealthy.

And these numbers aren't even the whole picture. They don't include members' homes and other non-income-generating property, which could add hundreds of millions of dollars to total net worth.

Congressional leaders' presence in the top 1% is one of the catalysts that angered citizens enough to start the global "Occupy Wall Street" movement. It also has prompted a closer look at how these elected representatives are gaining such riches, especially on an annual salary of $174,000.

According to a CBS News "60 Minutes" segment that aired Nov. 13, congressional "insider trading" might be a key factor in their financial success. Congress members may be using information gained from their "insider" positions to make highly profitable trades in the stock market.

This form of insider trading may be unethical, but it's also legal.

"This is a venture opportunity," Peter Schweizer, a fellow at Stanford University's conservative think tank the Hoover Institution, told "60 Minutes" correspondent Steve Kroft. "This is an opportunity to leverage your position in public service and use that position to enrich yourself, your friends, and your family."

Congressional "Insider Trading"

Schweizer has extensively reviewed Congress members' financial disclosure records for his book, "Throw Them All Out," released this week. He wanted to know how our elected representatives manage to accumulate so much wealth while in office.

Schweizer found that congressional representatives were trading stocks related to hot topics being discussed and debated in Congress before information had been disclosed to the public.

"We know that during the health care debate people were trading health care stocks," Schweizer said to Kroft. "We know that during the financial crisis of 2008 they were getting out of the market before the rest of America really knew what was going on."

To continue reading, please click here...

]]> http://blog.macroaxis.com/2011/11/17/while-the-middle-class-suffers-congress-is-getting-richer-%e2%80%93-with-help-from-legal-insider-trading/feed/ 0 http://blog.macroaxis.com/2011/11/17/while-the-middle-class-suffers-congress-is-getting-richer-%e2%80%93-with-help-from-legal-insider-trading/ http://blog.macroaxis.com/2011/11/17/while-the-middle-class-suffers-congress-is-getting-richer-%e2%80%93-with-help-from-legal-insider-trading/#comments Thu, 17 Nov 2011 10:00:55 +0000 Kerri Shannon http://moneymorning.com/?p=58600
A Roll Call analysis of Congress members' financial disclosure forms showed their collective net worth was more than $2 billion in 2010 - a 25% leap from 2008. Minimum net worth in the House of Representatives rose to $1.26 billion, with minimum Senate net worth at $784 million.

With a median net worth of $891,506, Congress members are nine times wealthier than the average American household - and some Congressional leaders are exceedingly richer.

About 11% of Congress has net worth of more than $9 million, landing them in the top 1% of America's wealthy.

And these numbers aren't even the whole picture. They don't include members' homes and other non-income-generating property, which could add hundreds of millions of dollars to total net worth.

Congressional leaders' presence in the top 1% is one of the catalysts that angered citizens enough to start the global "Occupy Wall Street" movement. It also has prompted a closer look at how these elected representatives are gaining such riches, especially on an annual salary of $174,000.

According to a CBS News "60 Minutes" segment that aired Nov. 13, congressional "insider trading" might be a key factor in their financial success. Congress members may be using information gained from their "insider" positions to make highly profitable trades in the stock market.

This form of insider trading may be unethical, but it's also legal.

"This is a venture opportunity," Peter Schweizer, a fellow at Stanford University's conservative think tank the Hoover Institution, told "60 Minutes" correspondent Steve Kroft. "This is an opportunity to leverage your position in public service and use that position to enrich yourself, your friends, and your family."

Congressional "Insider Trading"

Schweizer has extensively reviewed Congress members' financial disclosure records for his book, "Throw Them All Out," released this week. He wanted to know how our elected representatives manage to accumulate so much wealth while in office.

Schweizer found that congressional representatives were trading stocks related to hot topics being discussed and debated in Congress before information had been disclosed to the public.

"We know that during the health care debate people were trading health care stocks," Schweizer said to Kroft. "We know that during the financial crisis of 2008 they were getting out of the market before the rest of America really knew what was going on."

To continue reading, please click here...

]]> http://blog.macroaxis.com/2011/11/17/while-the-middle-class-suffers-congress-is-getting-richer-%e2%80%93-with-help-from-legal-insider-trading/feed/ 0 http://blog.macroaxis.com/2011/11/03/the-rush-to-debut-groupon-ipo-is-one-more-reason-to-avoid-this-tech-trap/ http://blog.macroaxis.com/2011/11/03/the-rush-to-debut-groupon-ipo-is-one-more-reason-to-avoid-this-tech-trap/#comments Thu, 03 Nov 2011 10:00:24 +0000 Kerri Shannon http://moneymorning.com/?p=58086
Social media stocks were all the rage this summer, but that enthusiasm is certainly on the wane as we approach the Groupon IPO.

And rightfully so.

This would-be tech titan is more like a tech trap.

Groupon is expected to price its initial public offering (IPO) today (Thursday) and start trading tomorrow, after its last push this week to generate investor interest.

Groupon plans to sell 30 million shares in a price range from $16 to $18, giving the company a market value of $10.1 billion to $11.3 billion.

That's a drastic 44% to 50% cut from the $20 billion valuation the company had earlier this year. And what's worse is that a lack of investor interest may result in an even lower number.

But the fact remains Groupon hasn't proven it's worthy of long-term investment.

"I wouldn't touch it with a ten-foot pole," said Money Morning Chief Investment Strategist Keith Fitz-Gerald. "This isn't a stock for an investor looking for a long-term play with stability."

Why the Rush for a Groupon IPO?

Groupon delayed its initial plan to debut in the summer, and now seems eager to come to market. The fact that it's hurrying the process amid a number of obstacles has raised some eyebrows.

To begin with, this is hardly a good time to list on an exchange. The European debt crisis continues to whipsaw markets from one day to the next. For example, the Dow Jones Industrial Average enjoyed a 339-point, 2.9% gain on Oct. 27, but that gain was followed just two trading days later by a 276.10-point, 2.3% drop.

Market volatility is a big reason why the U.S. IPO market has been stagnant since July, despite a strong start to the year.

"Why are Groupon investors in such a hurry to cash out? What's the rush? Is there something lurking behind the scenes of which we are unaware?" wrote accounting professors Anthony H. Catanach Jr. and J. Edward Ketz in The New York Times. "Or is the rush to the IPO because Morgan Stanley, Goldman Sachs and Credit Suisse want to collect their fee (which is tied to the market value of the stock issued) before the company's value drops further?"

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