Analyst Upgrades

• Verizon (VZ), FEMSA (FMX), Vornado (VNO), Duke Realty (DRE) and AvalonBay (AVB) to buy from neutral, as well as Carnival (CCL) to conviction buy from buy, at Goldman.
• Symantec (SYMC) to buy from hold at Citigroup.
• Copano Energy (CPNO), DCP Midstream (DPM) and Inergy (NRGY) to overweight from equal weight at Morgan Stanley.
• SYNNEX (SNX) to strong buy from buy at Needham.
• Eli Lilly (LLY) to hold from sell at Hapoalim.
• World Wrestling (WWE) to buy from neutral at Roth Capital.

For most people in their mid-twenties, a typical New Year's resolution would be to lose some weight or even find a job. But for Facebook's mastermind, Mark Zuckerberg, the goals are certainly more cosmic. How about start the year with a $500 million investment that has a valuation of $50 billion? Yes, it's hard to top that.

Then again, Facebook is a game-changer in the same league as eBay (EBAY) or Google (GOOG). And investors are clamoring to get a piece of the action.

The trends that drove gold prices higher in 2010 are still in place. In the U.S., the Federal Reserve is buying $600 billion in treasuries in an attempt to keep interest rates low. Low interest rates encourage higher gold prices.

In Europe, the situation is still unstable. The European Central Bank (ECB) has stepped up its purchases of member nations' bonds. Spain is still on the table as a country teetering on verge of a bailout. Until the European mess is settled, gold remains a surrogate currency.

To paraphrase Mark Twain "The reports of our death are greatly exaggerated". The world economy has been in shambles for a few years now, and our nation has much work ahead of it. 2010 was an improvement over 2009 and I believe 2011 will show further improvement.

There are lots of ideas running through my mind as I consider where the economy might be heading in 2011. What opportunities lay in front of us waiting to be picked up or passed over? Just five trading days left, and market activity will slow down except among fund managers making adjustments for tax purposes or window dressing. You should examine your tax situation, too.

The general feeling of investors right now is that we are at a potential turning point in the economy. The final piece of the economic puzzle is for the jobs market to start showing strong gains and the final piece of the puzzle for the stock market is for financial stocks to stage a big and sustainable rally. We might be right on the precipice of both of those things happening. Investors still have an opportunity, however, to get in on the ground floor in a number of names.

The most compelling name in this space could be Morgan Stanley (MS), which has found itself on the back burner this year, particularly compared to Goldman Sachs (GS). While both stocks have struggled in 2010, GS is going to finish the year on a high note. In the last six months, the shares have risen nearly 21% compared to a gain for MS of under 1%.

In the middle of the summer with the stock market smoldering from the economic aftershocks of the BP (BP) oil spill, I decided to post a contrarian story emphasizing a very common refrain among value investors, "my pal Warren" being head of the class: buy on fear (sell on greed). This notion is continuing to work for what I called the toxic stock portfolio.

This is the third update to my ranting five months ago that six of the most reviled and most highly traded stocks featured by daily bad press as a group would outperform the overall market. It has, with the big winner rising from being one of the biggest losers.

"Despite more than doubling since we first recommended it just shy of two years ago, Sprott Resources (SCP), a Toronto-listed resource company, remains a strong buy, selling at a discount to a reasonable asset value," says Adrian Day.

The money manager and editor of The Global Analyst explains, "Sprott makes direct and indirect investments in the resource sector, frequently with new businesses which it subsequently takes public after nurturing them.

"One such is Orion Oil & Gas, of which Sprott still owns 78%, and remains undervalued. After more possible acquisitions, Orion could increase in value and more shares be spun off.

Federal Reserve Chairman Ben Bernanke will appear on 60 Minutes this Sunday to defend his controversial stimulus package, dubbed QE2, of buying $600 billion of Treasury securities.

In the CBS interview, Bernanke explains his intentions with QE2 and defends the notion that this stimulus will not lead to inflation. He also told CBS that he is not ruling out the purchase of more securities.

Fear gripped Wall Street on September 29, 2008, when the U.S. House of Representatives failed to pass the bailout package. On that day alone, banks borrowed a record $155.8 billion.

The Fed had set up a lending facility called the Primary Dealer Credit Facility (PDCF) to lend money to banks. As the crisis spread, borrowing increased almost daily. The Wall Street Journal (subscription required) lists day-by-day borrowings:

So now, when you thought that Goldman Sachs Group Inc. (GS) was king of the hill, think twice. JPMorgan Chase & Co. (JPM) and Bank of America Corp. (BAC) both racked up perfect trading quarters, according to the Wall Street Journal.

JPMorgan had 12 days where it made more than $200 million each day. Bank of America had at least 25 days where it made more the $100 million from trading in the third quarter.

A day does not pass that I do not think of John Maynard Keynes saying, "The market can remain irrational longer than you can remain solvent."

Two weeks have passed since I raised questions about the insider selling at Oracle (ORCL). Since that time, management continues to sell as the stock hovers around its 52-week high, and it has appeared in the top five of Barron's insider activity list sell side for both weeks. Add to this the concerns raised about Oracle's potential weakness in the world of cloud computing and there are major question marks looming.

Goldman Sachs (GS) was out with a note on Friday recommending that clients buy long-dated Treasuries ahead of the Federal Reserve quantitative easing announcement, which will take place on Wednesday.

Previously, the consensus was that the Fed would focus on shorter maturity bond purchases. Goldman, however, believes that the purchases will extend out to the 30-year bond.

What a difference a year makes. Last year, Goldman Sachs Group (GS) was top of the heap in trading, setting records with $100 million trading days. A year later, and Goldman's net is down 40%, as reported in the The Wall Street Journal.

For the quarter, Goldman's net income fell to $1.9 billion, or $2.98 a share. Net revenues were down 28% to $8.9 billion from $12.37 billion.

What does it mean when a stock is downgraded to "Outperform" from "Strong Buy" as Raymond James did this week? That was the analysis painted on Noble Corp. (NE) and it's hard to figure.

What is the difference? What are they telling investors? You should switch from betting the farm to only betting the house on this stock?

They reduced their price target to $41 from $44. Noble closed yesterday at $34.66, so Raymond James is still speculating on a gain over 20% in the next twelve months.

A very common refrain among value investors, "my pal Warren" being head of the class, is buy on fear (sell on greed), and it is working with the toxic stock portfolio.

This is the second update to my ranting twelve weeks ago that the six most highly traded stocks receiving the most bad press would be a great contrarian investment, and that this group would outperform the overall market without much difficulty.

It was true earlier, and it is still true today as the DJIA topped 11,000 again. The toxic stocks list includes Bank of America (BAC), Citigroup (C), General Electric (GE), BP (BP), Goldman Sachs (GS) and Transocean (RIG).