Hedge Fund titan Jon Paulson pulled off the greatest trade of all time in 2007, raking in a cool $15 billion in his bet against subprime mortgages - according to the International Business Times who ranked the top ten greatest trades of all-time. Some were brilliant masterminds, others were just plain lucky.
The Top Ten Greatest Trades of All-Time
1. John Paulson’s bet against sub prime mortgages made him $15 billion in 2007
2. Jesse Livermore’s call on the Crash of 1929 (a legendary trader featured in the popular book, Reminiscences of a Stock Operator).
3. John Templeton’s foray into Japan in the 1960s (a true investment pioneer, Templeton foresaw the rise of Japan after World War II and profited hugely from it).
4. George Soros’ breaking of the Bank of England in 1992 (Soros made $1 billion).
6. Andrew Hall’s $100 oil prediction (with oil trading at $30 per barrel in 2003, Hall bet prices would rise to $100 in 5 years; they did and he took home a personal paycheck of $100 million in 2008).
7. David Tepper’s 2009 bet on financials (as the market hit its low in early 2009, Tepper bought financial services stocks & his fund earned $7 billion that year ($4 billion of that went to Tepper).
8. Jim Chanos’ prescient shorts (his sharp analysis led him to predict the demise of Enron, WorldCom, and other firms, and he is known as the best short-seller in the world).
9. Jim Rogers’ early call on commodities (he was bullish on commodities back in the 1990s & has been riding them to great profits ever since).
10. Louis Bacon’s geopolitical play (he correctly predicted that Saddam Hussein would invade Kuwait in 1990 & profited handsomely by going long on oil & shorting stocks, which helped his fund return 86% that year).
Most of these trades were ‘global macro’ plays where huge, concentrated bets were made by analyzing fundamental economic/business conditions. These investors excelled at turning a great observation about the world into a great investing idea. But, while these make the headlines, you never hear about the other investors who made a big call and missed, and ended up out of business.
It’s almost impossible for regular investor folks to make a ‘big score’ like these traders. Rather than trying to throw a touchdown pass on every play and make a big score like these traders, the smarter game plan is to focus on trying to get consistent first downs. Do your homework, watch market/sector developments, don’t chase stocks up or down. Do that, and the score may take care of itself.
Source: International Business Times
If you currently own Bank of America (NYSE: BAC) then you have been a strong supporter of the new direction the bank is going in and have been loving the impressive run the stock has been on, +83% year-to-date, +183% over the past 20 months. Just take a look at both of the BofA charts below and you’ll see why investors have been loving BofA’s recent stock performance. While BofA’s recent rally has been nothing short of stellar, it didn’t come from nothing. It was supported by the fact that fundamentally BofA is a strong company from top to bottom. Overall, there is a lot to like about Bank of America and the new direction the company is going in under the watch of CEO, Brian Moynihan.
Bank of America has clawed its way back from oblivion to the delight of traders and investors alike, who have profited on the stock’s advance. BofA has been a great momentum trade and going forward we expect shares to continue to soar. BofA is a great value play and as you can see, the stock is gradually recovering, climbing back to where they were trading before the financial markets collapsed.
Bank of America’s Past 12-Months Stock Performance: +82.13%
Bank of America’s Past 20-Months Stock Performance: +182.97%
BofA’s Legal Worries & Future Concerns
Some of the biggest concerns investors have when it comes to Bank of America are the bank’s legal woes, pending lawsuits and the potential financial ramifications from these lawsuits. Some speculate that the legal settlements could cost the bank and its shareholders billions of dollars. When it comes to investing, I prefer to look at the fundamentals of a company rather than giving into fear and listening to all the rumors. Right now all these numbers being thrown around are nothing but speculation and in the end BofA will pay a lot less in legal penalties than originally expected. Just examine all of the past legal cases against Bank of America and analyze the amount BofA actually paid out versus what analyst’s originally speculated, it’s consistently been a lot less. Many can attribute this success to the work of CEO Brian Moynihan, who before embarking on a career in banking was a high-powered Boston Lawyer. In all seriousness, this legal onslaught is a battle that the company has been at for several years now, as CEO Brian Moynihan has been systematically knocking lawsuits out of the way slowly, steadily, and one at a time.
With all the legal worries soon to be behind them, investors should now be focusing on the many great prospects Bank of America currently has going for them. The two biggest factors that make Bank of America successful are their ability to innovate their products to attract new customers while cutting costs and also their ability to produce strong sales numbers.
BofA’s Impressive Sales Growth
A strong indicator for past and future success for Bank of America has been their impressive sales growth. BofA has increased their sales growth across all segments of their business. In their 2Q earnings report, BofA’s five main operating segments all posted impressive growth rates and earnings. Compare the two figures below to see just how substantial BofA’s sales growth has been:
2nd Quarter of 2013: $1.4 Billion
2nd Quarter of 2012: $184 Million
Bank of America’s 2013 2nd Quarter net income ballooned to $1.4 billion vs $184 million prior year driven by higher net interest and non-interest income. BofA’s net income multiplied 7.6 times in one year, a very impressive figure and a strong indicator for continued future success. What was more impressive was the factthat it was a balanced performance with BofA seeing all five segments of their business improve:
- Retail Banking: Despite banking center consolidation and cost reduction, BofA saw a significant increase on the retail side in deposits, new accounts, plus credit/debit card usage.
- Mortgage/Loans: Real estate services managed to come in with $1 billion in revenue and marks a great improvement over last year’s -$186 million.
- Wealth Management: Revenues in investment management literally skyrocketed 10-fold to $4.5 billion with net income increasing 261% to $758 million. The segment now has a 17% net income-margin.
- Global Investment Banking: Global banking revenues increased to $4.1 billion up from $231 million in the same period last year driven by investment banking activity and loan origination. Global banking now has a 31% net income-margin and is highly profitable.
- Equity Trading: Global markets revenue, driven by equity revenue came in at $4.2 billion and profits at $959 million.
Sales are what drive Bank of America as a company and to see this kind of growth across all segments of their business is very impressive and a bullish indicator for future success.
BofA’s Ability to Innovate
Innovation has always been something that has distinguished Bank of America as a company and made them stand out from their competitors. BofA’s ability to innovate new products, making the lives of their customers easier while cutting costs has been a winning strategy. The newest innovation will be BofA’s ‘Teller Assist‘ ATM machines that will allow customers to do the following:
- Cash checks for the exact amount, including receiving change.
- Receive cash withdrawals in a variety of denominations ($1, $5, $20 & $100).
- Deposit checks with cash back.
- Split a deposit into two or more accounts.
- Make loan or credit card payments.
Bank of America has consistently been making strides to go automated in its entirety, in terms of banking; similar to the way tons of food stores now have implemented self-scan devices for checkout. The more machines in place, the more automation, the fewer tellers needed, the less the bank spends. This has been an initiative that the bank has been working on for the past few years, and I believe that this forward looking “automation innovation” is going to yield the bank tangible results in terms of cost cutting and general efficiency in the future. Katy Knox, Retail Banking and Distribution Executive at Bank of America says it perfectly in the following quote:
“We know that customers want to bank on their schedule – not ours – so we are constantly looking at how to deliver more convenient banking options to them. This technology gives customers easy, convenient access to ATM banking services with the added option of having a personal interaction and the support of a teller available at the push of a button.”
In one new innovation, Bank of America will be simplifying the lives of their customers while cutting costs and saving money in the long-run. It’s a win-win if you ask me and it’s innovations like the Teller Assist ATMs that will lead BofA to prosperity.
BofA’s Stock is Significantly Undervalued
When it comes to valuation, BofA is significantly undervalued compared to its peers as it has a book value discount of 28% and a forward P/E of 10.5. Bank of America trades at the largest discount to book value while Goldman Sachs (NYSE: GS) and Wells Fargo (NYSE: WFC) already manage to trade at a premium. Even though Bank of America had a great Q2 with an EPS estimate beat of 28%, its valuation continues to lack its peers. While the P/B industry average stands at 1.1, Bank of America is comparatively cheap with a near 30% discount from book value and near 10% earnings yield providing investors with a significant margin of safety.
What to Expect from BofA’s 3Q Earnings?
Bank of America surprised everyone with their 2Q earnings, reporting a 70% increase in profits, primarily through cost cutting measures. Overall revenues grew 3.5% however BofA’s stock price and valuation still lag compares to its immediate peers. While reducing uncertainty with respect to book value credibility and legal risks, Bank of America’s valuation remains low and attractive. I also expect that Brian Moynihan will be a man of his word and Bank of America will step up its shareholder remuneration policy with an estimated annualized dividend yield of 2-3% in 2014/15.
I expect BofA to once again beat the analyst’s expectations reporting strong 3Q earnings. BofA has been making strategic cuts to reduce overall costs while increasing revenues & strengthening the core parts of their business. Merrill Lynch continues to be BofA’s most profitable division & expect Merrill’s profits to continue to increase going forward as the two companies become more integrated with one another. Overall, BofA is a great long-term investment and a strong BUY for investors. Those who currently own the stock, simply hold onto your shares and over time watch them grow!
Conclusion: What to Expect from BofA Long-Term?
Investors need to look past the newspaper headlines and short-term outrage against Bank of America and instead analyze the core parts of BofA’s business. Bank of America combines a market-leading, deposit-strong banking franchise with impressive sales and earnings growth, declining/encouraging delinquency and loss trends, and a low valuation. Dividends and share buybacks can further add fantasy to the stock. Under Moynihan’s ‘Project New BAC’, BofA has been able to leave its legal troubles behind and focus on fundamentals and cost cutting. Going forward the company is going to remain a lean and clean sales machine for investors.
Innovation continues to be a strength of BofA as consistently they have been able to innovate their consumer bankingproducts to attract the highest number of customers and in return deposits. Over 50% of Americans currently has some form of relationship with Bank of America whether it’s a checking/savings accounts, credit card, mortgage, auto loan, investments, you name it.
As the economy improves, Bank of America should profit from higher consumer spending and an increased transaction business with a strong possibility to outperform EPS estimates. Fueled by its innovation, future steady dividend and the recovering housing market, I recommend investors to buy BAC. My 12-month price target for Bank of America is $24 per share, a yield of +65%.
Binary options are becoming an increasingly popular form of trading in the financial markets. They offer a way to trade a wide variety of assets across multiple markets and offer greater reward in a shorter period of time to regular investments. For investors looking to profit off binary options the key is to find a great Binary options broker. 24option is not only one of the top ranking brokers worldwide but it also is our personal favorite binary options broker.
Established in mid-2010 and headquartered out of London, 24option specializes in trade with options based on multiple investment instruments allowing inroads in several markets at once. 24option’s known for offering its customers a wide variety of underlying assets and types of options to operate. There are also a number of advantages that make 24option one of the top brokers for binary options traders.
So why trade binary options? Without getting into too much detail, we have listed 7 of the great advantages/benefits to trading binary options:
1. Limited Risk
2. High Rewards and Fast Returns
3. Simple Trading
4. Low Investment
5. Wide Range of Internationally Traded Assets
6. Trade on Any Market Condition
7. Trade Anywhere, Any Time
On top of these many advantages, traders who use 24option’s platform are more equipped to succeed and generate large profits. 24option is a proven system that has produced great results since it was first established and in addition they offer users a plethora of great amenities.
In our opinion, 24option is by far the best binary options broke out there and if you read all the reviews you can learn why. Read more at 24option review to find out why they are the best of breed broker when it comes to binary options. Not only does 24option offer a great product with top-ranked customer service but 24option is one of the few services that offers users free demos. Everyone make sure to take advantage of this great innovative service and traders read more at 24option review to find out how to profit off binary options!
While U.S. social media stocks like Facebook (NASDAQ: FB), Groupon (NASDAQ: GRPN), and Zynga (NASDAQ: ZNGA) have struggled to live up the hype; China’s Tencent Holdings (0700.HK & OTC: TCEHY) on the other hand has been thriving despite a weak Chinese economy.
Who & What is Tencent?
Tencent is a Chinese investment holding company whose subsidiaries provide everything from mass media, entertainment, Internet, gaming and mobile phone services to China’s population of 1.35 billion people. They are China’s largest Internet Company and the 3rd largest tech company in the world, behind Google & Amazon. The Internet has become one of China’s leading industries and as a result an ultra-competitive market as new companies are being established daily as everyone is trying to capitalize off the new trends and growing user base. While many companies have been experiencing growing pains, Tencent has continued to dominate the market thanks to their diversified mix of businesses.
Tencent’s 3 Top Services
- QQ, China’s largest instant-messaging service with over 850 million users.
- QQ Games, a massive, youth-oriented, multiplayer gaming network.
- WeChat, a free mobile social-network that allows users to send photos, videos, and voice messages to their friends, walkie-talkie style.
Tencent is China’s Facebook, Twitter, eBay, Yahoo, Google, Zynga, and Tumblr all rolled into one. What makes Tencent stand out from their competitors is the fact they can offer their users, advertisers, and application developers access to everything from a single platform.
One of the Greatest Growth Stocks of the Past Decade
Tencent’s dominance has resulted in their stock more than doubling over the past three years. Tencent has been one of the greatest growth stocks of the decade, appreciating +392% in the past five years along with a ridiculous +7,595.89% since their IPO in 04’. Tencent’s competitors are not experiencing the same success as many are struggling, held back by the uncertainties surrounding the health of the Chinese Economy.
Baidu (NASDAQ: BIDU), one of China’s Internet Giants and a competitor of Tencent, is down over -13% the past year compared to Tencent’s +39% yield over the past year. Same thing happened during 1Q earnings, many Chinese companies fell flat falling short of analyst’s expectations. Tencent on the other hand, reported better than expected 1st Quarter earnings beating analyst expectations sending shares up +31% since April.
Short-Term Expectations, What to Expect in 2013?
Many investors want to know whether Tencent’s great run will ever end? My outlook is this, the 2nd half of 2013 could cause some challenges for Tencent due to volatility in the months ahead. Tencent has seen an overall slowdown in their gaming business, which is expected to continue as long as the Chinese economy continues to struggle. Add to that the fact that Tencent’s two most recent ventures, e-commerce and mobile are not expected to start generating revenue until at least 2014. For most companies, these problems would be a blessing but for Tencent’s ridiculous growth to continue they will need to find a way to supplement the lost revenue through its other services.
Long-Term Expectations, What to Expect Over the Next 5 Years?
Tencent’s dominance should grow stronger in the next several years as they plan to capitalize off China’s rapidly growing mobile and ecommerce markets. If there is one thing Tencent knows how to do, it’s turn their users into profits as seen in their strong 2013 profit margins of 28.93%.
Originally founded as an instant-messaging platform in 1998. Much like Facebook, Tencent grew very quickly recruiting a high volume of new users. Tencent was surprised that having lots of users didn’t automatically translate into profits so the company changed their business model building on their large user base and creating an online-gaming presence. Tencent has since then expanded into many different online services the two most popular are QQ, +850 million users, and WeChat, +300 million users in two years. Tencent’s ability to attract users and in turn profit of them is a major reason analysts are very bullish about Tencent’s long-term prospects.
Tencent’s Huge Opportunity With China’s Growing Mobile Market
Tencent currently trades at a premium valuation, something they’ve earned thanks to their years of dominance. Tencent’s dominance in China’s online market can be attributed to their efficient operations, strong senior management and their ability to continue to release new innovative services. Tencent’s growth can be directly attributed to their efficient and effective investing producing a ROE of 35.38% and ROA of 13.90%. Its numbers like those than show why Tencent’s senior management have been the driving force behind the company’s success. Tencent’s CEO, Ma Huateng, deserves a lot of the credit. A recurring candidate for Barron’s World Best CEO, Huateng is described as very patient and careful executor, often planting seeds and experimenting before jumping in.
This explains why Tencent often takes its time to develop new brands, making sure that the right infrastructure is in place to allow the new venture to truly succeed. Quality control is a huge part of Tencent’s business development strategy. They always like to make sure that their new brands are fully developed and well tested before they release it to the public. Tencent’s reasoning is that most people will only give an app, game, online service, or new social media platform one shot and if a user experiences any technical difficulties or bugs in the software, the likelihood of them becoming a long-time user greatly diminishes.
Tencent’s Establishing a Foothold in China’s Growing Mobile Market
This strategy can be seen with Tencent entering China’s mobile market. Establishing a foothold in China’s growing mobile gaming market is a huge opportunity and one they want to build the right way, not the quick one.
Executives cautioned that it was still early days for e-commerce and mobile gaming, stressing that focusing on the quality of the user experience is the key to long-term success. They also wanted to curb expectations and not let analysts call these ventures a bust for failing to produce profits, when Tencent doesn’t expect them to become a factor in the company’s revenue strategy until at least 2014 maybe 2015. Executives are really excited about the prospects of the company’s shift into mobile gaming saying that they have the right infrastructure in place to link its applications like mobile QQ and Weixin to mobile-gaming, as well as filling the pipeline with “high quality games.”
Mobile gaming is a much larger market than traditional gaming and for Tencent that means it’s a much more lucrative opportunity as well. The differences between the two are that mobile gamers range between ages 18 to 60 versus traditional gamers range between ages 18 to 24. This opens up a whole new group of people that Tencent can market their single platform services to. Over 80% of China’s population of 1.36 billion is expected to be using the Internet by 2025. Adding to this, it’s reported that Mobile phones have become the top devise for accessing the Internet in China and over 60% of mobile users purchase mobile products on a monthly basis. So as you can see, there is a huge untapped market that Tencent has yet to capitalize from. Currently gaming makes up half of Tencent’s revenue. If they are successful in tapping into the mobile gaming market then this number should rise substantially.
Tencent’s Strong Long-Term Prospects
Tencent is a well-run company with a solid balance sheet, over HK$25 billion in net cash, and a strong array of popular, revenue producing services. With a current 0.30% dividend, executives have said that they plan to both increase the dividend and continue to buybacks shares to return cash to shareholders. Investors looking to capitalize on both emerging markets and the technology sector should look no further than Tencent. They are clear the leader in a rapidly growing sector and they hold many great long-term prospects that I believe will allow them to continue to dominate the Chinese market. Continued development of both mobile and ecommerce services will make Tencent the only company that can offer its users and advertisers a single platform to fulfill all their online needs.
Tencent’s 12-Month Price Target
The consensus among analysts is that Tencent will continue to outperform its competitors, as they expect earnings to grow 22% in 2014 to over HK$25 billion (HK$13.55 a share) on HK$95 billion in sales. I also believe Tencent will beat its competitors and as a result I expect Tencent’s stock to continue to rise to $375 over the next 12-months, an annual yield of 25%.
Hope everyone had a great week and are enjoying an even better 4th of July weekend! We have some great reads to help you all enjoy it a little more. So sit back, relax, and enjoy the articles below. 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 market’s current climate by either commenting below, posting on our Facebook Fan Page or by sending either Stocks on Wall Street or our Founder a Tweet.
Is Warren Buffett More Myth Than Legend? (Marketwatch)
Celebrity Economists Make Waves (At Work)
An Open Letter To The Idiot Nation (StoneKettle)
Are we having fun yet? On the banks’ barely believable behaviour (London Review of Books)
Gladwell: The Gift of Doubt (New Yorker)
In Connecticut, a struggle to launch Obamacare (WaPo)
Basel Examines Banks’ Diverging Views of Risk-Weighted Assets (Bloomberg)
Thoughts on the future of finance blogging (FT Alphaville)
Finance blogging is not for the faint of heart (Abnormal Returns)
The Fed’s magic jobs number (Fortune)
Gold – Has the ‘Narrative’ Failed? (Acting Man)
Elizabeth Warren Tackles Wall Street (The Nation)
Why doesn’t Apple enable sustainable businesses on the app store? (Stratechery)
The Answer is a Click Away: The Internet Era’s Great Placebo Effect (Medium)
4 Steps to Viral, Or How to Create Infographics That Blow up the Web (visual.ly)
Pandora Paid Over $1,300 for 1 Million Plays, Not $16.89 (The Understatement)
Pandora and Royalties (Pandora)
The Immortal Life of the Enron E-mails (MIT Technology Review)
Morsi repeated McCain’s error: Ignore the economy (MarketWatch)
Egypt Interim Leader Inherits Troubled Legacy From Mursi (Bloomberg)
The Economics of Eating Out (priceonomics)
Mankiw, Kaplan, CEO Pay and the Defense of the 1 Percent (Economic Policy Institute)
Lockdown: Why Google Killed RSS Reader (Marco)
Surprise! Inflation is too low almost everywhere on earth (Wonkblog)
Do budget deficits cause inflation? (Mainly Macro)
Hope everyone’s had a great week so far and are excited for an even better weekend! We have some great reads to help you all enjoy it a little more. So sit back, relax, and enjoy the articles below. 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 market’s current climate by either commenting below, posting on our Facebook Fan Page or by sending either Stocks on Wall Street or our Founder a Tweet.
It’s Not Just the Fed, It’s China, Too (Moneybeat)
7 charts that tell the Fed not to taper QE3 (MarketWatch)
Gold Takes a Plunge Below $1,300 (WSJ)
The Conflict Between Managing Funds and Selling Funds (Bronte Capital)
Decline and fall: how American society unravelled (theguardian)
Can Others See When You View Them on LinkedIn? (Full Contact)
The Trouble With Kickstarter (WSJ)
Finance blogger wisdom: summer reading (Abnormal Returns)
Parsing the Fed: How the Statement Changed (Real Time Economics)
New China billionaires blowing massive bubbles (MarketWatch)
Gold is now only back to where it was in September 2010 (Moneybeat)
The Second Great Depression (Foreign Affairs)
Congress is wildly unpopular. Should anyone actually care? (Wonkblog)
Why Monopolies Make Spying Easy (New Yorker)
Bernanke’s Bond-Buying Paradox for Markets (WSJ)
Crossed signals over Fed’s stimulus efforts (Washington Post)
Financial Sector Thinks It’s About Ready To Ruin World Again (Onion)
Stocks on Wall Street readers know that we’ve been bullish on Vietnam. Bloomberg agrees with our outlook. TheBloomberg Markets, November 2012 list of the most promising Frontier markets for investors ranked Vietnam as #1. United Arab Emirates as #2 – a market we 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.
We like Frontier markets that are moving to Emerging Markets. Developed capital markets are key to becoming an emerging market. So, we’re 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. The huge drop however opened up a great buying opportunity, as result back in November 2012, we recommended investors to buy shares of VNM as we believed VNM was capable of producing huge gains.
VNM has performed just how we expected as shares are up +38% over the past 7 months. Investors who have a high-risk tolerance may want to consider making a play on this Vietnam ETF. Make sure to checkout Stocks on Wall Street this week to read our detailed report on Vietnam’s long-term investment outlook.
There is no meaningful difference between the schemes adopted by Bernie Madoff and our Social Security system. Madoff did to his investors what the government has been doing to wage earners for over 60 years with Social Security.
Why did Bernie Madoff go to prison? He persuaded people to invest with him, but he didn’t invest their money. As Madoff built his portfolio over time, he simply took the money from the new investors to pay off the old investors. Eventually, there were too many old investors and not enough money from new investors coming in to keep the payments going. Madoff’s scam was finally debunked; he went to jail and became one of the most hated men in America.
Soooo…. there is fundamentally no difference between Social Security and Bernie Madoff’s scam – except that one was operated by a private individual who is now in jail and the other is operated by politicians who enjoy perks, privileges and status in spite of their actions. Here’s a nifty little chart with a side-by-side comparison.
|BERNIE MADOFF||SOCIAL SECURITY|
|Takes money from investors with promise money will be invested & made available to them later.||Takes money from wage earners with promise money will be invested in a “Trust Fund” & made available later.|
|Instead of investing money Madoff spends it on yachts & nice homes in the Hamptons.||Instead of depositing money in a Trust Fund, politicians use it for general spending & vote buying.|
|When the time comes to pay investors back, Madoff simply uses some of the new funds from newer investors to pay back the older investors.||When benefits for older investors become due the politicians pay them with money taken from younger & newer wage earners to pay the geezers.|
|When Madoff’s scheme is revealed, all hell breaks loose. New investors won’t give him more cash.||When Social Security runs out of money, they simply force taxpayers to send them some more.|
|Bernie Madoff is in jail.||Politicians remain in Washington.|
Hope everyone’s having a great weekend so far! We have some great reads to help you all enjoy it a little more. So sit back, relax, and enjoy the articles below. 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 market’s current climate by either commenting below, posting on our Facebook Fan Page or by sending either Stocks on Wall Street or our Founder a Tweet.
Why is this recovery unlike the others? (MarketWatch)
Fading Bull (Wealth Management)
What does it mean to have “predicted the crisis”? (Noahpinion)
Google is the General Electric of the 21st century (FT.com)
Join Wall Street. Save the world. (Wonkblog)
In China, an Empire Built by Aping Apple (NYT)
A Small World After All: A new book sheds light on how little of the world we see through our browsers (Book Forum)
Feeding the Fee Machine (Institutional Investor)
This market correction will pass (Calafia Beach Pundit)
The Real Problem: Em Decoupling? (The Reformed Broker)
Higher Dividend Stocks Still Seem Rather Pricey (Learn Bonds)
How Many Jobs to Bring Down Unemployment? (Real Time Economics)
NSA collecting phone records of millions of Verizon customers daily (theguardian)
The Stocktwits Network Helps Solve the Puzzle (The Thoughtful Bull)
Estimize offers new approach to consensus estimates (Inside Investor Relations)
Goldman Sees Commodity Bull Run Over as Returns Trail Stocks (Bloomberg)
The era of ‘uncertainty’ may be over. Will a growth boom begin? (Wonkblog)
How Does Income Growth Compare to Other Recoveries? (Real Time Economics)
Why Didn’t the SEC Catch Madoff? It Might Have Been Policy Not To (Taibblog)
Monetary policy and US inequality, again (FT Alphaville)
The Fed and Inequality (Economix)
Across the board, 2013 has already been a strong year for oil and natural gas companies and we’re only five months into the year! What we have seen is that many of these oil and natural gas stocks have already made double digit gains on the year alone. This is one of the main reasons we have decided to focus this week on getting you invested in the right energy stocks. When it comes to energy stocks, all we have been seeing is huge gains across the board and that’s why we believe this is a great time to invest in the energy sector. More importantly, we believe American based energy companies are set to produce some of the biggest returns over the next few years as there is a lot of speculation that we are entering an American Energy Boom that will propel these stocks higher.
Throughout the week, we are going to be focusing the majority of our articles on the energy sector and the best ways to invest within that sector. The article you are about to read right now is the first part to a two part article series where we will be offering our 10 Favorite Energy Stocks. Below are our first five energy stocks:
Halliburton (NYSE: HAL) Projections: +57.2%
A little over 19 months ago, we first recommended investors to BUY Halliburton as we saw it as a strong long-term investment. During those long 18 months, we unfortunately have nothing to show for it as shares are now trading at the same levels of where they were when we first initially invested. Our timing for HAL was originally wrong as we invested at the wrong moment as shares fell over 40% in the first 9 months due to falling oil prices and overall weakness in our global economy. Since then however, HAL has recovered quite nicely as shares are up +27% over the past 6 months and up +40% over the course of the past year as share prices are now back to where they were when we first initially invested. Fundamentally we still like Halliburton for all the same reasons, read our original article to find out more details.
Going forward, HAL’s outlook is very bullish with 91% of analysts covering HAL issuing a BUY rating or higher. Overall there are 32 analysts currently covering HAL and all but 3 think it’s a great BUY opportunity. If that doesn’t make you feel comfortable then maybe this will, HAL is represented in the equity portfolio of Soros Fund Management who holds a $34 million stake.
2013 has been a good year for HAL investors for several reasons. For one, HAL’s share price has appreciated +18% year-to-date, secondly in February Halliburton announced a +39% increase in its quarterly dividend to $0.125 per share, and finally in its most recent quarter (Q1 2013), the oil and gas E&P play reported a record $7.0 billion. Halliburton’s management has stated that it’s focused on improving North American margins in the intermediate-term and we have no reason to doubt that they won’t accomplish this goal, as historically they have always been one of the most efficient management teams worldwide. If you’re looking from George Soros point of view, he might see HAL as the best way to play America’s energy boom.
Halliburton’s strength in the tight oil and gas space is underrated. Trading at 10.7 times forward earnings, HAL is cheap especially compared to its peers. Going forward we are very optimistic about HAL’s long-term outlook and believe that the company will continue to outperform against their competition and we believe they will position themselves as the leader of the American energy boom. As a result, we believe shares of HAL will be trading at $65 per-share 12-months from now which included with their annual dividend of 1.20% works out to be a total net yield of +57.2%.
Rex Energy (NYSE: REXX) Projections: +21%
Rex Energy has been a favorite of ours along with being one of our top-performing stock picks for both 2012 and 2013. We first recommended REXX as a strong BUY opportunity around a year ago. In that short time period, shares have soared over +78%. This probably lead to many investors to sell off their whole position thinking that the stock couldn’t rise any higher without however actually reanalyzing the company’s past and future performance, long-term projections, and overall outlook to see if there in fact is more potential still there. We did in fact take the time to reanalyze REXX and what we found was that while it had been a great year there was nothing to suggest that this run would stop or that REXX would lose value going forward. In fact, many key indicators led us to continue to be bullish on REXX. We did however sell half of our position recommending our readers to do the same as in case of a market correction it would protect our portfolio allowing us to play with the houses money rather than still having all our original starting capital at risk. To find out why we like REXX going forward simply click on the LINK below:
Going forward we expect REXX to continue to outperform their peers and have placed a 12-month price target of $20 per share, a total net yield of +21%.
Range Resources (NYSE: RRC) Projections: +27%
Range Resources stock price has steadily climbed throughout the past year as shares are up +21% year-to-date and +38% over the course of the past 12 months. Going forward, there is nothing to doubt that RRC won’t continue to rise higher as the company foresees production to grow between 20% to 25% over the course of the next few years. RRC’s total resource potential is estimated to be anywhere between 50 to 70 trillion cubic feet equivalent of natural gas. Being a low-cost producer, RRC should yield exceptional profits from these upbeat production numbers.
We also believe that RRC’s new strategy and focus on per-share growth instead of focusing on growth at all costs will be a big driving force for the company going forward and we believe it will be a key factor in sending share prices even higher. With increased production and exports expected to continue to grow there is little to suggest that Range Resource’s stock won’t stop continuing to steadily rise higher. In fact, we think RRC will be a big winner going forward and we expect shares prices to hit $95 over the course of the next 12 months, a total yield of +27%.
Southwestern Energy (NYSE: SWN) Projections: +40%
Southwestern Energy has made some key recent capital investments that we believe will only further strengthen the company’s long-term outlook as well as sending share prices significantly higher. SWN recently doubled down on its Marcellus acreage, purchasing 162,000 acres from Chesapeake Energy for $93 million. Being the discoverer of the Marcellus play, SWN made the most of its first-mover advantage as they have continued to improve their operations within the acreage. This strategic investment has greatly strengthened SWN’s overall outlook going forward leading to an increase in their overall projections across the board.
Even as SWN expands, the bulk of their assets are still in the Fayetteville Shale. SWN’s strategic capital investments have been crucial providing the company with a low-cost structure that will help SWN profit even if gas prices were to fall or weaken. Shares of SWN rose +37% over the course of the past year, to many investors that is a great return but when you dig deeper and see the long-term potential you realize that SWN is just getting started. The combination of both SWN’s smart and strategic investments along with their luck in what they discovered has led to increased optimism on SWN’s overall long-term outlook. These findings have also led to many analysts across Wall Street upping their projections adding an additional +30% upside to SWN from current levels. The biggest news of all might be that SWN’s recent acquisitions has led to them becoming a new position in the hedge fund managed by George Soros, the fund disclosed a $16.7 million position in Southwestern Energy.
Following a strong first quarter where SWN posted an annual increase in production of 11% along with earnings of $0.36 per share versus $0.30 EPS just a year ago representing solid growth. Add in the recent developments, acquisitions, and investments and SWN has become a much more interesting play and one that holds a lot more potential and value now going forward. We project shares of SWN to be trading at $52 per-share 12-months from now, a total net yield of +40%.
Ultra Petroleum Corp (NYSE: UPL) Projections: +63%
Just like RRC, Ultra Petroleum is another low-cost producer utilizing a new strategy to increase overall future production. UPL are now using their cost position to focus on profitable growth. UPL has cut back its capital program to make sure they invest within their cash flow. In doing so, they were able to trim off more than a billion dollars from their capital plans for this year alone. Going forward, the company will have the ability to spend more capital as cash flow increases. UPL’s management team has chosen this strategy to keep the business more efficient and cash flow positive. They want to avoid the possibility of any possible cash flow problems going forward and this new strategy will allow for them to stay within their means and only spend what they can afford to.
UPL has robust projections when it comes to future production, as they believe that by 2016 they can grow their production by 42% while their EBITDA will more than double. These conservative projections only assume a minimal rise in natural gas prices, however it’s very likely that the price of natural gas will rise above the $4.50 price that Ultra is modeling it to be by 2016. If this is true and natural gas prices do rise higher, then UPL will easily exceed their projections benefiting the business in many different positive ways. For one, higher natural gas prices will lead to an increase in both total revenue and overall profit for UPL. In turn, this will lead to higher cash flow numbers giving UPL more capital to reinvest back within the business which will only further promote increased growth and production. In turn, all of these added benefits will lead to a stronger long-term outlook for UPL, leading them to beat all future earnings estimates which will only further propel the stock to rise higher and higher.
UPL is already having a strong year in 2013, as share prices are up +28% year-to-date. Going forward, we firmly believe that UPL will be a quick riser and we project shares to be trading at $37 per-share 12 months from now, a total net yield of +63%.
Why Do People Pay The Fees & Commissions When The Majority of Financial Planners Don’t Even Beat the S&P 500 Index?
Before you invest the majority of your money with a financial planner, make sure you really not only trust the person but question him to see if he is knowledgable & has setup a good plan of action/strategy for your future. Why should you ask so many questions? A commonly held view is that between 80-90% of financial planners do not beat the S&P 500 Index. Most financial planners do nothing more than sell clients mutual funds. Plus, their commissions and hidden fees further dilute returns. The odds are that, if you just follow the advice found in a credible basic investing book, you will probably do no worse than your financial planner – and perhaps even better. One caveat, however: Although financial planners may not make you more, the better ones can do a better job of minimizing your losses in bear markets. That’s because they can spot trends before the average investor and can be better at implementing strategies to protect you in down markets. Looking at performance during bear markets, is perhaps a better indicator of a financial planner’s qualifications.