RSSArchive for 2012

A Portfolio to Forget: Fortune Magazine's 10 Stocks To Last The Decade

A Portfolio to Forget: Fortune Magazine’s 10 Stocks To Last The Decade

FE_DA_InvestingGraphs_111411Continuously towards the end of the year newspapers, and magazines worldwide are filled with predictions, stock recommendations and trading ideas. We like many other top financial bloggers highly disregard these terrible ideas and think you should ignore them as well. It’s ironic how if you examine issue to issue you don’t tend to see them being all to consistent and never talking about their past successful picks, as most of the time there are none. We have always said that actions speak louder than words so if you can, always let your performance speak for itself. And for that, we present Fortune: 10 Stocks To Last The Decade A few major trends will likely shape the next ten years. Here’s a portfolio we can all forget.

August 14, 2000

1. Nokia (NOK: $54)
2. Nortel Networks (NT: $77)
3. Enron (ENE: $73)
4. Oracle (ORCL: $74)
5. Broadcom (BRCM: $237)
6. Viacom (VIA: $69)
7. Univision (UVN: $113)
8. Charles Schwab (SCH: $36)
9. Morgan Stanley Dean Witter (MWD: $89)
10. Genentech (DNA: $150)

Closing Prices December 19, 2012:

1. Nokia (NOK: $4.22)
2. Nortel Networks ($0)
3. Enron ($0)
4. Oracle (ORCL: $68.44)
5. Broadcom (BRCM: $49.89)
6. Viacom (VIA: $54.17)
7. Univision ($? )
8. Charles Schwab (SCH: $14.61)
9. Morgan Stanley Dean Witter (MWD: $14.20)
10. Genentech (Takeover at $95 share)

The portfolio managed to lose over +70%, with 3 bankruptcies, one bailout, and not a single winner in the bunch. Even the Roche Holdings takeover of Genentech was for 37% below the suggested purchase price. The lesson is that valuation matters. Had you merely bought the S&P 500 Index over that same time period, you would have seen a gain of 23.43%.

Have fun forecasting and think twice next time you see that magazine cover that sounds too good to be true.

Source10 Stocks To Last The Decade

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The Government is Attempting to Force Former SAC Portfolio Manager, Mathew Martoma "To Flip Against Steve Cohen" on Insider Trading Allegations

The Government is Attempting to Force Former SAC Portfolio Manager, Mathew Martoma “To Flip Against Steve Cohen” on Insider Trading Allegations

FOX Business Network (FBN) senior correspondent Charlie Gasparino reports that government officials are trying to get former SAC Capital portfolio manager Mathew Martoma “to flip against” the fund company’s founder Steve Cohen on insider trading allegations. Gasparino goes on to report that Martoma has “refused past attempts” and that “at least for now shows no signs of giving into the government’s demands” as SAC “is now paying for his high-profile, and highly paid attorney, Charles Stillman.”

Excerpts from the report are below.

On government officials attempting to “flip” Mathew Martoma against Steve Cohen:

“Government officials had high hopes that Mathew Martoma, the latest former executive from SAC Capital to be implicated in the government’s burgeoning investigation of insider trading, could provide evidence that would finally implicate the probe’s ultimate target: Steve Cohen, the fund company’s billionaire founder. But people close to the investigation say Martoma has refused past attempts to provide evidence against his old boss and at least for now shows no signs of giving into to the government’s demands. And they say Martoma has a powerful incentive not to cooperate because SAC, which hasn’t employed him for about two years, is now paying for his high-profile, and highly paid attorney, Charles Stillman.”

On Martoma’s legal fees:

“People who know Stillman say his fees aren’t cheap — his rate is as much as $1,300 a hour, they say. And while it is not unusual for companies to pay the legal defense of executives ensnared in criminal and civil probes based on standard employment contracts, legal experts say the practice always prompts the question of whether the firm is really paying for silence… But it’s unclear if the legal-fee arrangement is part of Martoma’s employment contract, or part of some other recently crafted deal with SAC. Martoma hasn’t worked at SAC since 2010, when he was fired for poor performance. He earned $9.4 million in 2008, a bonus prosecutors say was based on using inside information on trades.”

Source: Fox Business

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10 Question Quiz: How to Prepare for Both a Bear and a Bull in 2013

10 Question Quiz: How to Prepare for Both a Bear and a Bull in 2013

Take our little test to see if you’re one of America’s 20 million rational investors. Or if you’re one of the 75 million irrational investors. Just 10 questions: And you’re self-scoring so remember denial’s one of the chief psychological blocks to self-analysis. Most investors say they’re rational, but are not.

Grade yourself: Know where you are on the rational/irrational scale. Then change you behavior and shift into the 20% rational sector. Do it and you will increase your returns by a third.

1. You are convinced you’re an above-average investor?

Studies show that about 75% of investors think they’re “above average.” Warning: Boston research group Dalbar’s studies tell us that in recent decades, the average investor grossly underperforms the market, with after-tax returns less than inflation.

2. You believe you can beat the market by timing and active trading?

Finance professors Terry Odean and Brad Barber studied 66,400 Wall Street investment accounts and concluded: “The more you trade, the less you earn.” The returns of passive investors (2% annual turnover) actually beat active investors (258% turnover) by 50%.

3. You love the adrenaline rush from making investment decisions?

Daniel Kahneman, winner of the 2002 Nobel Prize in economics says “all of us would be better investors if we just made fewer decisions.” Rebalance by adding new money.

4. You rebalance your portfolio more than once a quarter?

Various research studies tell us that the added costs and risks of frequent rebalancing actually lower returns of most portfolios. Remember Buffett’s rule: “Buy and never sell.”

5. You believe cheap online trading accounts actually increase returns?

Odean and Barber research says no. Worse, Ameritrade founder Joe Ricketts admitted to Fortune: “Trading often and heavy is not something that makes you a lot of money.”

6. You believe active traders are making the big bucks?

Unfortunately, even the best winning traders make little for all their efforts, risks and anxieties, averaging about $50,000. Most actually lose money, deny it, then get out.

7. You chase good deals, buy when they’re hot, sell when they cool?

Morningstar research indicates fund investors are very bad timers, invariably jumping in late and high, and panic selling at the bottom. Rational investors do just the opposite.

8. You believe investors acting collectively create rational markets

Wharton economist Jeremy Siegel studied 120 big-up and big-down days in the stock market between 1801 and 2001 and found no reasons for 75% of the turning points.

9. You’re saving too little, your portfolio’s less than $100,000?

Unfortunately the vast majority of Americans have portfolios under $50,000 and their low savings rate tells us they will never have a big enough retirement nest egg.

10. You’re totally confident that we’ll see a new bull market in 2013?

In “Investment Madness,” behavioral finance expert John Nofsinger warns that investors have an optimism bias: “Overconfidence causes people to overestimate knowledge, underestimate risks, and exaggerate their ability to control events.”

Now total up your test scores. How many did you mark true? Too many? You be the judge whether you’re in the irrational investor category. Anyway, remember, test or not, the odds are four out of five that you are making irrational decisions with your money and as an investor, every day, every trade, all year.

Solution? My Zen masters would enlighten with something like: “The answers are in the questions.” Discover them, go back and reread the 10 questions — what you must do in this age of uncertainty (2013) to prepare for a bull market (a rally over 14,165) as well as a bear market (hard fall over a fiscal cliff) will become obvious to you, obvious to all rational investors. Then you will instantly know how to change your behavior and you will win.

Source: MarketWatch

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Wednesday's Must-Read Articles: What Earnings Reveal About The Economy

Wednesday’s Must-Read Articles: What Earnings Reveal About The Economy

Hope everyone rushed out and bought their Powerball tickets as the big drawing is tonight, will we finally have our big winner? For the rest of you, we have some great articles for you to read. Like always, if you have any investment questions or need advice on a specific stock, Stocks on Wall Street is always here for you so feel free to Contact Us at anytime. We always love to hear from our readers so please shoot us an email. Also let us know what you think about the articles below and your thoughts on the markets current climate by either commenting below, posting on our Facebook Fan Page or by sending us either Stocks on Wall Street or our Founder a Tweet.

What Earnings Reveal About The Economy - Neil Irwin, Washington Post

My Top Five Choices For a New Treasury Sec - Simon Johnson, Bloomberg

Why I’m Buying Shares of Apple Now - Doug Kass, TheStreet

Is Dow Theory Signaling It’s Time to Sell? - Mark Hulbert, MarketWatch

Berkshire Trades As Though Buffet’s Already Left - Andrew Bary, Barron’s

Investors Are Fleeing Stocks & Other Myths - Roben Farzad, BusinessWeek

Why America Is Better & Europe Is Not - Jean Pisani-Ferry, Caixin

After a Momentous Event, 11 Key Lessons - Barry Ritholtz, Washington Post

The Real Election Winner: Inflation - Matthew Stevenson, The Great Debate

Six Reasons That Stocks Could Tank Soon - Chris Ciovacco, Ciovacco Capital

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The Five Most Important Questions About Our Economy

The Five Most Important Questions About Our Economy

The biggest worry on every Americans mind is continuously the state of our economy. People everywhere are always asking what are the biggest questions and concerns about the current state of our economy. While that is a rather broad subject, the Motley Fool recently did a great job at narrowing down that question and giving a great answer by providing us with five great questions about our economy.

1. What happens with the Fiscal Cliff?

The Fiscal Cliff is probably the single most important issue we’ve faced in the last three years. In the next 50 days, Congress and the president have the opportunity to A) put forth a legitimate deficit-reform bill that instills confidence in American businesses and consumers, or B) do nothing, go over the fiscal cliff, and throttle the economy back into recession (the Congressional Budget Office estimates unemployment will rise to 9.1% if we go over the cliff).

There could be a third option: a short-term deal that punts the hard deficit decisions down the road again. I actually think that’s the most likely outcome. But given Washington’s history of partisan flamethrowing and gridlock, the odds that something ugly will happen are uncomfortably high. What’s dangerous about the fiscal cliff is that the worst outcome will happen if Congress does nothing — which is the one thing our legislators are really good at.

2. Will there be a long-term shift in labor versus capital?

The economy has moved in three long cycles over the last 100 years. From the early 1900s through the 1930s, workers did poorly while owners of capital did very well. From the 1940s through the 1970s, workers did great while owners of capital did so-so. And from the 1980s through today, workers have done poorly (most real wages have stagnated) while owners of capital have done extremely well.

I want to know: Are those three periods coincidental, or does the economy move in consistent cycles that favor labor in one, then capital in the next? If it’s the latter, then it’s possible that the next 50 years could be more favorable to workers and less to owners of capital.

There are so many complex variables involved here — globalization, taxes, innovation, productivity — that I don’t think it’s possible to predict what will happen. This could, however, become one of the most important trends of the next half-century.

3. Will China go the way of Japan?

Twenty years ago it was assumed that Japan would become the world’s economic superpower. It grew faster, was more productive, and had more ambition and potential than any other country in the world — just how we see China today.

Of course, Japan didn’t live up to expectations. One big reason was demographics. As Japan’s elderly took up a larger and larger share of its population, its labor force didn’t have the vitality necessary to keep economic growth booming.

China could face a similar dilemma. Due to its one-child policy, China’s working-age population is projected to decline by 200 million by 2050.

I want to know: How will relaxing the one-child policy and other shifts in China’s demographics play out over the coming decades? Answer that, and you’ll have a good idea where its economy is heading.

4. How will demographic shifts affect America?

America is blessed with one of the youngest populations in the developed world. But we are getting older. Working-age individuals (age 15-64) currently make up 66% of the population. That’s expected to fall to 60% by 2050.

Not only will older Americans make up a larger portion of the population, but they are living much longer than before. Two weeks ago, BlackRock CEO Larry Fink noted that a healthy 25-year-old female can now expect to live close to age 100.

How will this change the economy? Will it mean the new retirement age is 80 instead of 65? And if people are living longer, will they need to save much more for retirement? What does it do to Social Security? If a lower portion of the population is of working age, will young Americans have an easier time finding a job? What does it mean for health care costs? Or pension fund obligations? Interest rates? It could affect so many things in so many different ways that it’s mind-boggling.

5. What impact will health care costs have on wages?

A big reason average wages have gone nowhere in the last decade is that rising health insurance premiums took up a larger share of compensation. Most employees were given a nice raise in recent years — it just came in the form of health insurance.

But there’s evidence that growth in health care costs has topped out. Annual growth is now near the lowest level in 50 years.

I want to know: Is that trend the reality or just noise? If it’s real, workers could see higher real take-home pay for the first time in years.

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Top Frontier Markets to Invest In

Top Frontier Markets to Invest In

StocksonWallStreet readers know I’ve been bullish on Vietnam.  Bloomberg seems to agree.  The Bloomberg Markets, November 2012 list of the most promising Frontier markets for investors ranks Vietnam #1.  United Arab Emirates is #2 – a market I also think has strong growth potential.

It’s no secret that growth in the U.S. and Europe over the next decade will be outpaced by the BRIC’s and emerging markets.  Adventurous investors looking for even more attractive growth potential should also consider Frontier markets.  Frontier markets tend to be smaller than emerging markets.  Shares of frontier companies are also harder to trade than those of emerging countries.

I like Frontier markets that are moving to Emerging Markets.  Developed capital markets are key to becoming an emerging market.  So, I’m most interested in economies where the stock market is developing and companies are beginning to get access to capital.  Also, it’s worth noting that weakness in China tends to get picked up by Frontier Markets.  Sectors that show the most promise in Frontier markets are technology, energy, consumer discretionary and industrials that benefit from infrastructure improvements.

Vietnam fits the bill on all counts.  It has enjoyed a strong and consistent average GDP growth of 7.2% annually since 2000 and projected cumulative GDP growth from 2012-2016 is 31.4%.

The main ETF tracking Vietnam is the Market Vectors Vietnam ETF (VNM) sank 47% in 2011 and was one of the worst performers in the entire emerging world which fell by an average of 21% in 2011.  These horrible losses were largely due to runaway inflation.  While inflation is still high (around 20%) it appears the country is finally starting to turn around.  VNM is certainly capable of producing huge gains.  VNM is up about 36% year-to-date, suggesting that investors who have a high-risk tolerance may want to consider making a play on this Vietnam ETF.

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Creating Shareholder Value

Creating Shareholder Value

Source: New Yorker

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Why ESPN Is Worth $40 Billion As The World's Most Valuable Media Property

Why ESPN Is Worth $40 Billion As The World’s Most Valuable Media Property

Walt Disney reported fourth quarter earnings Thursday that matched Wall Street estimates, but the stock is down more than 5% Friday after revenues came up just short of expectations. Disney is a wildly diverse company with theme parks, movie studios, cruise ships, consumer products and the ABC TV network. But once again, cable networks were the driving force behind Disney’s earnings, responsible for 57% of the company’s total operating income. The cable channel doing most the heavy lifting for Disney is ESPN, which along with a contribution from the Disney Channel, generates more profits than the rest of Walt Disney combined.

Disney acquired Capital Cities/ABC in 1996 for $19 billion, which was the second largest takeover in U.S. history at the time. The majority of the deal revolved around the ABC network and its stations, which were valued at roughly $11 billion combined. Another component of CapCities was the expanding sports channel ESPN (this was pre-ESPN2, ESPNU, ESPN The Magazine, etc.).

Disney execs certainly recognized the potential value of ESPN. Disney’s CEO at the time, Michael Eisner, thought ESPN offered two clear paths to growth: international expansion and exploiting the ESPN brand at Disney’s theme parks and retail stores. He told the New York Times when the merger was announced, “We know that when we lay Mickey Mouse or Goofy on top of products, we get pretty creative stuff.” Eisner added. “ESPN has the potential to be that kind of brand. ABC has never had our resources, and we haven’t had ESPN. Put the two together and who knows what we get.”

ESPN has blown up, but not quite how Eisner envisioned. ESPN international affiliate revenues currently represent just 11% of ESPN’s affiliate fees, according to research firm Wunderlich Securities. ESPN Zone sports-themed restaurants were a bust and all but two in Southern California were shuttered by 2010. ESPN is hardly integrated into Disney’s theme parks or retail shops.

But Disney is grateful for those $6.1 billion in affiliate fees from ESPN that help stabilize revenues each quarter. Ad revenues at ESPN, now $3.3 billion, can fluctuate depending on the economy (total ESPN revenues, including the networks, magazine and website, are $10.3 billion). Affiliate fees, paid by cable companies to channel owners each month, have steadily grown 8% annually at ESPN in recent years. ESPN and ESPN2 are both in more than 100 million homes and command $5.13 and $0.68 per month, according to SNL Kagan. The next highest among widely available channels are TNT at $1.18 and Disney Channel at $0.99 says Kagan. The average fee for basic cable channels is $0.26.

ESPN is worth $40 billion according to a research report this summer from Wunderlich or barely ten times earnings before interest, taxes, depreciation and amortization of $3.9 billion. Disney as a whole is currently worth $84 billion (Hearst owns a 20% stake in ESPN with Disney owning the rest). The CapCities purchase worked out great for Disney, but only because of the growth of ESPN, as the value of ABC has deteriorated dramatically over the past 15 years. Wunderlich figures that the ABC Network is worth $1.7 billion, or just 4% of ESPN’s value, and the ABC Station Group another $2.6 billion.

The reality is that there is not another media property in the world worth as much as ESPN because no media asset delivering content generates close to as much money. Wunderlich pegs the value of the Disney Channel, which is one of the most valuable channels and has the third highest affiliate fees, at $10 billion. It is even uglier in print. The current market value of the New York Times is $1.3 billion. The only media companies in the world worth more than $40 billion are News Corp. ($58 billion) and Comcast ($96 billion). The value of News Corp. is spread out among dozens of media assets, while Comcast derives most of its value from being a cable provider.

There are fears that spending on sports rights fees will crimp ESPN’s profitability going forward as competition heats up from Fox Sports and NBC Sports. ESPN recently agreed to double the annual rights fees it pays for Major League Baseball and last year reached an eight year, $15.2 billion deal to broadcast the National Football League.

The reality is that the value of sports on television is only increasing, as much of the viewing public moves to watching programs on delay, limiting the effectiveness of advertising. It is a problem that ESPN does not have to worry about as 99.4% of sports events on TV are watched live, according to Disney CFO Jay Rasulo.

Source: Forbes

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Do You Have What It Takes To Be a Young Millionaire? If So Take The Quiz!

Do You Have What It Takes To Be a Young Millionaire? If So Take The Quiz!

Below is an interesting quiz that every young entrepreneur or aspiring young adult should take. The quiz will be able to give you an answer to whether or not you have the drive and right characteristics to become a young millionaire! Just answer the questions below, keep tally of your score and then follow the number key on the bottom to see your results!

1. Are you young?
A. Yes (5)
B. No (-100)
C. No, but I’m spry! (-50)

2. Are you currently or have you ever been worth $1 million?
A. No (0)
B. Yes (100)

3. How amped are you right now?
A. Not all that amped. You? (-5)
B. Totally (3)
C. TO-tally (-5)

4. Do you currently make more than $75,000 a year and save at least 15 percent each month? 
A. Yes (10)
B. No (0)

5. 401(k)?
A. Yes (5)
B. No (-5)

6. Quick, here’s an asset!
A. Buy it! (2)
B. Appreciate it! (2)
C. Protect it! (2)
D. Do all three! (10)

7. When you hear the term “hedge fund” you think:
A. A little money set aside for landscaping (-5)
B. A speculative investing portfolio involving high risk and a very large initial investment (1)

8. Which word best describes this photo?


A. Mountains (0)
B. Sunset (0)
C. Success (4)

9. While growing up, you had a favorite:
A. Stuffed animal (0)
B. Horse (10)

10. Which activity do you most enjoy?
A. Hemming (-5)
B. Hawing (-5)
C. None of the above (0)

11. Which of the following stocks have you purchased in the last five years?
A. Priceline.com (50)
B. Apple (40)
C. Facebook (?!)
D. Other (0)

12. Which set of zeros seems most appealing?
A. 00 (0)
B. 000 (0)
C. 0000 (0)
D. 00000 (0)
E. 000000 (10)

13. Who’s your favorite notable American?

14. Which of the following virtues do you possess?
A. Hunger (2)
B. Drive (2)
C. Prudence (2)
D. Patience (2)

15. Did the last question make you think about going to Taco Bell?
A. Yes (-3)
B. No (1)

16. What comes to mind when you think back on your college experience?
A. Ivy (10)
B. Other green plant (-10)

17. Choose a boat:

18. Choose a boat name:
A. Knot Paid IV (-1)
B. Aquaholic (-1)
C. Lamberdinghy (-1)
D. Feelin’ Nauti (-1)
E. Wake Me When It’s Over (-1)
F. Sea-E-O (5)

19. Which of these two self-help books seems most up your alley?
A. Secrets of the Millionaire Mind: Mastering the Inner Game of Wealth by T. Harv Eker (8)
B. The Moneyless Man: A Year of Freeconomic Living by Mark Boyle (-2)

20. In your professional life, do you go by your first initial and your middle and last names?
A. Yes (5)
B. No (0)

21. Might you be T. Harv Eker?
A. Yes (20)
B. No (0)

22. You consider an empty storefront to be:
A. Urban blight (0)
B. A thing of beauty (2)

23. You consider the walk-in freezer in that empty storefront to be:
A. A metaphor for a cold world (0)
B. One less thing you have to purchase to get a restaurant off the ground (4)

24. Describe this glass:


A. Half empty (-5)
B. Half full (5)
C. Hello? Coaster?! (-10)

25. Building wealth is most like …
A. Climbing a mountain (2)
B. Rowing a river (-2)
C. Thinking about climbing a mountain or rowing a river–while lying in a hammock (-5)

26. What are you most likely to do with this pile of cash?
A. Invest it. (4)
B. Spend it. (-1)
C. Sit atop it and giggle. (-3)
D. Ignite it to provide light and warmth. (-10)

27. Here’s what I need you to do. I need you to take this briefcase. Then I need you to get a flight from JFK to Belgium and meet up with a guy named Janssens. Give him the briefcase. Then lie low for a little while. And don’t ask any questions. When you get back, I’ll give you $1 million. Also, Janssens can be a little prickly. 
A. No. (0)
B. Newark is slightly more convenient for me, especially on weekends. (-20)
C. Done. (30)

Less than 0 points: “Hundredaire” is not really a thing.
1 to 50 points: That’s hunger, drive, prudence and patience. And maybe a little fear.
51 to 100 points: One word: biotech.
More than 100 points: You did not need to take this quiz.

This story originally appeared at Entrepreneur.com This story originally appeared at Entrepreneur.com 

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Top 10 Dumbest Ways the Government Wasted Taxpayer's Money Last Year

Top 10 Dumbest Ways the Government Wasted Taxpayer’s Money Last Year

We all hear about the waste in Washington and the billions of dollars that go to waste every year due to ineffective policies. Well thanks to the Motley Fool, we have a list of the Top 10 Dumbest Ways the Government Wasted Your Taxpayers Money last year.

Dumbest Ways the Government Wastes Money

For those who greatly enjoy this little bit of humor and zest mixed in with economic figures, then you’ll be excited to read the Waste Book (link opens PDF), an annual summary of 100 ways the U.S. government is wasting taxpayer money, which is compiled by Oklahoma Sen. Tom Coburn and his political team.

This year’s version of Waste Book covers 100 purported wastes of taxpayer money totaling north of $18 billion. While this is but a blip compared to a $16 trillion deficit, it’s nonetheless a questionable use of your tax dollars.

Therefore, I want to once again highlight 10 of the dumbest ways in which the U.S. government wasted your taxpayer dollars in 2012.

1. There’s an app for that 
So many wasteful programs, I hardly know where to begin! How about with $100,000 in prizes offered by the Department of Energy to develop an energy app that would help users track their energy usage in their home. It’s a novel idea as our energy resources are finite and the DOE has pushed both consumers and businesses to utilize the available green energy subsidies available to them. However, there’s just one slight problem with the DOE contest: Apps that do this already exist — at least five of them to be exact. Perhaps someone should invest in an app that tracks apps for the DOE?

2. Alms for the rich 
Just because you made $66 billion in net revenue doesn’t mean you won’t take a handout when one is offered… right PepsiCo.? According to Coburn’s report, Pepsi and Theo Muller Group are teaming up to open a yogurt manufacturing facility at the Genesee Valley Agri-Business Park in New York. Unable to use the supplied municipal water in the yogurt-making process, or the $4.2 billion in cash on its balance sheet, Pepsi gladly accepted slightly more than $1.3 million in funding from the U.S. Department of Agriculture and the Department of Commerce to build a new aquifer-direct water supply system, a new road leading to the plant, and to improve the parks’ wastewater capacity.

3. RoboSquirrel 
Researchers at San Diego State University and the University of California Davis spent a portion of a $325,000 National Science Foundation grant to construct a robot squirrel to answer the question of why rattlesnakes rarely attack squirrels that wag their tails. Using a taxidermied squirrel that is housed with other squirrels so as to smell realistic, and coupled with heating wires in its tail and body, researches marched RoboSquirrel into the lion’s den, or should I say snakes’ garden, and determined that a heated and wagging tail does indeed play into their defense mechanism. According to researchers, RoboSquirrel 2.0 and RoboKangaroo are in the works. As for me, I can’t wait for RobotChicken!

4. From arts and crafts to World of Warcraft 
For those of you that thought your grandparents spent the entire day quilting or quietly reading, think again. A research team in North Carolina used $1.2 million from a National Science Foundation grant to study 39 individuals, aged 60 to 77, to see how their cognitive function responded after playing Activision Blizzard‘s World of Warcraft for two hours every day for two straight weeks. The results showed no improvement for those who tested with high levels of cognitive function prior to the test, however some improvement was noted for those who tested with lower cognitive function. I guess we can tell Eli Lilly to move over as we no longer will be needing solanezumab or any of its other Alzheimer’s treatments for further testing as long as we have World of Warcraft.

5. Red planet pâté  
Don’t let the small fact that NASA has absolutely no manned fleet at the moment stop you from thinking that it isn’t actively spending money on potentially fruitless programs. Take for instance the nearly $1 million spent annually on developing a so-called “Mars menu.” In order to stave off food monotony, researchers spend roughly $1 million each year to have test subjects simulate space conditions and rate the food being tested based on taste, their overall health, and the mood it puts them in. The only problem is that the first manned mission to Mars is likely two decades away at the earliest.

6. Because I’m the wiz! 
Let me go on the record as stating that this one amused me the most. Michigan State Police, in an effort to deter drunk drivers from getting behind the wheel of a car, apportioned $10,000 in federal funds to purchase 400 talking urinal cakes from a Maryland-based company called Wizmark. The urinal cakes, when activated by a motion sensor, would encourage users at local bars to consider getting a cab if intoxicated and, of course, remind them to wash their hands! As Sen. Coburn’s report points out, for around $100 onAmazon.com. Michigan State Police could have acquired breathalyzers that they could have instead passed out to local bar owners instead of the urinal cakes. When will people learn that everything is cheaper on Amazon?

7. Shoot first and ask questions later 
The Missile Defense Agency really, really likes to build things. According to Waste Book, the MDA has not once, but twice, begun the build-out of interceptor missiles without first finishing the research and testing that should have been completed prior to their construction. Not surprisingly, delays, failures, and system upgrades were needed to both generations of missiles, which have cost taxpayers at least $1 billion and caused costs on the project to soar fourfold.

8. Miniature golf yields a maximum confidence boost 
Not to be outdone by RoboSquirrel, researchers at Purdue University in Indiana used part of a $350,000 National Science Foundation grant to examine the benefit golfers might gain if they used their imagination better. Researchers placed 36 participants in front of two different-sized golf holes and used optical illusions to make them appear bigger or smaller than they actually were. The findings showed that those who putted toward the smaller hole but perceived it to be bigger were more successful than those who perceived it to be smaller than its actual size. Shocking…

9. Ship mates? 
It’s a great thing that our Navy is manned by some fantastic men and women overseas, because its leaders in Washington aren’t making it easy for future generations. In late 2010, the U.S. Navy split what could amount to $37 billion in contracts to build 55 new littoral (near-shore) combat ships between two companies, Lockheed Martin and Austal USA. While the thinking here is that two companies could build these ships twice as fast, they somehow failed to grasp that the defense systems, design, and software used on each ship would be different; meaning that crewmembers can’t simply be transferred from one ship to another without being retrained. This “boo-boo” is slated to cost taxpayers a minimum of $148 million.

10. What’s the buzz about? 
Let’s end on a strong note, like a $939,771 experiment funded by the National Institutes of Health in Michigan and Texas that tested fruit flies to discover that male fruit flies are more attracted to younger female fruit flies than older ones. According to researchers, a hormone that female fruit flies produce wanes over time, which makes male fruit flies less attracted to them despite researchers’ countless efforts to test this theory even in the dark. The scary news is that this testing may soon be expanded beyond just fruit flies.

Source: Motley Fool

Which wasteful program stands out the most to you? Let us know by leaving a comment below, sending us a Tweet, or commenting on our Facebook Fan Page. Also remember to sign up for Stocks on Wall Street’s Monthly Newsletter.

Does Yelp Need Help? Is Yelp A Thorn in Apple’s side?

Does Yelp Need Help? Is Yelp A Thorn in Apple’s side?

Yelp continues to struggle.  Since Stocks on Wall Street first took a negative view on Yelp (NYSE: YELP) in our June 25, 2012 article titled “Why Yelp Is Not A Good Investment: 3 Reasons to Sell the Stock Now”, the stock has tumbled 21.59%.

(Above is a chart of Yelp’s performance since June 25th, 2012)

The three reasons we cited were:

1) Yelp’s flawed business model, with high cost of sales and no clear path to profitability;

2) End of their lockup.  Lockups also plagued other social media plays, Zynga (NASDAQ: ZNGA and Groupon (NYSE: GRPN);

3) Yelp did not fit two key criteria in Stocks on Wall Street’s Rules of Investing: (a) Buy best-of-breed companies and (b) Buy damaged stocks, not damaged companies.  We consider Yelp a damaged company and it is certainly not a best-of-breed stock.

Yelp was heralded as a social media darling earlier this year as shares rocketed up over 60% since their March 2012 IPO.  Market pundits initially touted YELP as a better investment than social media plays, Groupon or Zynga.  However, after a roller coaster summer, Yelp peaked at $28.89 on October 4, 2012, then plummeted 40%.

 (Above is a chart of Yelp’s performance since October 4th, 2012)

Why is Yelp Struggling? 

First, there is widespread concern about Yelp’s ad revenue, or lack thereof.  Third-quarter earnings beat analyst estimates and revealed that sales rose 63% to $36.4 million.  However, fourth-quarter guidance did not meet expectations.  Yelp forecast next quarter’s revenue at $40-$40.5 million amid lagging ad sales – just short of Bloomberg’s average analyst estimates of $40.8 million.  Shares fell almost 11%, reversing the stock’s upward trend.  Yelp’s Chief Financial Officer, Robert Krolik, reported fourth-quarter revenue from display ads would be “flat-to-down” because of “execution challenges in that part of the business.”

Mobile advertising is another looming challenge.  Yelp has also been a laggard at generating mobile advertising revenue, particularly as users increasingly turn to mobile devices for access to social media.  Yelp’s mobile app generated no revenue in the last quarter.

Yelp’s integration into Apple Maps has become further cause for concern.  Apple’s (NASDAQ: AAPL) vulnerability with its problematic map application is undeniable.  All too often, directions are wrong or location data is missing.  Apple’s CEO, Tim Cook, has apologized for the Apple Map’s inadequacies.

It’s increasingly apparent that Yelp’s flaws contribute to Apple Maps’ flaws.  Yelp’s user-sourced business information is leading Apple Map users astray.  Apple needs to work more proactively with Yelp for more accurate business listings and review if they hope to fix Maps.

Anyone with a Yelp account can add or influence venue data. This may range from the business’s location to its operational hours – all without independent verification by the business in question.  By comparison, Google (NASDAQ: GOOG) requires business owners to confirm their location.  Google Maps employs a method known as crowdsourcing.

According GigaOM, Yelp’s user-based approach results in “multiple venues entered, prospective businesses that add data but never open, and businesses that are closed but never get removed from Yelp.”  GigaOM cites a very telling example involving a Napa Auto Parts location.  A search of Apple’s Maps found one Napa Auto Parts store in a small California city that had 13 reviews from Yelp users.  However, Apple Maps showed that particular location as a pizzeria and there was no mention of Napa Auto Parts,

Yelp’s approach with hidden reviews and out-of-date businesses will continue to degrade search results and more customer use or map quality improvements wont fix that problem.

Here’s why Yelp’s method of curating posts presents a further problem to Apple Maps.  Yelp favors ‘elite’ user reviews over reviews by regular users.  Elites are specifically selected for their seemingly authentic reviews and profile information.  This means the primary reviews seen by searchers are hand picked by Yelp.  When using a full browser, the filters can be circumnavigated and other reviews by regular users can also be accessed.  But Yelp’s mobile application and Apple Maps do not allow those filtered reviews to be seen.  As a result, much information is missing.  This is likely to become a bigger problem for Yelp, especially if Apple decides to terminate their contract and look for better, more accurate alternatives.

Stocks on Wall Street continues to believe there are just too many negatives outweighing the positives for Yelp.  If you’re a current shareholder, sell on a bounce.  With or without Apple Maps, Stocks on Wall Street remains bearish on Yelp.

 Where Does Yelp Go From Here?  

Analysts continue to lower price estimates and downgrade Yelp.  Nine analysts recently issued a ‘HOLD’ rating, up from five ‘HOLD’ analysts just three months ago.  82% of analysts covering Yelp now have a HOLD rating on the stock.  Investors have cause to be concerned about Yelp’s business model and ad revenue growth and its mobile advertising strategy.  Stocks on Wall Street reiterates its negative view on Yelp.

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Monday's Must-Read Articles: New Bull Record in 2013 or Crash Over a Bear Cliff?

Monday’s Must-Read Articles: New Bull Record in 2013 or Crash Over a Bear Cliff?

Hope everyone has had a great weekend so far and are looking forward to enjoying the Thanksgiving holidays with family and friends. Below we have some great articles for you to read. Like always, if you have any investment questions or need advice on a specific stock, Stocks on Wall Street is always here for you so feel free to Contact Us at anytime. We always love to hear from our readers so please shoot us an email. Also let us know what you think about the articles below and your thoughts on the markets current climate by either commenting below, posting on our Facebook Fan Page or by sending us either Stocks on Wall Street or our Founder a Tweet.

New Bull Record in 2013 or Crash Over a Bear Cliff?- MarketWatch

Newspapers vs. Google: Taxing Times - The Economist

Moneyball Is a Hard Game to Play for Funds and Baseball Teams - Morningstar

Mark Cuban To Facebook: BUH-BYE I’m Going to Twitter - Read Write

On not being boring: A dramatic reading of Apple’s share price - Asymco

Lloyd Blankfein: The Business Plan for American Revival - The Wall Street Journal

There Are Actually 9 ‘Cliffs’ Investors Should Be Freaking Out About - Financial Post

Quantitative Analysis in Fund Investing: Fitting Factors Into the Formula - Morningstar Advisor

Fixed-Income Strategy: What’s Jeffrey Gundlach Doing? - CFA Institute

In Sports or Business, Always Prepare for the Next Play - Business Day

Bartlett: Our Long-Term Fiscal Future Is Better Than It Looks - Economix

How to invest in legalized marijuana - MarketWatch

Facebook’s False Faces Undermine Its Credibility - The New York Times

Stimulate this: China’s railway ministry will spend $32 billion by Christmas, even though demand for its services is muted - Quartz

Why Aren’t People Moving in America Anymore? - The Atlantic

What Apple Critics Are Missing: The Stock is Cheap! - Eric Jackson

Second Presidential Terms for the Stock Market Aren’t as Favorable as First Terms - Ed Yardeni

We trade stocks, not the president - All-Star Charts

Google outage shows business risks in China - The Wall Street Journal

If you can’t access some of the articles it might be because you need to have a subscription, to get a Free-Trial or Subscribe to any of the Top Financial Publications, Simply Click on the Link