Posted on February 22, 2012
By Morningstar:
By Samuel Lee
For the past three decades, the rich world rode high a tide of debt-fueled prosperity. The financial crisis spurred U.S. households and firms to chip away at their debts. The eurozone crisis is doing the same to European governments. In the past–notably the 1930s’ United States and 1990s’ Japan–deleveragings of this magnitude took a decade or so to work through. They were punctuated by false dawns, tremendous volatility and sluggish growth. In this macroeconomic context, strategies less dependent on robust growth and steady markets make sense. The best of the lot: PowerShares S&P 500 Low Volatility (SPLV).
It implements a simple low-volatility strategy for a more-than-reasonable 0.25% expense ratio. Each quarter the fund sorts S&P 500 stocks by their trailing 12-month volatilities, picks the 100 least volatile, and weights them by the inverse of their volatilities. SPLV is laden with the boring, such as utilities and consumer
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Posted on February 22, 2012
By Bob Johnson:
This article will help you understand where and how to look for profitable investing opportunities within sectors. It intends to give a description of different sectors of the economy and show how a basic knowledge of these can be helpful in identifying the stocks most likely to produce better than average returns. It will help long term investors identify entry points. A brief discussion will then describe the business cycle and the best sectors for different points in the cycle.
Sectors
The word “sector” has many meanings. In its basic form it means a portion of something, often divided into sections with similar characteristics. For example, one may speak of the public and private sectors. For the purposes of this article, we define sector as a divisions of the economy, described by the function that sector involves. Standard & Poor’s in collaboration with Morgan Stanley Capital International developed the Global
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Posted on February 22, 2012
By Morningstar:
By Timothy Strauts
Something strange appears to be going on with municipal-bond exchange-traded funds. The two largest ETFs in the category have had very different performances for the year to date. iShares S&P National AMT-Free Municipal Bond ETF (MUB) has returned 4.90% this year. Its main competitor, SPDR Nuveen Barclays Capital Municipal Bond ETF (TFI), has returned only 2.19%. Both ETFs track investment-grade municipal bonds, have similar yields and durations, and have fees that are within 2 basis points. From a holdings perspective, the only material difference is the slightly higher credit quality of TFI, but even that difference is negligible.
Why would similar funds have such different results and what should investors do? Upon further investigation, we find that what appears to be strange is in fact what we should expect, and the course of action is simple.
It’s Not You, It’s Me
I am an advocate for well-constructed
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Posted on February 22, 2012
By Stephen Simpson:
Not only do I like industrial companies in general, but small industrial companies are near and dear to my heart. Played right, they can be surprisingly lucrative stock picks with much less of the risk that often goes with small technology or healthcare names.
The question for this article, then, is whether Altra Holdings (AIMC) merits a spot in the portfolio of growth-inclined investors.
An Annoying Reset To End The Year
The Altra Holdings case doesn’t start off especially strong, as though revenue rose 11% organically in the fourth quarter, the company missed earnings estimates by a significant margin.
Margins were actually the problem. Altra came up short on the gross margin line due in large part to inventory de-stocking in Europe, production disruptions tied to weather, and some higher healthcare costs. All of that said, operating income did still rise 20% and the company is ahead of schedule in
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Posted on February 22, 2012
By Mike Arnold:
Every security is a sell at one price, a hold at some lower price and a buy at yet some further decremented price when value is appreciably higher than the stock quote. Before the corrosive global financial crisis and at the apex of crude oil prices, Vestas Wind Systems (VWDRY.PK) closed at about $48/share on June 16, 2008. Today, shares trade hands around $3/share. That represents a breathtaking 94% reduction in Vestas’ share price.
Click to enlarge:
To be sure, Vestas was to be avoided at $48/share, but has the market punished Vestas’ share price enough that it now represents a compelling buying opportunity?
Business Overview:
Vestas Wind Systems A/S engages in the manufacture and sale of wind turbines and wind power systems in Europe, Africa, the Americas, and the Asia Pacific. It also offers wind project planning, procurement, construction, and operation services; and after sale services, as well as
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Posted on February 22, 2012
By KLLJ Investments:
Will a new weight loss drug be approved in 2012?
Here we are, two months into 2012 and the FDA has another opportunity to approve a new drug to help fight obesity. Will this be a déjà vu event from 2010 or will we witness a turn in the hallways of the FDA that there are some acceptable risks in the name of weight loss? Obesity treatments remain the largest unmet medical need in all of pharma and a new option for physicians could lead to billions in revenue. So will either Vivus’ (VVUS) Qnexa or Arena’s (ARNA) Lorcaserin be approved in 2012?
On Wednesday, February 22nd, Vivus will face a second Advisory Committee for its weight loss drug – Qnexa. Last week, we received insight from the FDA on how it may be viewing the approvability of the drug and there are still some obstacles for Vivus to overcome.
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Posted on February 21, 2012
By Bayesian Investing:
If you are like me and you were always skeptical of the peak oil theory, you are feeling pretty smug right now. New technologies and new oil discoveries are being made daily and politicians are once again musing about America becoming energy independent. You never even hear the phrase “peak oil” anymore unless it is from some jerk like me enjoying a self-satisfied pat on the back for being right.
However, I am becoming a believer in peak oil theory’s little cousin: peak cheap oil. Or peak conventional oil, if you prefer. Whatever you call it, it is undeniable that the face of oil production is changing. Conventional oil deposits are shrinking, as are margins at the oil majors. Oil exploration is becoming more expensive and most new oil reserves are coming from deep horizontal wells, hydraulic fracturing and deep-sea drilling.
As a young investor, I figured that the world
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Posted on February 21, 2012
By Ploutos:
Recently, I authored an article that placed the year-end 2011 price to trailing twelve months earnings ratio of the S&P 500 (SPY) in a historical context. Multiples of price to trailing earnings as low as 2011′s ratio have portended higher returns on average over the next one year. While the sample size of annual returns of the S&P 500 is statistically significant (55 observations 1957 – 2011) and appears to have predictive power, researchers at the Federal Reserve Bank of San Francisco have presented some compelling counterevidence against the hypothesis that today’s low earnings multiples will lead to above average forward returns that must be weighed by market participants.
A piece published by Zheng Liu and Mark Spiegel in August of 2011 points to a historical relationship between the age distribution of the nation’s population and equity market performance. The article makes the supposition that the transition of the large
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Posted on February 21, 2012
By Anthony Welch:
With the recent talk of rebalancing the NASDAQ once again due to ongoing outperformance of Apple (AAPL) versus the other constituents of the index, one decision ETF investors face is whether to own the Powershares NASDAQ ETF (QQQ) or just own Apple outright. After all, wouldn’t QQQ investors have been much better off owning the top holding, (currently about 16 ½% of the index), than the index itself?
A look at Apple (red line) versus QQQ (green line) on a weekly chart answers the question quite clearly:
It appears that everyone should sell their QQQ and load up on Apple, right? Perhaps, but first allow me to note that I am a big fan of Apple and, as I’ve mentioned before, if anyone can get to a trillion in market cap, Apple can. I like their products, I like their story, and the valuation seems reasonable, so this is not
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Posted on February 21, 2012
By Brett Korsgaard:
Activity in one of the more promising segments in the biotech industry is creating opportunities for investors and has implications for larger industry players jockeying for a piece of the pie. Immunotherapy centers on harnessing the bodies sophisticated immune system to combat cancer and other maladies. The logic makes sense: instead of poisoning our body with radiation and chemotherapy, perhaps we could use this most potent of all defense mechanisms in the treatment of cancer.
Investors are hopeful that this evolutionary leap might be at hand, and the key is to follow deal flow and clinical trial successes of the smaller market entrants. I will explore the prospects for several companies below as well as illuminate the path that larger companies have forged before them. History generally leaves clues and Amgen’s (AMGN) purchase of BioVex last year for close to $1 billion creates a blueprint for the structure and evolution
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