Let's go back to the financial crisis and the practices that brought this country to its knees. Banks developed a fancy scheme whereby they absolved themselves of all risk from the loans they made. They simply wrapped them up in a bundle and sold them to someone else. What they were doing is essentially packaging and reselling "junk."
When the news of how bad things were became known, the markets froze and collapsed. No one knew who had which securities, and if they did, they didn't know their true value.
Continue reading Banks Lobby Against Risk Retention on the Loans They Make
"Between early November and mid-January, the normally staid municipal bond market plunged; and despite recovering off the lows, federally tax-exempt muni funds with an average credit quality of AA+ still carry yields of better than 6%," notes income expert Carla Pasternak.
The editor of High Yield Investing explains, "Launched in 1991, Nuveen Premier Insured Municipal Bond (NIF) is one of the longest-standing muni funds. It's managed by Nuveen, specialists in the muni area.
Continue reading Nuveen Premier Insured Muni: A 9% Tax-Equivalent Yield
"Realty Income (O) is one of our favorite companies; they continue to grow their portfolio of properties which will ensure their dividend stream will grow for years to come," says Steve Christ.
The editor of Wealth Advisory explains, "The company recently announced its 54th consecutive quarterly increase and the 61st dividend increase since Realty Income went public in 1994.
"The company recently announced that it had signed definitive purchase agreements to acquire up to 33, single-tenant, retail, distribution, office and manufacturing properties under long-term, net-lease agreements for approximately $544 million.
Continue reading Realty Income (O) Ups Dividend for 54 Consecutive Quarters
Back in the summer of 2010 when the market was down, the gulf was full of spewing oil and investors were running away from bad news stocks shocked most notably by BP (BP
) oil spill, I decided to post a contrarian story
reminding readers that the fear was overblown and created a buying opportunity.
"My pal Warren" has said for years that we should buy on fear and sell on greed. The toxic stock portfolio was a result of this sentiment.
This is the fourth update to my ranting eight months ago that acquiring six of the most hated, and most highly traded stocks with constant negative headlines would outperform the overall market. The theory has born fruit as the toxic stocks are ahead and the difference is increasing over time.
Continue reading Chasing Value: Toxic Stock Update #4 -- BAC, BP, C, GE, GS, RIG
"Flagstar Bancorp (FBC), the Midwest savings bank that we recommended, as our favorite stock for 2011, remains a buy," says Mark Skousen.
The editor of Forecasts & Strategies explains, "The bank missed expected earnings, losing 74 cents per share, compared to an expected loss of 15 cents per share. But looking at the bigger picture, the news is better than those numbers reflect.
"Flagstar Bancorp technically lost $0.74 per share this year, but that's better than last year's loss of $1.53 per share. Moreover, if you look beyond the one-time charge for the sale of a bad loan portfolio, the per-share loss was only $0.06.
Continue reading Insiders and Institutions Bank on Flagstar Bancorp (FBC)
The past week's data-point-of-consequence for investors was delivered by none other than the head of the world's most powerful central bank. U.S. Federal Reserve Chairman Ben Bernanke underscored the nation's need to raise the debt ceiling.
Speaking at a National Press Club luncheon in Washington Thursday, Bernanke said delays in raising the debt ceiling limit, currently $14.3 trillion, could have "catastrophic" consequences, Reuters reported.
Continue reading Bernanke: Failure to Raise Debt Ceiling Could Be 'Catastrophic'
"My latest 'Special Alert' recommendation could be called an 'Are you Crazy?' pick; despite the high risk, I believe National bank of Greece (NBG) could double before the end of 2011," says global stock specialist Nicholas Vardy.
The editor of The Global Bull Market Alert explains, "Ratings agency Fitch just recently cut the long-term ratings of the National Bank of Greece to BB+ from BBB- while it maintained a 'negative outlook' for its prospects.
"Nevertheless, here's why I think Fitch and the other naysayers are wrong... and why National Bank of Greece will be a big winner for patient investors.
Continue reading National Bank of Greece (NBG): A 'Crazy' Speculation
One economic data point that sort of slipped under the radar recently concerned the U.S. Federal Reserve's $78.4 billion payment to the U.S. Treasury in 2010, up about 65% from $47.4 billion in 2009.
And the reason for the revenue surge? Experienced investors or others who have reviewed the Fed's report will realize that much of it stems from income from the Fed's purchase of mortgage securities and Treasury securities in connection with the quantitative easing, part 2 program, or QE2.
Under QE2, the Fed will purchase up to $600 billion in assets from November 2010 to June 2011 -- this coming after the Fed purchased $1.7 trillion in assets through March 2010.
Continue reading Tell-Tale Stat: Fed Paid $78.4 Billion to U.S. Treasury in 2010
The beleaguered U.S. dollar, which has weakened about 50% versus the euro and about 11% versus the British pound since 2002, is down but hardly out.
The dollar has rallied in the past two months versus the euro (up 8%) and pound (up about 4%), on renewed concern about sovereign debt in Europe. This time, the concern is about Portugal's debt, and the impact continued credit market woes would have on both euro-zone and United Kingdom GDP growth.
On Tuesday, Portugal's Prime Minister Jose Socrates said his country will not need a bail-out, and its budget deficit will be lower than forecast, Bloomberg News reported. He said rumors that the country needs aid are helping "speculators" while hurting Portugal and driving down the euro.
Continue reading Europe Debt Concerns Continue to Weigh on Euro, Support Dollar
Here are the next four of my 2011 picks. I am behind schedule, after publishing the first 5 earlier in the week (see: Chasing Value: 2011 Stock Picks -- 5 of 11). This year instead of starting completely anew, I am adjusting my 2010 picks. There is no sense in abandoning good ideas just because the calendar turned a page.
You will actually find support of running themes I have been writing about over the past few months. One of these is the idea of making a contrarian investment in a basket of stocks that have been both scalded and scolded in the headlines. Six stocks were included in such a group that I called the "toxic stocks" (see: Chasing Value: Toxic Stock Update #3 -- BAC, BP, C, GE, GS, RIG).
Continue reading Chasing Value: 2011 Stock Picks -- 6, 7, 8, 9
Athletic footware and accessories giant Nike Inc. (NKE
) will get its chance to impress Wall Street when it reports its fiscal second quarter earnings
following Tuesday's market close.
Investors are expecting to see a strong report, and this bullish view helped push the stock to a new 52 week high in Monday's trading session of $90.87.
Continue reading Nike Second Quarter Earnings Preview
The verdict on the U.S. Federal Reserve's quantitative easing program, including part 2, or QE2, will not be rendered for years. It may be longer, given the many areas of financial and economic policy the program has touched.
Anyone who says they definitively and incontrovertibly know QE2's long-term impact is not being genuine: many more data points have to occur to judge, for example, how QE2 affected banker lending psychology, let alone its impact on the U.S. economy.
That said, we can glean clues and insights by looking at current conditions, and one short-term data point reveals that since Fed Chairman Ben Bernanke disclosed the implementation of QE2 on August 27, the S&P 500 is up 17%, Bloomberg News reported Friday.
Continue reading A Bernanke Rally? S&P 500 Up 17% Since QE2 Announced
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