Thursday, October 31, 2013

The Five Worst Performing Stocks on the Dow

The Dow Jones Industrial Average is up more than 19% so far this on the year. The DJIA, an index of 30 stocks from some of the country's largest companies, is a widely followed indicator of the stock market's performance.

The Dow's growth in recent months has largely been a result of the country's improving economy. Unemployment continues to fall, the housing market is recovering and the country's largest companies, including Nike, Boeing and American Express, have benefited from recovering consumer confidence. As a further boon to the market, interest rates remain low and quantitative easing has, according to many market followers, driven investors' appetites for stocks.

Click here to see The Five Worst Performing Stocks on the Dow

However, several DJIA stocks simply are not living up to the performance of the broader stock market. 24/7 Wall St. reviewed year-to-date share price changes and dividend yields for all 30 Dow Jones stocks. We identified the five companies that have posted the worst total returns, after accounting for dividends paid, for the year.

Top Dividend Stocks To Watch Right Now

Each of these five companies has failed to deliver strong returns for different reasons. Some of the companies have been hampered by their international operations. IBM, which is down nearly 6% for on the year, has seen slowing demand for its hardware, especially from China. Mining business at Caterpillar, shares of which are down more than 6%, has suffered from the end of the global commodities boom.

However, some companies also face challenges domestically. Coca-Cola has had to contend with a decline in soda drinking by Americans. Exxon Mobil's refining profits have slipped as the difference in price between domestic and foreign oil has narrowed.

To identify the worst-performing stocks in the Dow Jones Industrial Average, 24/7 Wall St. reviewed total return figures, which include price changes and dividends paid, for each of the 30 component stocks. The DJIA is a price-weighted index, meaning the relative prices of each component affect their weighting in the index. Total return figures for individual companies are are from FINVIZ.

These are the five worst performing stocks on the Dow.

Wednesday, October 30, 2013

Ways to Save Money at Walt Disney World

Whenever I'm traveling, it's a safe bet I'm going to Disney World, near Orlando, Fla. I've averaged four to five trips a year over the past decade, and I've learned a thing or two about saving money. There's no reason anyone should spend a fortune to see Mickey & Co. Here are my secrets.

Stay Off-Property. There are certainly affordable rooms on Walt Disney World property. At Disney's All-Star resorts, standard rooms go for as low as $96 per night during off-peak times. But it's important to consider just what you get in most of Disney's value hotel rooms: two beds, a bathroom and a TV. If you don't plan to do anything in your room except sleep, and you want the convenience of staying on the property, check out the "value" tier Disney hotels for the lowest prices.

See Also: How to Visit New York City on a Budget

The biggest bang for your buck, however, can be found off-property in surrounding Lake Buena Vista, or neighboring Orlando and Kissimmee, where there's an abundance of affordable chain hotels. Consider a room similar to the one described above at a local Holiday Inn Express. An overnight stay there in early November would cost around $85 including breakfast, compared with $110 to $133 at the All-Star Disney hotels, no food included.

Check out the certified Walt Disney World Good Neighbor Hotels for off-property options, all of which also provide transportation to the parks.

Visit at Off-Peak Times. Crowds change with the seasons at Disney World. So do room rates. That $96 "value" room costs $198 during the Christmas season. Likewise, a standard "moderate" tier room jumps from $198 on an off night to $284 on New Year's Eve.

Generally, Disney's off seasons fall between holidays and school vacations. The easiest way to see when the hotels will be at their cheapest is to consult the online pricing calendar. First, select a hotel on Disney's booking Web site. Then pick a room type. To the right of each, under the price, is a blue link to "view price per night." Click that to reveal a pop-up window, then click on "view seasonal pricing" in the lower left. This calendar will let you view room prices through December 2014.

Keep Your Eyes Peeled for Savings Promos. Disney World runs a number of promotions for money-saving vacation packages throughout the year. So, if you're set on staying on-property, try to snag one of these. Right now, the offer is for a five-night/six-day package for a family of four that includes tickets, the Disney Dining Plan and a standard room at select Disney moderate resort hotels for $2,606. When compared with the same trip a la carte, that's up to a $600 savings. Check back with Disney's Web site periodically to stay on top of new deals.

Visit Only One Park Per Day. Whether you stay on or off-property, you'll save money by dedicating a whole day to each park. A three-day ticket, which allows admission to one park a day, costs $262, or about $87 per day for an adult (when booked separately from a hotel room). Purchasing the park hopper option, which lets you go into and out of each of the four parks as you please, adds an extra $59 per ticket or $84 if you want to tack on the water parks.

There's no real need to be able to hop, aside from a bit more flexibility in scheduling. And you will be able to go into and out of the same park throughout the day if need be. Just note that on major holidays and some days during the summer, one or all of the parks may close due to capacity crowds. In that case, you won't be able to get back in until some people leave.

Consider the Disney Dining Plan. Disney travel experts are split as to whether the DDP is a good value or not. I say, if you're set on staying on property, and you're healthy eaters, go for it. First, the basics: There are different DDP levels with varying meal allotments, and they are only available to guests staying at one of the Disney resorts. Adult prices apply to anyone 10 and older, the children's rate is for ages 3 through 9, and those under 3 can share food at no cost. Kids must order off the children's menu. The most basic (and cheapest) plans are the Quick-Service Dining Plan and the Dining Plan.

The Quick-Service plan includes credits for two counter-service meals and one snack per person per night of your stay. The Dining Plan includes credits for one counter-service meal, one table-service meal and one snack per person per night of your stay. One meal is defined as a full buffet at breakfast, lunch, or dinner, or an entrée, dessert and non-alcoholic beverage at lunch or dinner, and an entrée plus non-alcoholic drink at breakfast.

Note that you may use more than one day's worth of credits in a day, and that some dining experiences will require two meal credits. Gratuities are not included. All dining plans also include a souvenir mug that can be refilled for free, as often as you like during your stay, at your resort only.

Tuesday, October 29, 2013

Will News Corp. Rise Higher?

With shares of News Corp. (NASDAQ:NWSA) trading around $32, is NWSA an OUTPERFORM, WAIT AND SEE or STAY AWAY? Let's analyze the stock with the relevant sections of our CHEAT SHEET investing framework:

T = Trends for a Stock's Movement

News Corp. is a diversified global media company that operates in six segments: Cable Network Programming; Filmed Entertainment; Television; Direct Broadcast Satellite Television; Publishing; and Other. The company is involved in programming distribution through cable television systems and direct broadcast satellite operators; live-action and animated motion pictures distribution and licensing; operation of broadcast television stations and the broadcasting of network programming and in direct broadcast satellite business through its subsidiary, SKY Italia. News Corp. distributes information and entertainment through just about every medium possible which reinforces a powerful presence. As companies and consumers continue to search for entertainment and information at increasing rates, look for companies like News Corp. to see rising profits.

T = Technicals on the Stock Chart are Strong

News Corp. stock has been a big winner over the last few years. The stock has been digesting gains for a recent run and looks to be forming the right side of a base. Analyzing the price trend and its strength can be done using key simple moving averages. What are the key moving averages? The 50-day (pink), 100-day (blue), and 200-day (yellow) simple moving averages. As seen in the daily price chart below, News Corp. is trading above its rising key averages which signal neutral to bullish price action in the near-term.


(Source: Thinkorswim)

Taking a look at the implied volatility (red) and implied volatility skew levels of News Corp. options may help determine if investors are bullish, neutral, or bearish.

Implied Volatility (IV)

30-Day IV Percentile

90-Day IV Percentile

News Corp. Options




What does this mean? This means that investors or traders are buying a significant amount of call and put options contracts, as compared to the last 30 and 90 trading days.

Put IV Skew

Call IV Skew

July Options



August Options



As of today, there is an average demand from call buyers or sellers and low demand by put buyers or high demand by put sellers, all neutral to bullish over the next two months. To summarize, investors are buying a significant amount of call and put option contracts and are leaning neutral to bullish over the next two months.

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On the next page, let's take a look at the earnings and revenue growth rates and the conclusion.

E = Earnings Are Increasing Quarter-Over-Quarter

Rising stock prices are often strongly correlated with rising earnings and revenue growth rates. Also, the last four quarterly earnings announcement reactions help gauge investor sentiment on News Corp.'s stock. What do the last four quarterly earnings and revenue growth (Y-O-Y) figures for News Corp. look like and more importantly, how did the markets like these numbers?

2013 Q1

2012 Q4

2012 Q3

2012 Q2

Earnings Growth (Y-O-Y)





Revenue Growth (Y-O-Y)





Earnings Reaction





News Corp. has seen increasing earnings and revenue figures over the last four quarters. From these numbers, the markets have been upbeat about News Corp.'s recent earnings announcements.

P = Excellent Relative Performance Versus Peers and Sector

How has News Corp. stock done relative to its peers, Time Warner (NYSE:TWX), Walt Disney (NYSE:DIS), Viacom (NASDAQ:VIA), and sector?

News Corp.

Time Warner

Walt Disney



Year-to-Date Return






News Corp. has been a relative performance leader, year-to-date.


News Corp. is a multimedia giant that is able to reach and affect audiences all over the world. The stock has been a big winner over the last several years and is currently digesting gains for a strong run. Over the last four quarters, investors in the company have been upbeat as earnings and revenue figures have been rising. Relative to its strong peers and sector, News Corp. has been a year-to-date performance leader. Look for News Corp. to continue to OUTPERFORM.

Monday, October 28, 2013

This Once-A-Year Trading System Averages Double-Digit Returns

In a bear market, diversification reduces losses. In a bull market, diversification can reduce your gains. This is the trade-off all investors face. The price of decreased risk is almost always lower returns. Despite its disadvantages, holding a diversified rather than a concentrated portfolio is usually the best choice for an individual investor.

Diversification is also the best choice for many institutional investors, including the managers of large endowment funds at colleges and charities. Managers of these funds must balance current income needs and demands for growth of capital that will allow the institution to continue meeting its goals in the future.


Historically, diversification has been the best way to strike this balance.

One of the research papers we recently read showed how profitable it would be to perfectly time the markets. If you could invest each year in the asset class that would prove to be that year's biggest winner, $10,000 would have grown to $959 million in 39 years. That is an average annual return of 34.2%.

Of course that gain is impossible because it requires knowing in advance which asset class will be the biggest winner. We can never know what will happen in the markets, but we do know what happened in the past -- and that can be profitable information.

This paper showed how you could trade once a year, buying the asset class that had the largest one-year gain in the previous year. The average annual return from this once-a-year trading system was 13.9%, and $10,000 would have grown to $1.6 million in the 29 years beginning in 1970.

This strategy looked at seven different asset classes, all available as exchange-traded funds (ETFs).

-- iShares Dow Jones US Real Estate (NYSE: IYR)
-- iShares Russell 2000 Index (NYSE: IWM)
-- PowerShares DB Commodity Index Tracking (NYSE: DBC)
-- SPDR S&P 500 (NYSE: SPY)
-- Vanguard Total World Stock Index ETF (NYSE: VT)
-- iShares Barclays 7-10 Year Treasury (NYSE: IEF)
-- iShares Barclays 1-3 Year Treasury Bond (NYSE: SHY)

The rules for this trading system are simple. Every January, calculate the total return for each ETF over the past 12 months. If the current holding is no longer the leader, sell it and replace it with the ETF that is the new leader.

That's the entire system. For such a simple strategy, the returns are impressive. The downside, however, is this system does not create a diversified portfolio since it is invested in only one ETF at a time.

To create a diversified portfolio, we recommend making the strategy just a little more complicated. Divide your initial investment into eighths and buy each of the seven ETFs with one eighth of your portfolio. Use the remaining eighth to apply this momentum rotation strategy. In addition to placing the momentum trade once a year, also rebalance your portfolio at that time. This would have gained an average of 10.6% a year since 1970.

You could also use options for the momentum strategy and increase your returns significantly.
With this variation of the strategy, instead of investing one eighth of your account into the ETF with the highest total return in the past year, you buy long-term call options on that ETF.

Call options give you the right but not the obligation to buy the underlying ETF at an agreed-upon price (known as the exercise price) before the expiration date of the option. You can find options with one year or more to expiration on most of the ETFs used in this strategy, and options with at least to six months to expiration will be available on all of them.

Options provide leverage, and you can see significantly larger gains when the options trades turn out to be winners. The risk of the option is limited to the amount you paid for the call.

At-the-money options with about a year to expiration should cost about 6% to 10% as much as the ETF would. We will use 10% in this model. That option should deliver an average gain of about 30% over time. When combined with the gains from the diversified portfolio, your total returns should be about 12.2% a year.

The rules are to allocate 12.8% of your portfolio to each of the seven ETFs identified above and rebalance these positions once a year. Use the rest of your portfolio to buy long-term options on the ETF that has the largest total return in the past year. Use call options with an exercise price near the current market price of the ETF.

We understand this system will require a little effort to implement, but the results should reward investors who make that effort.

Regardless of which system you prefer, you should consider maintaining a simple-to-manage diversified ETF portfolio and use options to boost the returns of that portfolio.

This article originally appeared on
This One-Trade-A-Year System Averages 12.8% a Year in Gains

P.S. -- Amber Hestla-Barnhart is a former Military Intelligence Analyst with an eye for seeing what others miss. She now applies her unique training to the options world where she's uncovered a glitch that could be worth thousands of dollars per year to traders. To see what she's uncovered, click here.

Sunday, October 27, 2013

Top Medical Companies To Own In Right Now

SAIC (NYSE: SAI  ) is helping to keep America safe from chemical and biological weapons. The only question is how much help it will be allowed to give.

On Monday, SAIC announced that it has won one of "multiple" awards to provide program, engineering, medical, and technical support services�to the government's Joint Program Executive Office for Chemical and Biological Defense. This multiple-award indefinite-delivery/indefinite quantity (IDIQ) contract has an initial three-year base period of performance. If necessary, it may be extended by as many as two one-year "options" periods, and a final six-month option as well -- five and a half years total, if all options are exercised. In that event, says SAIC, the total value of the contract could reach $495 million.

Not all of this money may go to SAIC, however. Indeed, given that SAIC says 42 contractors have won awards similar to the one SAIC announced Monday, it seems likely that quite a lot of the contract's funding will go to entities other than SAIC.

Top Medical Companies To Own In Right Now: Curis Inc.(CRIS)

Curis, Inc., a drug discovery and development company, focuses on the research and development of cancer therapeutics. The company, under collaboration with Genentech, Inc., is conducting a pivotal Phase II clinical trial on its lead molecule, GDC-0449 in advanced basal cell carcinoma patients, as well as various Phase II clinical trials in first-line metastatic colorectal cancer and advanced ovarian cancer patients. It is also evaluating CUDC-101, a small molecule that is in a Phase I clinical testing and is designed to target histone deacetylase, epidermal growth factor receptor, and epidermal growth factor receptor 2. In addition, Curis has a development candidate, Debio 0932, which is a Heat Shock Protein 90 or Hsp90 inhibitor. The company holds a license agreement with Debiopharm related to its Hsp90 technologies. Further, it involves in preclinical testing for the development of candidates from its targeted cancer programs. The company was founded in 2000 and is base d in Lexington, Massachusetts.

Top Medical Companies To Own In Right Now: Quintiles Transnational Holdings Inc (Q)

Quintiles Transnational Holdings Inc. is a provider of biopharmaceutical development services and commercial outsourcing services. The Company operates in two segments: Product Development and Integrated Healthcare Services. The Company�� Product Development segment operates as a contract research organization (CRO) focused primarily on Phase II-IV clinical trials and associated laboratory and analytical activities. The Company�� Integrated Healthcare Services segment is a global commercial pharmaceutical sales and service organizations and Integrated Healthcare Services provides a range of services, including commercial services, such as providing contract pharmaceutical sales forces in geographic markets, as well as healthcare business services for the healthcare sector, such as outcome-based and payer and provider services. In August 2012, it acquired Expression Analysis, Inc.

Product Development

Product Development provides services and that allow biopharmaceutical companies to outsource the clinical development process from first in man trials to post-launch monitoring. The Company�� service offering provides the support and functional necessary at each stage of development, as well as the systems and analytical capabilities. Product Development consists of clinical solutions and services and consulting. Clinical solutions and services provides services necessary to develop biopharmaceutical products, including project management and clinical monitoring functions for conducting multi-site trials (generally Phase II-IV) (core clinical) and clinical trial support services that improve clinical trial decision making and include global laboratories, data management, biostatistical, safety and pharmacovigilance, and early clinical development trials, and strategic planning and design services that improve decisions and performance. Consulting provides strategy and management consulting services based on life science and advanced analytics, as well as regulatory and comp! liance consulting services.

The Company competes with Covance, Inc., Pharmaceutical Product Development, Inc., PAREXEL International Corporation, ICON plc, inVentiv Health, Inc. (inVentive), INC Research and PRA International.

Integrated Healthcare Services

Integrated Healthcare Services provides the healthcare industry with both geographic presence and commercial capabilities. The Company�� commercialization services are designed to accelerate the commercial of biopharmaceutical and other health-related products. Service offerings include commercial services (sales representatives, strategy, marketing communications and other areas related to commercialization), outcome research (drug therapy analysis, real-world research and evidence-based medicine, including research studies to prove a drug�� value) and payer and provider services comparative and cost-effectiveness research capabilities, clinical management analytics, decision support services, medication adherence and health outcome optimization services, and Web-based systems for measuring quality improvement.

The Company competes with inVentiv, PDI, Inc., Publicis Selling Solutions, United Drug plc, EPS Corporation and CMIC HOLDINGS Co., Ltd.

Top 10 Blue Chip Companies To Invest In Right Now: StemCells Inc (STEM)

StemCells, Inc. (StemCells), incorporated in August 1988, is engaged in the research, development, and commercialization of stem cell therapeutics and related tools and technologies for academia and industry. The Company is focused on developing and commercializing stem and progenitor cells as the basis for therapeutics and therapies, and cells and related tools and technologies to enable stem cell-based research and drug discovery and development. The Company�� primary research and development efforts are focused on identifying and developing stem and progenitor cells as potential therapeutic agents. The Company has two therapeutic product development programs, including its CNS Program, which is developing applications for HuCNS-SC cells, its human neural stem cell product candidate, and its Liver Program, which is characterizing the Company�� human liver cells as a therapeutic product.

CNS Program

The Company in its CNS Program, is in clinical development with its HuCNS-SC cells for a range of disorders of the central nervous system. The CNS includes the brain, spinal cord and eye. In February 2012, the Company had completed a Phase I clinical trial in Pelizeaus-Merzbacher Disease (PMD), a fatal myelination disorder in the brain.

The Company�� CNS Program is focused on developing clinical applications, in which transplanting HuCNS-SC cells protect or restore organ function of the patient before such function is irreversibly damaged or lost due to disease progression. The Company�� initial target indications are PMD, and more generally, diseases in which deficient myelination plays a central role, such as cerebral palsy or multiple sclerosis; spinal cord injury, disorders in which retinal degeneration plays a central role, such as age-related macular degeneration or retinitis pigmentosa. The Company�� product candidate, HuCNS-SC cells, is a purified and expanded composition of normal human neural stem cells. Its HuCNS-SC cells can be directly transp! lanted.

Liver Program

Liver stem or progenitor cells offer an alternative treatment for liver diseases. A liver cellular therapy or cell-based therapeutic provide or support liver function in patients with liver disease. The Company held a portfolio of issued and allowed patents in the liver field, which cover the isolation and use of both hLEC cells and the isolated subset, as well as the composition of the cells themselves.

The Company�� range of cell culture products, which are sold under the SC Proven brand, includes iSTEM, GS1-R, GS2-M, RHB-A, RHB-Basal, NDiff N2, and NDiff N2B27. Its iSTEM is a serum-free, feeder-free medium that maintains mouse embryonic stem cells in their pluripotent ground state by using selective small molecule inhibitors to block the pathways, which induce differentiation. RHB-A is a defined, serum-free culture medium for the selective culture of human and mouse neural stem cells and their maintenance and expansion as adherent cell populations. RHB-Basal is a defined, serum-free basal medium. When supplemented with specific growth factors, this media is formulated for the propagation and differentiation of adherent neural stem cells. RHB-Basal can also be tailored to specific-cell type requirements by the addition of customer preferred supplements.

The Company�� NDiff N2 is a defined serum-free scell culture supplement for the derivation, maintenance, expansion and/or differentiation of human and mouse embryonic stem (ES) cells and tissue-derived neural stem cells supplement. Its NDiff N2-AF is a serum-free and animal component-free version of NDiff N2. Its NDiff N2B27 is a defined, serum-free medium for the differentiation of mouse embryonic stem cells to neural cell types. NDiff N27-AF is a serum-free and animal component-free version of NDiff N27. Its GS1-R is a serum-free media formulation shown to enable the derivation and long-term maintenance of true, germline competent rat embryonic stem cells without the add! ition of ! cytokines or growth factors. Its GS2-M is a defined, serum- and feeder-free medium for the derivation and long-term maintenance of true, germline competent mouse iPS cells.

The Company also markets a number of antibody reagents for use in cell detection, isolation and characterization. These reagents are also under the SC Proven brand and it includes STEM24, STEM101, STEM121 and STEM123. Its STEM24 is a human antibody that recognizes human CD24, also known as heat stable antigen (HSA), a glycoprotein expressed on the surface of many human cell types, including immature human hematopoietic cells, peripheral blood lymphocytes, erythrocytes and many human carcinomas. Its CD24 is also a marker of human neural differentiation. Its STEM101 is a human-specific mouse antibody that recognizes the Ku80 protein found in human nuclei. Its STEM121 is a human-specific mouse antibody that recognizes a cytoplasmic protein of human cells. Its STEM123 is a human-specific mouse antibody that recognizes human glial fibrillary acidic protein (GFAP).

The Company�� Other products marketed under SC Proven include total cell genomic DNA (gDNA), RNA and protein lysate reagents purified from homogenous stem cell populations for intra-comparative studies, such as Epigenetic fingerprinting, Southern, Western and Northern blots, PCR, RT-PCR and microarrays. This range of purified stem cell line lysates includes mouse embryonic stem (ES) cells propagated in SC Proven 2i inhibitor-based GS2-M media and mouse ES cell-derived and fetal tissue-derived neural stem (NS) cells propagated in SC Proven RHB-A media.

Advisors' Opinion:
  • [By James E. Brumley]

    When an investor thinks of spinal-related stem cell stocks, usually a name like Neuralstem, Inc (NYSEMKT: CUR) or StemCells Inc (NASDAQ: STEM) comes to mind. And well they should. STEM has logged some amazing breakthroughs in the field of spinal cord repair, while CUR has done the same. Not all back problems are spinal cord related though. In fact, most back problems - and therefore the most opportunity - are bone and disc related problems. That's where a young gun like BioRestorative Therapies (OTCBB: BRTX) can step in and make stem cell waves. BRTX has developed an approach to rejuvenate and revive failing spinal discs, potentially ending pain for millions of back-pain sufferers, and circumventing expensive spinal surgeries that are in increasing burden on insurance companies.

  • [By John Udovich]

    The results of a recent Pew Center Poll regarding attitudes towards abortion and various forms of stem cell research could be a good sign for the stem cell industry along with small cap stem cell stocks like StemCells Inc (NASDAQ: STEM), NeoStem Inc (NASDAQ: NBS), Neuralstem, Inc (NYSEMKT: CUR),�International Stem Cell Corp (OTCMKTS: ISCO) and BioRestorative Therapies (OTCBB: BRTX). Basically, Americans think that having an abortion is a moral issue with 49% of American adults believing abortion is morally wrong, 23%�view it not as a moral issue and and 15% view it as morally acceptable. However and when Americans were asked about issues surrounding�human embryos, such as stem cell research or in vitro fertilization, as a matter of morality, their views were different.

Top Medical Companies To Own In Right Now: Spectrum Pharmaceuticals Inc.(SPPI)

Spectrum Pharmaceuticals, Inc., a commercial-stage biotechnology company, primarily focuses on oncology and hematology. The company engages in acquiring, developing, and commercializing a broad and diverse pipeline of late-stage clinical and commercial products. It markets Zevalin, a prescribed form of cancer therapy, radioimmunotherapy; and Fusilev, a novel folate analog formulation and the pharmacologically active isomer of the racemic compound, calcium leucovorin. The company?s drugs in late stage development include Apaziquone, an anti-cancer agent; and Belinostat, a histone deacytelase inhibitor. Its drugs in development also include Ozarelix a luteinizing hormone releasing hormone antagonist, which is in Phase II clinical stage; SPI-1620, a peptide agonist of endothelin B receptors, which is in Phase I clinical stage; and RenaZorb, a lanthanum-based nanoparticle phosphate binding agent, which is in preclinical stage. The company was formerly known as NeoTherapeutics, Inc. and changed its name to Spectrum Pharmaceuticals, Inc. in December 2002. Spectrum Pharmaceuticals, Inc. was founded in 1987 and is based in Henderson, Nevada.

Advisors' Opinion:
  • [By Rich Smith]

    Spectrum Pharmaceuticals (NASDAQ: SPPI  ) has found itself a new Executive Vice President, a new Chief Financial Officer, and a new Principal Accounting�Officer. They're all the same person.

  • [By Keith Speights]

    Biotech stocks are highly volatile. A good example of this is Spectrum Pharmaceuticals (NASDAQ: SPPI  ) . Spectrum rode a wave of generic leucovorin shortages in late 2010 and early 2011 to stock gains of more than 170%. Shares then plunged more than 30% from July through September 2011. But the ride wasn't over yet.

Top Medical Companies To Own In Right Now: Scancell Holdings PLC (SCLP.L)

Scancell Holdings PLC is a United Kingdom-based company. The Company�� principal activity of the consists of the discovery and development of monoclonal antibodies and vaccines for the treatment of cancer. In April 2012, the Company completed recruitment to the Phase 1 clinical trial of SCIBI. In May 2012, the Company commenced recruitment and treatment of the first patient in the second part of it Phase 1/2 clinical trial of SCIBI. The Phase 2 part of the trial is conducted in five United Kingdom centers in Nottingham, Manchester, Newcastle, Leeds, and Southampton. On August 15, 2012, the Company announced the development of a platform technology, Moditope.

Saturday, October 26, 2013

Will the New Honda Fit Get the World's Best Mileage?

In many ways, Honda's (NYSE: HMC  ) subcompact Fit is a classic Honda: It's small and fuel-efficient, but roomy and well-thought-out, with an endearing look that owners love. But the current car is reaching the end of its life, and competitors like Ford's (NYSE: F  ) Fiesta have arguably outpaced it in some ways.

Honda won't show the all-new Fit until this fall, but already some details are leaking, including this one: Honda expects the hybrid version to be Japan's -- and maybe the world's -- most fuel-efficient car.

In this video, contributor John Rosevear looks at what we know about the new version of Honda's well-regarded subcompact -- and at how the new version is likely to be received in the U.S. and abroad.

More expert advice from The Motley Fool There's a new product hitting Chinese markets that's sweeping through the booming Chinese middle class: foreign cars. As the demand for cars grows in the biggest market in the world, so too could your profits if you check out these two automakers to buy for a surging Chinese market. To learn more about them, just click here now!

Friday, October 25, 2013

Unless You Own a Business, You've Missed Out on the Recovery

The National Employment Law Project released a report showing just how slow of a recovery it has been since the Great Recession. It's been so slow, in fact, that wages have moved backward: Averaged across every job, real median hourly wages have fallen 2.8% since 2009:

Source: "The Inequality of Declining Wages During the Recovery," National Employment Law Project.

And the lowest earners, including restaurant cooks, food preparation workers, and housekeepers, have taken the brunt of declines, with median wages dropping more than 5%.

With all this talk of recovery, yet no improvement in our bank accounts, you may have sought professional help to sort out this contradiction -- after all, psychiatrists are one of the few professions actually earning more (about 8% more) since 2007. But it's not a mystery: With wages falling and corporate profits still near historical highs as a proportion of GDP, it's clear that unless you have a share in the profits of a business, the recovery has passed you over.

Here's why.

Supply and demand
First, to get a wider picture of wages, we can look at wages as a percentage of economic activity, here measured by GDP:

From a high near 54% in 1970, wages now amount to only 44% of GDP. This fell as low as 43.6% in the third quarter of last year -- the lowest reading since the Department of Commerce began measuring wages in 1947.

Companies can get away with paying less in wages because the supply of labor outstrips the demand. The widely reported unemployment rate still sits at a not-horrible 7.6%. But the unemployment rate that includes the "marginally attached," or those unemployed who have looked for work in the past 12 months, as well as those working part-time jobs but desiring full time work, hovers around a dizzying 14%:

Simply put, if a company knows you don't have much of a chance of finding a different job, it also knows you'll stick around even if your pay is cut.

The good news is that you don't have to own a business outright to grab a share of the high corporate profits. After all, a share of stock entitles you to a share of those profits.

And how have corporations performed over the same time frame? the Dow Jones Industrial Average (DJINDICES: ^DJI  ) is up nearly 80% since 2009. Part of this is because earnings for the index improved from $256 at the beginning of 2009 to $937 today. The S&P 500  (SNPINDEX: ^GSPC  ) is up nearly 90% over the same time, with its own earnings improving from $13 in 2009 to $87 in 2012. 

The bad news: A majority of Americans don't own any stocks and therefore completely missed the upswing in the market. These Americans are simply on the losing end of the tug-of-war between corporate profits and wages. One thing that can end decreasing wages -- a stronger labor market -- seems a long way off in the distance.

For investors, corporations may find it difficult to keep squeezing higher profits from lower wages, and the fight to increase corporate earnings will have to face already historically high earnings and a lack of consumer spending power.

If you want to help hedge your declining wages and are one of the 53% of Americans without any stock holdings, take a look at our brand-new special report, "Your Essential Guide to Start Investing Today." In it, the Motley Fool's personal-finance experts show you why investing is so important and what you need to do to get started. Click here to get your copy today -- it's absolutely free.

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Thursday, October 24, 2013

Top 5 Energy Stocks To Buy For 2014

NEW YORK (TheStreet) -- On Friday, U.S. Environmental Protection Agency Administrator Gina McCarthy announced new coal-burning electric plants will have limits on the amount of carbon dioxide they emit into the air. The announcement wasn't unexpected after President Obama announced plans to limit greenhouse gases.

However, the results on your portfolio and electric bill may be.

What happens when you mix a Boston Clean Air Task Force, EPA, Department of Energy, Sierra Club, Mississippi Public Service Commission, White House limits on greenhouse-gas emissions and a new carbon capturing electric power plant by Southern Co (KBR)?

Lawsuit after lawsuit, a billion dollars in cost overruns, taxpayer subsidies and the most expensive coal plant to operate causing electric rates to skyrocket, if this becomes the norm. The new project is called Plant Ratcliffe by Southern Co. Plant Ratcliffe is quite the boondoggle, but proponents say it always costs more to build the first one and costs will come down as the technology improves. More plants are in the planning stages and may bring a needed shot in the arm to mining stocks. Alpha Natural Resources (ANR), Walter Energy (WLT), Arch Coal (ACI), Cliffs Natural Resources (CLF), Peabody Energy (BTU), and James River Coal (JRCC) are companies that may benefit from increased demand for coal. Not all coal or coal companies are equal, so it's crucial to discriminate based on your investment time-horizon goals. With that said, the announcement should have been followed by a deep sell-off in coal and utility related stocks. But something happened. Or, rather, didn't happen. The above coal stocks didn't sell off tremendously and are largely moving along with the rest of the market today. This is noteworthy because stocks don't bottom on good news, they reach a bottom on awful news. Let me explain: When a stock chart continues trending lower, what you're witnessing is investors throwing in the towel and moving on. Leaving aside bankruptcies for a moment, almost all stocks have a core group of investors that are commonly known as the "strong hands." A stock is at the bottom when the weak hands are gone. At some point, distressing news (like an unfavorable EPA announcement regarding coal) hits the wire and the related stock or stocks react with little or no movement. This is what we are witnessing right now in coal-related companies.

Top 5 Energy Stocks To Buy For 2014: Canadian Solar Inc.(CSIQ)

Canadian Solar Inc. engages in the design, development, manufacture, and sale of solar power products in Canada and internationally. The company offers solar cell and solar module products that convert sunlight into electricity for various uses. Its products include a range of standard solar modules for use in a range of residential, commercial, and industrial solar power generation systems. The company also designs and produces specialty solar modules and products consisting of customized modules that its customers incorporate into their products, such as solar-powered bus stop lighting; and specialty products, such as portable solar home systems and solar-powered car battery chargers. In addition, it sells solar system kits, a package consisting of solar modules produced by it and third party supplied components, such as inverters, racking system, and other accessories, as well as implements solar power development projects. The company sells its products under the Canad ian Solar brand name. Canadian Solar Inc. offers its standard solar modules through a direct sales force and sales agents primarily to distributors, system integrators, and original equipment manufacturer customers, as well as to solar projects; and specialty solar modules and products to the automotive, telecommunications, and light-emitting diode lighting sectors. The company was founded in 2001 and is based in Kitchener, Canada.

Advisors' Opinion:
  • [By Paul Ausick]

    Chinese solar companies are a different story. Many manufacture their own silicon wafers and sell silicon to other makers. Trina Solar Ltd. (NYSE: TSL), LDK Solar Co. Ltd. (NYSE: LDK), JA Solar Holdings Co. Ltd. (NASDAQ: JASO) and Canadian Solar Inc. (NASDAQ: CSIQ) all manufacture and sell solar ingots, wafers or cells.

  • [By Eric Volkman]

    Start scratching names off the asset list of Canadian Solar (NASDAQ: CSIQ  ) . The company announced that it has closed the sale of Brockville 1, a 10 megawatt AC solar power plant. The buyer is TransCanada (NYSE: TRP  ) , and the plant is one of nine that TransCanada will ultimately take over from its national peer. All told, the nine plants have a combined capacity of 86 megawatts.

  • [By Travis Hoium]

    Canadian Solar (NASDAQ: CSIQ  ) made a big splash this week by announcing a partnership with Samsung Renewable Energy to build manufacturing capacity in Canada. The venture will supply modules to at least 200 MW worth of projects Samsung is building and will probably grow that base in the future. �

Top 5 Energy Stocks To Buy For 2014: WaterFurnace Renewable Energy Inc (WFIFF.PK)

WaterFurnace Renewable Energy, Inc. specializes in the design, manufacture and distribution of geothermal and water-source systems. It�� the United States subsidiary companies are WaterFurnace International, Inc. (WaterFurnace) and LoopMaster International, Inc. (LoopMaster). In December 2010, it incorporated two Australian subsidiaries: WaterFurnace International Asia Pacific Pty. Ltd. (WaterFurnace Asia Pacific) and Hyper WFI Pty. Ltd. (Hyper WFI). WaterFurnace designs, manufactures and distributes geothermal water source heating and cooling systems for residential, commercial and institutional buildings. LoopMaster installs geothermal loops for residential applications, does commercial conductivity testing and provides design and installation assistance. Hyper WFI designs, develops and builds devices that limit the inrush current, which electric motors draw upon start up. On January 21, 2011, the Company acquired inventory and fixed assets from Binary Engineering Pty. Ltd.

Top Blue Chip Companies To Buy Right Now: Transocean Inc.(RIG)

Transocean Ltd. provides offshore contract drilling services for oil and gas wells worldwide. It offers deepwater and harsh environment drilling, oil and gas drilling management, and drilling engineering and drilling project management services. The company also offers well and logistics services. In addition, it engages in oil and gas exploration, development, and production activities primarily in the United States offshore Louisiana and Texas, and in the United Kingdom sector of the North Sea. As of February 10, 2011, the company owned, had partial ownership interests in, and operated 138 mobile offshore drilling units, including 47 high-specification floaters, 25 midwater floaters, 9 high-specification jackups, 54 standard jackups, and 3 other rigs, as well as 1 ultra-deepwater floater and 3 high-specification jackups under construction. Transocean Ltd. was founded in 1953 and is based in Zug, Switzerland.

Advisors' Opinion:
  • [By Taylor Muckerman and Joel South]

    In fast-growing markets, its not always the biggest company that shows the greatest improvement. While size isn't the only reason that Transocean's (NYSE: RIG  ) recent quarter underwhelmed, it certainly helped. Following on the heels of many of its peers, displaying only 4% growth in quarterly revenue just didn't measure up.�

  • [By Arjun Sreekumar]

    At Transocean (NYSE: RIG  ) , for instance, investor Carl Icahn is putting pressure on the company to raise its dividend to $4 per share, which he believes will improve capital allocation and provide a boost to its stock price. But Transocean's board suggests that Icahn's recommendation, though it may boost short-term returns, could potentially jeopardize the company's long-term returns and viability.�

Top 5 Energy Stocks To Buy For 2014: Williams Partners L.P.(WPZ)

Williams Partners L.P. focuses on natural gas transportation, gathering, treating and processing, storage, natural gas liquid fractionation, and oil transportation activities in the United States. The company operates in two segments, Gas Pipeline, and Midstream Gas and Liquids. The Gas Pipeline segment owns and operates approximately 13,900 miles of pipelines with annual throughput of approximately 2,700 trillion British thermal units of natural gas and delivery capacity of approximately 13 million dekatherms of gas. This segment also owns interests in joint venture interstate and intrastate natural gas pipeline systems. The Midstream Gas and Liquids segment includes natural gas gathering, processing, and treating facilities; and crude oil gathering and transportation facilities that serve the producing basins in Colorado, New Mexico, Wyoming, the Gulf of Mexico, and Pennsylvania. Williams Partners GP LLC serves as the general partner of the company. Williams Partners L.P . was founded in 2005 and is based in Tulsa, Oklahoma.

Advisors' Opinion:
  • [By Stone Fox Capital]

    Williams has one of the leading energy infrastructures in North America. It owns interests in, or operates, 15,000 miles of interstate gas pipelines, 1,000 miles of NGL transportation pipelines, and more than 10,000 miles of oil and gas gathering pipelines. It owns more than 70% of Williams Partners L.P. (WPZ), one of the largest diversified energy master limited partnerships.

Top 5 Energy Stocks To Buy For 2014: Precision Drilling Corp (PDS)

Precision Drilling Corporation (Precision) is a provider of contract drilling and completion and production services primarily to oil and natural gas exploration and production companies in Canada and the United States. The Company operates in two segments: Contract Drilling Services, and Completion and Production Services. In Canada, the Contract Drilling Services segment includes land drilling services, directional drilling services, procurement and distribution of oilfield supplies and the manufacture and refurbishment of drilling and service rig equipment, and the Completion and Production Services segment includes service rigs for well completion and workover services, snubbing services, camp and catering services, wastewater treatment services and the rental of oilfield surface equipment, tubulars, well control equipment and wellsite accommodations.

Tuesday, October 22, 2013

High Yield: Stocks or Bonds?

A few weeks ago, CAPS player Valyooo started a lively debate with a blog entry asking for opinions on stocks vs. high-yield bonds. Since then, the Fed has hinted that the easy-money flow might be slowed a bit and interest rates have climbed. Let's do a little digging to try and find an answer, or at least add some color to the question.

The junk
First up, some high-yield or junk bonds. Junk bonds carry low credit ratings and unlike treasuries or high-grade corporates, there is a non-negligible risk of default. Therefore, investors demand higher interest rates because of the greater risk. A search at for corporate bonds with 5% to 10% yields and eight to 12 years until maturity turned up more than 500 hits, including the five in the table below. These five are issued by publicly traded companies and have credit ratings near the top of junk.


Price Per $100 Face Value


S&P Rating


Markwest Energy Partners















Goodyear Tire & Rubber





Advanced Micro Devices






Only Advanced Micro Devices lost money over the past year and analysts predict all five issuers will be profitable over their next fiscal year. All five companies are highly leveraged with debt, which doesn't leave a lot of room for a bad business cycle.

Junk bonds also offer a chance for capital appreciation if the issuing company's business improves to a point where the debt rating improves. For example, if the auto business grows and creates tire demand, Goodyear's business should improve and may get strong enough for an upgrade in the credit rating. If that happens, the bonds would trade up in price comparable to other issues with similar ratings.

The equities
I put the Fool's stock screener to work with the following settings to find some high dividend yields

Dividend yield greater than 5% Market capitalization greater than $1 billion Trailing price-to-earnings ratio positive and less than 20 CAPS rating of 4 or 5 (out of 5) stars

The screen returned 65 hits, including the five summarized below.

Company Name

Current Dividend Yield

Price-to-Earnings Ratio (TTM)


CAPS Rating

Annaly Capital Management (NYSE: NLY  )





AstraZeneca (NYSE: AZN  )



health care


El Paso Pipeline Partners (NYSE: EPB  )



basic materials


National Grid (NYSE: NGG  )





TAL International (NYSE: TAL  )





Source: Motley Fool stock screener.

Annaly is a real estate investment trust, or REIT, specializing in mortgage securities. As long as a REIT distributes at least 90% of its earnings to shareholders, it doesn't pay income tax, which is why the yields tend to be high. Annaly and other mREITs buy mortgage-backed securities using leverage, i.e., they borrow short-term money and use it to buy the MBS. Profits come from the spread between the cost of funds and the yield on the MBS. Annaly recently cut its dividend as the interest rate environment is getting tougher for mREITs.

Pharma firm AstraZeneca has a goal of maintaining or growing its dividend every year and targets 50% of earnings as its dividend payout. The payout ratio is currently at 62% and analysts are predicting decreasing earnings over the next few years.

El Paso is a natural gas pipeline master limited partnership and is a member of the Kinder Morgan family. The partnership operates its network of pipelines like a toll road for transporting natural gas. Its first distribution was recorded in January 2008 and every quarter since has been a higher payout.

National Grid is an electric and natural gas utility operating in the U.K. and northeast U.S. In a recent update to its dividend policy, the company is targeting dividend growth rate equal to inflation. Dividends are paid twice a year and recent history has been high yields with some small ups and downs. My Foolish colleague Jim Royal holds National Grid in his World's Best Dividend Portfolio.

Finally, TAL leases shipping containers. The company's dividend history shows a drop-off to a penny per share quarterly in 2009 and then back up and it's been climbing nearly every quarter since.

This is a tough call, the bonds and stocks both offer yields well above treasuries, high-quality bonds, or broad stock market indexes. There are different risk profiles for stocks and bonds, but the amount of risk seems comparable. I have to give the edge to stocks. I've got a long investing horizon and the potential for dividend growth and capital appreciation from stocks outweighs the stable income of the bonds.

Of the investments profiled, TAL is the most interesting. It's turned up in a few high-yield searches and recovering economies around the world should drive trade and demand for containers. I'll be adding TAL to my scorecard with an outperform CAPScall.

The bonds and stocks profiled should be considered representative of high-yield investments available in the market and not outright buy recommendations. Rewards from high yields typically come with risks like missed payments or defaults, market fluctuation, and dividend cuts.

If you're on the lookout for high-yielding stocks, The Motley Fool has compiled a special free report outlining our nine top dependable dividend-paying stocks. It's called "Secure Your Future With 9 Rock-Solid Dividend Stocks." You can access your copy today at no cost! Just click here.

Editor's note: An earlier version of this story had incorrect dividend yields for AstraZeneca and National Grid.

Monday, October 21, 2013

Obamacare website: 6 biggest contractors

obamacare website glitches

Top outside contractors received more than $200 million for their work on the troubled Obamacare websites.

NEW YORK (CNNMoney) It cost the federal government more than $300 million for outside contractors to set up the Obamacare website that has had so much trouble in its first three weeks of operation.

Most of that money has gone to six prime contractors that together have received more than $200 million in taxpayer funds, with the biggest single contractor receiving $88 million.

Overall, the government has spent $394 million setting up the website and the exchanges through which the public can buy health insurance, according to a report earlier this year from the General Accountability Office, a government watchdog. While not all the money went into the troubled websites, most of it did.

Top four Obamacare complaints

The largest contractor is CGI Federal Inc., the U.S. unit of a Canadian firm CGI Group (GIB). It received $88 million through last March 31. Its original $93.7 million contract runs through December, with three one-year option periods still possible.

A company spokeswoman said the terms of the contract prevent it from speaking about the details of its work.

Quality Software Services Inc. received $55.1 million to set up the data hub, according to the GAO report, while National Government Services Inc. a unit of WellPoint (WLP, Fortune 500), received $31.6 million for a consumer call center and providing premium aggregations. Neither company responded to a request for comment.

The MITRE Corp., which GAO lists as receiving $22 million for project management and information technology security, also said it could not comment on its contract.

Errors still bug Obamacare website   Errors still bug Obamacare website

Genova Technology received $16 million for information technology and Terremark Federal Group, a unit of Verizon (VZ, Fortune 500), received $15.5 million for cloud computing services. Neither of those companies had a comment on their contracts.

The problems with the site are getting increased attention in Washington now that the federal government shutdown has ended. President Obama said Monday that there is "no excuse" for the problems many people are having signing up for coverage on the website. He said there would be a "tech surge" of additional outside help to correct the problems.

The House Energy and Commerce committee has scheduled a hearing Thursday on implementation problems. Numerous Republican members of Congress are calling on Health and Human Services Secretary Kathleen Sebelius to resign or be fired. To top of page

Saturday, October 19, 2013

Ford's Hot F-150 Sales Look Set to Continue

Ford's top-of-the-line F-150 Limited is a very well-equipped truck, and a very profitable product for Ford. Photo credit: Ford Motor Co.

Good news for Ford (NYSE: F  ) , and for General Motors (NYSE: GM  ) and Chrysler as well: Pickup sales have been up sharply in recent months.

Sales of Ford's F-Series line, the F-150 and its Super Duty siblings, were up 31% in May – a huge jump that far outpaced the overall market's gains. What's more, F-Series buyers have been opting for more expensive pickups.

What's driving those trends? And what do they mean for Ford's bottom line?

A perfect economic storm for pickups – in a good way
There are a couple of things driving this big jump in pickup sales. One is what auto executives call "pent-up demand". The average age of a pickup in the US is around 11 years old right now. That's older than the historical norm, and it suggests that a lot of people and businesses have been waiting to buy – likely because the economy has been tight.

Another factor is the economy – specifically, that a couple of parts of the economy that are correlated with pickup sales have been picking up steam. Ford sales analyst Erich Merkle says that increases in new-home construction and oil-field services have both driven demand for Ford's pickups.

Top Canadian Companies To Own For 2014

Both are likely to continue to drive demand for some time. And that's a very good thing for Ford's profits.

Pickups are the fuel that powers Ford's engine
Ford divides its business into several geographical regions, and the one that has carried the business lately is North America. Sales, margins, and profits in North America have all been great for Ford. And pickups have a lot to do with that: Morgan Stanley analyst Adam Jonas said late last year that F-Series sales might account for as much as 90% of Ford's global profits.

There are two reasons why the F-Series is such a big contributor for Ford. First, these pickups sell in really big numbers. Ford sold over 70,000 F-Series pickups in May alone. For comparison, Ford sold 29,553 Fusions in May – and the Fusion is a hot seller. But the F-Series has been America's best-selling vehicle for over 30 years, and a very big part of Ford's business the whole time.

Second, full-sized pickups like the F-Series are very profitable products, with high margins. And those margins may be getting higher. Ford has been working hard to lower its reliance on incentives, which cut into profits.

Ford has also been working to increase average transaction prices by adding features and options packages that make buyers want to spend more. That strategy has been especially apparent on the F-Series, where Ford has introduced more upscale packages in recent years. And it's paying off with much-improved profit margins for Ford in North America.

Trends are moving in Ford's direction
Consider this: Ford's F-150 starts at $23,955 – but in top-of-the-line, limited trim, like the red truck shown above, the price tag is well north of $50,000. A lot of that difference is profit for Ford.

Analysts at Edmunds say that transaction prices for full-sized pickups have risen by 29% since 2005, while overall transaction prices for the industry as a whole have risen about 13%. A lot of that has to do with those extra options packages, a strategy that has been picked up (so to speak) by GM and Chrysler as well.

A Ford official was quoted by Automotive News recently as saying 30% of F-150 retail sales and more than half of Super Duty sales are "high series" versions like the Limited and King Ranch editions. Ford's strategy of encouraging buyers to pay more for more features appears to be working out well.

That success has been a big contributor to Ford's recent profits – and the trends favoring pickup sales should help Ford post more good numbers in coming quarters.

Strong pickup sales are just one of several good reasons to think that Ford still has big growth opportunities ahead. The Fool's premium Ford research service outlines those opportunities. If you're looking for some freshly updated guidance to Ford's prospects in coming years, you've come to the right place – click here to get started now.

Friday, October 18, 2013

Better Call Saul? Beware Legal Fee Rules


Breaking Bad Screening Lab in Hollywood - Saul...

Breaking Bad Screening Lab in Hollywood - Saul Goodman Bench (Photo credit: Pop Culture Geek)

Most people don't pay their lawyer in cash, and most lawyers aren't like Breaking Bad's Saul Goodman. Still, Saul has a kind of likable everyman quality that might make paying his fees not too painful. But however you pay legal fees and regardless of to whom, you can reduce their sting by observing six tax rules:

1. You Can't Deduct Personal Legal Bills. Personal means nondeductible, so the least desirable legal expenses are those of a purely personal nature. Examples include divorce or if a family member sues you for slander. But some legal matters of a personal nature can impact business or investment, making some deductible. See Stars and Their Legal Fees: Another Red Carpet?

2. Fees for Tax Advice Are Deductible. These are always deductible, whether for tax planning or disputes. Any tax qualifies, including income, estate, gift, property, sales, use and excise tax. Plus, despite the general rule on personal legal fees, tax fees are deductible even if the taxes are purely personal.

3. Business Legal Fees Are Deductible. Legal fees in a trade or business are deductible. However, some fees must be capitalized and added to the basis of assets. For example, say you are trying to sell your business and spend $50,000 in legal fees. Can you deduct it against your income or must you add it to your basis in your company? Usually the latter.

4. Investment Legal Fees Are Miscellaneous Itemized Deductions. If legal expenses don't relate to your business but only to investments, you can still deduct them but usually only as a miscellaneous itemized deduction. That means a 2% threshold, phase-outs and (worst of all) Alternative Minimum Tax (AMT). See AMT Problems For Attorney Fees Remain. However, as with business legal fees, some investment legal fees must be capitalized to the basis of the assets (such as legal fees for the purchase of investment property).

5. Contingent Lawyer's Fees Are Tricky. If you recover $1 million in a lawsuit and owe 40% to your contingent fee lawyer, you might assume you have $600,000 of income. How could you possibly have to pay tax on the full $1 million? Answer: In Commissioner v. Banks, the U.S. Supreme Court ruled you've got income when your lawyer is paid. That means you need to worry about how to deduct the fees.

In a pure personal physical injury case (say an auto accident or slip-and-fall), the entire recovery is tax-free so it doesn't matter whether you consider the recovery including legal fees or the net. Unfortunately, there is often confusion about what is tax-free.

6. Legal Fees in Employment Cases Are Deductible. Most employment settlements are either wages (on a Form W-2) or non-wage income (on a Form 1099). If your lawyer takes 40%, you still must include 100% in your income. However, you can deduct the legal fees "above-the-line," before reaching adjusted gross income. That means you have no tax—no regular tax and no AMT—on the legal fees. See More on Attorney Fees Post-Banks.

Bottom Line? Tax deductions alleviate some of the pain of legal bills. There are often several ways of allocating fees, so planning pays off.

You can reach me at This discussion is not intended as legal advice, and cannot be relied upon for any purpose without the services of a qualified professional.

Thursday, October 17, 2013

Markets Pop On Weak Dollar Events

China, Shutdown, Evans Contribute To Dollar's Pain

Global trade has an enormous impact on both the financial markets and worldwide economy. Therefore, when the currency that serves as the guidepost for valuing assets drops 1%, it impacts investor decisions across all asset classes. Thursday's tone was set in the currency pits as the U.S. Dollar Index (UUP) dropped more than 1%, which is a big move for a currency (see upper right corner in chart below). This week UUP was also turned back at a logical point of resistance (see line A), which provided further support for a weak-dollar friendly allocation.

Bad News Means More Stimulus

The Federal Reserve respects the impact of the dollar's value on emerging economies. An economic warning from China not only increased the odds of additional Chinese stimulus, but it also increased the odds of a Fed taper "push back." Stocks like the idea of postponing the tapering process. From Reuters:

China's exporters face a difficult time in coming months as demand from emerging markets slows, the Chinese trade ministry warned on Thursday after the latest trade data showed sales to Southeast Asia slowed sharply in September. But China is ready to take measures to support its exporters to ensure the trade sector grows 8 percent this year as targeted, Commerce Ministry Spokesman Shen Danyang said, allowing exporters to see "mild growth" in the next few months.

Shutdown May Shut Down Fed's Taper

The Fed desperately wants to back away from its non-traditional forms of monetary stimulus (QE). The news from China will not assist in that cause, nor will the recent government shutdown in the United States. From Bloomberg:

The government shutdown and debt-ceiling debate prompted Fitch Ratings on Oct! . 15 to put the U.S. on watch for a possible credit downgrade. S&P said yesterday the impact of the impasse was worsening by the day and had shaved at least 0.6 percent off of fourth quarter growth, taking $24 billion out of the economy. The ratings agency forecast 2 percent annualized growth in the fourth quarter, down from the 3 percent seen last month.

Three Cheers For "No Taper"

Charles Evans added some additional fuel to the weak-dollar fire when he cited a lack of data as another reason to postpone tapering of the Fed's bond buying program: From Bloomberg:

Federal Reserve Bank of Chicago President Charles Evans, an outspoken advocate of pressing on with Fed stimulus, said the central bank should not begin reducing the pace of asset purchases as the data used to gauge the economy's health stopped during the government shutdown. "Only the data can tell us how much progress we've made and they aren't saying much right now," Evans said today in a speech prepared for delivery in Madison, Wisconsin. "The data available in September were inconclusive, and since then, incoming information has been silenced with the federal government shutdown."

Investment Implications - Foreign Assets Benefit

In Thursday's ETF analysis, evidence is presented that supports increasing demand for assets that get a tailwind from a weak U.S. dollar, including emerging markets (EEM) and foreign stocks (EFA). Casting a wider economic net, our market model told us to start buying stocks last week even with the threat of a U.S. default. Wednesday, we continued with our incremental allocation shifts by adding some exposure to the energy sector. Thursday, we sat tight holding long positions in small caps (IJR), Europe (FEZ), emerging markets and technology (QQQ). The upper bounds of the bullish S&P 500 trend channel shown below may offer some resistance to the market's near vertical ascent.

Source: Markets Pop On Weak Dollar Events

Disclosure: I am long EEM, EFA, QQQ, IJR, FEZ. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article. (More...)

Wednesday, October 16, 2013

Advanced Micro Devices: Thursday Will Likely Be About Console Earnings Power And Server Revenues

This has been an interesting quarter for Advanced Micro Devices (AMD). As an AMD long, I was quite happy with the previous earnings report.

When I look at my AMD position, the things that concern me the most are:

DebtCompetition from Intel (INTC) and Nvidia (NVDA)Contractual obligations with Global Foundries

During the previous earnings call, none of my personal "trip wires" was triggered to give me cause for great concern, but the stock sold off sharply on what I felt was a positive report nonetheless.

In this article I would like to quickly touch on my concerns regarding AMD, look at each of its operating segments, and end with a conclusion as to why I feel positioning for Cloud growth and "console business earnings power" will likely be the focal points. Each heading will contain a short summary at the end to provide users a "condensed" version of that paragraph.


Points 1 and 3 go hand in hand, as some of the biggest penalties AMD has faced in recent times come from being unable to meet contractual obligations with Global Foundries.

During a previous article, I covered this in great detail. If you have not already done so, I recommend reading the paragraph (linked to here) that begins with, "This is the most important paragraph." This article also contains cut and pastes from previous financial statements from AMD, so it presents a source of consolidated information.

During the Q2 conference call, Mr. Kumar stated that about half of the contractual obligations had been met thus far for the year. During this call I am looking for an answer as to how much more obligation AMD has with Global Foundries during the 2013 FY. Another important point regarding the WSA (Wafer Supply Agreement) between AMD and Global Foundries is the details for 2014 pricing have yet to be announced, and are to be negotiated during 2013. News regarding 2014 pricing could be announced either tomorrow or shortly thereafter.

Regarding! point 2, specifically for CPUs, reports and data point to AMD gaining slight marketshare, or at a minimum maintaining market share, against rival chip maker Intel in the consumer PC space. Based on the timing of Intel's Bay Trail launch, AMD has had a full quarter essentially with no competition from Intel on the lower power chip front. Note this dynamic will change during Q4 as products based on Bay Trail come to market, and Bay Trail traction will be worth paying attention to. The following graphic is taken from AMD's Investor presentation from Q2, and is based on research data from Mercury research:

(click to enlarge)

I have explained before that I do not feel the power consumption characteristics for Bay Trail will be damning for AMD in the form factors where AMD is competing (I, II). While performing comparable workloads, Intel does have a performance/watt advantage to AMD, but Bay Trail is paired with a weak GPU. Consumers that would like to use small form-factor notebooks that are interested in any thing that uses the GPU heavily will be better served by a Kabini offering than a comparable Intel chip.

Regarding GPUs, a report by Jon Peddie Research points to AMD gaining traction in the discrete GPU market against Nvidia, and this market share was gained with an aging line of GPUs.

*Summary* As of the Q2 earnings report, AMD had extinguished half of its requirement for the year with Global Foundries, and has a competitive portfolio of products. Regarding debt, AMD needs to become cash flow positive soon in order meet debt obligations. AMD is expected to post a positive EPS this quarter, and this positive EPS is a starting argument for many longs. If AMD misses expectations, I expect to see a sell-off unless there is other good news to offset the miss.

Computing Solutions

AMD's major reportable operating segments are Computing Sol! utions an! d Graphics and Visuals.

Regarding Computing Solutions, AMD drove a positive surprise last quarter partially due to launches of its new low power Jaguar based chips, which I explained above I feel will remain competitive in small form factor notebooks and larger devices. During Q2 and Q3, there has been a steady roll-out of Kabini and Temash based devices from most of the major PC OEMs. Note that not all of PCs linked to on the Newegg website are based on the Jaguar cores, but it shows that Toshiba, Acer, Lenovo, Gateway, and HP are all featuring PCs using AMD hardware. Interestingly, reports also suggest that Dell will be launching a Jaguar based PC from AMD.

AMD also announced the quad-core A4-1350 Temash processor. I never had extremely high hopes for the dual core Temash part. On a performance basis, it would be competitive with Intel's out-going line of Atom processors. But based on reading through product reviews of Windows 8-based Z2760 (older) Atoms, the performance seemed to leave many consumers wanting. Some users only care about price, and dual core parts will serve Internet and media consumption needs of these users at low price points, but I do not think this market segment is that large given the large steps up in performance that can be obtained for minimal extra cash.

The A4-1350 is marketed using numbers that more closely resemble Intel's "scenario design power" power marketing numbers. The A4-1350 offers a quad-core part that operates in a 3W 'SDP' power envelope. I will not be surprised to finally see a tablet or two released with this part, as it brings quad-core performance to the table.

Regarding the overall PC market, IDC numbers show slight sequential growth from Q2 to Q3. Intel stated during its Q3 conference call the company could see signs of the PC market beginning to "bottom out," and saw PC CPU sales rise 4% sequentially. Given that IDC numbers point to a ~6M unit increase sequentially in PC shipments, and Intel has somewhere aroun! d 80% of ! the PC market share (~85%, but adjusted to account for data from Mercury research to make my guess more conservative), Intel likely saw ~3M extra PC CPU sales to PC OEMs (80% * 75M (~IDC Data from Q2 shipments) * 1.04 (increase in shipments as stated by Intel) = ~63M chips sold by Intel to PC OEMs). This would leave AMD with the remaining ~19M chip sales (81.6M per IDC numbers - my estimation for Intel's CPU chip sales in the most recent quarter). 19M chip sales to OEMs as compared with a somewhere around ~16M likely during Q2 represents a potential ~20% increase in CPU sales for AMD QoQ, and this is only accounting for PC OEMs, not chips purchased through retailers such as Newegg.

Unfortunately there is not enough resolution in the data to make accurate predictions and calculations, but the numbers do tell me there is a likely chance that higher PC CPU chip sales could give Computing Solutions revenue a boost.

Lastly, in my previous article outlining AMD as a potential cloud/microserver play going forward, I noted that AMD will now be offering Opteron versions of the SeaMicro servers. The SeaMicro server acquisition gives AMD the ability to sell directly to consumers, bypassing some of the hardware vendors. Depending on Verizon's purchase timeframe for the SeaMicro servers, this could impact Q3 financials, if the sales were not baked into Q2. The most detailed information I can find regarding the deal states that Verizon aims to start bringing these servers online during Q4 this year.

Another smaller, but potential positive factor in Q3 financials is the roll-out of Kaveri based motherboards. During Q2, chipset revenue was described as "flat sequentially." While not a major revenue driver, it could add a slight increase in revenue (think in orders of magnitude in the $10 million range).

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I feel AMD has a competitive portfolio! of produ! cts, especially among the client space. IDC numbers, combined with industry estimations of respective market shares, point to a potential for AMD to surprise with higher than expected PC division sales. Given that AMD stated during Q2 it expected PC sales to pick up in the back half of the year, it is hard to know how much of this rise was already baked into management's guidance. The SeaMicro acquisition and introduction of Opteron powered SeaMicro servers give AMD another potential avenue for higher revenues in the Computing Solutions group moving forward.

Graphics and Visual Solutions

This section will be shorter and will not be summarized.

The first stated reason for Graphics and Visual Solutions posting a break-even quarter during Q2, compared to $16M in profits during Q1, was lower console royalties. This should not come as a surprise as consumers are likely busy pre-ordering the next generation consoles. Both Sony and Microsoft have stated they expect record breaking sales for their new consoles. These record breaking sales should serve to offset the decline from Q2 in console royalties.

AMD has also refreshed its GPU lineup, and its "newest" products appear very competitive across all price points. I point out the word "newest" is because the products are by and large re-branded versions of its 7000 series GPUs. The only new GPU will be the Hawaii, but at this point I believe it is debuting too late to make much of an impact on Q3, and will likely be more of a factor in Q4. Note the Hawaii GPU is shaping up to be an excellent product based on leaked reviews, and looks to compete with Nvidia's $1000 Titan.

AMD also revamped its "Never Settle" campaign, removing two of the newer AAA titles (BioShock Infinite and Crysis 3), and reduced the number of games a user can receive across the various tiers of the program, while allowing users to pick and choose their free titles. During Q2, AMD stated it had lower ASPs for its GPU lines. Given the! new prod! ucts are typically price reduced from their 7000 series counterparts, I will not be surprised to see lower ASPs again this quarter across the GPU lines. Part of the lower ASPs could be offset by the changes in the Never Settle programs however.

Lastly, AMD has had record revenues in the previous few quarters in the workstation and server class GPU cards. Apple will be launching its refreshed MacPro update this fall, which will use more expensive workstation class cards based on AMD GPUs. This design win could continue to fuel record professional GPU revenues, based on how much inventory Apple builds for the launch, and the timing of the shipments from AMD to Apple.

Conclusion and Things To Watch For

During the previous earnings report, analyst questions regarding console margins were the focal point. Given this quarter we will finally see the direct impact of console silicon sales on AMD's financials, I suspect this again will be the focus. If AMD can silence arguments regarding the earnings power of consoles, I will view this as a huge positive for the share price; it would take some of the wind from the sails of the console margins argument.

Given the Verizon deal with AMD, I also expect a large focus to be on this going forward. The earnings call could shed some light on when we can expect to see the impact of server sales on AMD's financials, and possibly the magnitude.

My biggest concern remains contractual agreements with Global Foundries, so this will be my main concern going forward. I would also like to hear some insight as to how the Kaveri ramp is going. I expect to see AMD's new big-core CPU architecture to be a substantial revenue driver during 2014. Rumors I have read point to this APU being manufactured at Global Foundries. I would also like to see an update on where AMD stands with wafer purchase requirements.

Given AMD's strong second quarter in Computing Solutions, I expect sequentially improving PC sales to be a positive factor going into tomorrow. ! I think G! raphical and Visual solutions revenues (excluding consoles) will be fairly uneventful. The focus in this operating segment will be on console earnings power, and if AMD can manage to silence the critics, I will look for the stock to trend higher, barring any other bad news is announced and Washington does not overshadow the conference call.

Source: Advanced Micro Devices: Thursday Will Likely Be About Console Earnings Power And Server Revenues

Disclosure: I am long AMD. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article. (More...)

Additional disclosure: I own both options and stock in AMD, and actively trade my position. I may add or liquidate shares/calls at any time. I am also short NVDA through a very small number of puts. I may liquidate the NVDA puts within the next 72 hours.

Monday, October 14, 2013

Discover: Bank Stock Winner

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NEW YORK (TheStreet) -- Discover Financial Services (DFS) was the winner among major U.S. banks on Monday, with shares rising 2% to close at $52.81.

The broad indices strengthened late in the trading session, on the 14th day of the partial shutdown of the federal government. After Republican leaders in the House of Representatives late last week met with President Obama but failed to come to an agreement, Senate leaders have been working toward a compromise for the government to resume full operations and for an increase in the $16.7 trillion debt limit.

U.S. Treasury Secretary Jack Lew has repeatedly warned that the government could run out of money to pay its bills by Oct. 17, without an increase to the debt limit, although some analysts have said the government could probably go on operating until the end of October.

Politico on Monday reported that Senate Majority Leader Harry Reid (D., Nev.) had "privately" offered a deal to Senate Minority Leader Mitch McConnell (R., Ken) that would fully reopen all federal agencies at least until "mid-to-late December," while also extending the debt ceiling so that the government wouldn't hit its next debt limit until 2014. This would provide plenty of breathing room for negotiations between leaders of Congress and Obama, however, investors have learned to expect no deals until the last possible moment. Later Monday afternoon, Reid on the Senate floor said he was "very optimistic" he would reach a deal with McConnell. A meeting at the White House between Obama and congressional leaders scheduled for 3 p.m. ET, was postponed to allow the Senate leaders to continue negotiating. The KBW Bank Index (I:BKX) rose 0.6% to 63.92, with all but one of the 24 index components ending with gains. Earnings Season After a notable start to third-quarter earnings seasons for the largest U.S. banks -- with JPMorgan Chase (JPM) on Friday reporting a net loss of $380 million, or 17 cents a share, springing from a provision for litigation reserves that came to $7.2 billion after tax, or $1.85 a share -- none of the large U.S. banks reported on Monday.

JPMorgan also disclosed that its litigation reserves totaled $23 billion as of Sept. 30, and said that additional losses from regulatory investigations and lawsuits demanding the repurchase of securitized mortgage loans could total as much as $5.7 billion more. The company has been negotiating with the Department of Justice, federal bank regulators and states' attorneys general on a global settlement of numerous civil and criminal investigations of its mortgage lending, servicing and sales activities, with media reports saying the settlement could climb as high as $11 billion.

Despite the bad news on Friday, KBW analyst Christopher Mutascio's enthusiasm for JPMorgan is undiminished. "For those who can look through the large $9.2 billion litigation reserve build, the company's core performance was actually quite solid in a still challenging revenue growth environment," the analyst wrote in a note on Monday.

Mutascio reiterated his "outperform" rating for JPMorgan and stuck with his price target for the shares of $63, while maintaining his 2014 earnings estimate of $5.95 and his 2015 EPS estimate of $6.30.

The analyst also took solace in what JPMorgan CEO James Dimon repeatedly calls the company's "fortress balance sheet," writing "the one-time disclosure of the company's level of litigation reserves ($23 billion) should provide some comfort to investors when assessing the strength of the company's overall balance sheet. If you add the $23 billion in litigation reserves to the company's $195 billion in common capital, $17 billion in loan loss reserves and $2 billion in loan repurchase reserves, the company has nearly $240 billion in high quality capital/cushions." JPMorgan's shares on Monday rose 0.4% to close at $52.69. The regulatory overhand has caused JPMorgan's stock to be among the cheapest of all actively traded bank stocks, trading for just 8.8 times the consensus 2014 EPS estimate of $5.98, among analysts polled by Thomson Reuters. Next up is Citigroup (C), which will announce its results early Tuesday. Analysts on average estimate the company's third-quarter earnings will come in at $3.223 billion, or $1.04 a share, compared to $1.34 a share in the second quarter, and 15 cents a share in the third quarter of 2012, when the company booked a $2.9 billion after-tax loss on the valuation of its share of the joint brokerage venture with Morgan Stanley (MS).

Citigroup's revenue for the third-quarter is projected to total $18.828 billion, down from $20.479 billion the previous quarter, but up considerably from $13.951 billion a year earlier, which included a $4.7 pretax hit from the writedown of Citi's share of the joint venture, which the company was preparing to sell to Morgan Stanley.

Like JPMorgan, Citi's shares trade at a low valuation relative to nearly all actively traded bank stocks. The shares rose nearly 1% Monday to close at $49.65, and traded for 9.0 times the consensus 2014 EPS estimate of $5.51. Discover

Discover's shares have returned 38% this year and trade for 10.5 times the consensus 2014 EPS estimate of $5.04.

The card lender has stood out by reporting an annual growth rate of 12% for average credit card loans held on the balance sheet during August, and achieving an industry-leading efficiency ratio of 40.29% for the 12-month period ended June 30. Deutsche Bank analyst David Ho on Monday initiated his firm's coverage of Discover with a "buy" rating and a price target of $62, representing upside potential of 17% from Monday's closing share price. In a note to clients entitled "Growth is in the Cards," Ho called Discover "a compelling growth story within financials over the next consumer leveraging cycle." "We expect above average loan growth in both a sluggish macro environment and as consumer loan demand accelerates," Ho wrote, adding that the loan growth "will translate into positive EPS revisions over time from likely better than expected [net interest margin] trends, benign credit costs, meaningful excess capital and high margin payment assets." Ho estimates Discover will earn $4.90 a share this year, with EPS growing to $5.03 in 2014 and $5.55 in 2015. DFS ChartDFS data by YCharts Interested in more on Discover Financial Services? See TheStreet Ratings' report card for this stock. RELATED STORIES: Wells Fargo Could Hit Earnings Cliff Soon: Analyst Nobel Winner Robert Shiller Says There Is No Housing Bubble... Yet Robert Shiller, Eugene Fama Nobel Prize Undercuts Wall Street Science JPMorgan Report Bodes Well for Goldman, Citi: KBW A Mopping-Up Quarter for JPMorgan, Other Mortgage Lenders -- Written by Philip van Doorn in Jupiter, Fla. >Contact by Email. Follow @PhilipvanDoorn

Philip W. van Doorn is a member of TheStreet's banking and finance team, commenting on industry and regulatory trends. He previously served as the senior analyst for Ratings, responsible for assigning financial strength ratings to banks and savings and loan institutions. Mr. van Doorn previously served as a loan operations officer at Riverside National Bank in Fort Pierce, Fla., and as a credit analyst at the Federal Home Loan Bank of New York, where he monitored banks in New York, New Jersey and Puerto Rico. Mr. van Doorn has additional experience in the mutual fund and computer software industries. He holds a bachelor of science in business administration from Long Island University.

Sunday, October 13, 2013

Stocks Presume Standoff Solution, Break Two-Week Losing Streak

Heading into this week, the stock market looked ready to follow the script one or the other of the weekend’s big opening films: the Tom Hanks vehicle Captain Phillips or Robert Rodriguez’s Machete Kills.With the former, brave investors are rescued at the last minute from the pirates in Washington D.C. In the latter, it’s a debt-ceiling induced bloodbath.

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At the beginning of the week, it looked like a market massacre was on its way. The Dow Jones Industrials dropped 2% on Monday and Tuesday as it looked like the budget showdown would drag on into the debt ceiling and no one was giving ground. But the rescue came on Thursday as Republicans and Democrats started, you know, speaking to each other and the market soared 2.2%.

So Captain Phillips it is. The Dow Jones Industrials gained 1.1% to 15,237.11, avoiding a three-week slump, while the S&P 500 rose 0.8% to 1,703.20. The small-cap Russell 2000 jumped 1.4% to 1,084.32.

Note that a deal hasn’t actually been reached yet, and there’s always a chance that the “good will” that currently envelopes both sides could deteriorate over the weekend. Deutsche Bank’s David Bianco asses the possibilities:

We believe S&P 500 likely dips back down to 1650 or lower if a deal is not announced by Monday, October 14th, but not under 1625 as a deal should be announced before October 18th, Treasury’s deadline for risk to meet all obligations. We believe Secretary Lew’s testimony [Thursday] morning puts additional pressure to get a deal done by Friday, October 18th. We continue to see risks of missed interest payments as nonexistent and would use any weakness to buy non-financials.

Citigroup’s Tobias Levkovich says investors are already looking past the current showdown to better times in 2014:

While one might have thought that the fiscal standoff in Washington, tapering delays and even some disappointing trends in several emerging economies would undermine investor enthusiasm, our latest quarterly institutional investor survey of nearly 70 client respondents conducted over the past week showed an entirely different perspective. In particular, clients expect the S&P 500 to climb further in 2014, with a weighted average target of 1,806 alongside increasing their 2013 objective to 1,704  versus 1,664 when surveyed in July.

What could give stocks a boost? JPMorgan’s Thomas Lee and team suggest it could be  third-quarter earnings:

We…expect 3Q earnings to be a positive catalyst in coming weeks with EPS set to expand in high-single digits—the best growth seen since 1Q12. Already top-line growth has been showing steady improvement since 3Q12 (trough), particularly if investors see through the drag created by the Energy sector (down double-digits). Given the industrial production and manufacturing lifts seen in both the US and Europe, we would also expect cyclical visibility to improve.

In fact, some of the biggest movers this week were earnings related. Alcoa (AA) got things kicked off on Tuesday–despite its exclusion from the Dow–when it beat earnings handily. It gained 4.5% to $8.32 this week. Safeway (SWY), meanwhile, gained 6.7% to $33.75 after terrible earnings were trumped by asset sales. No such luck for Fastenal (FAST), which plunged 6.3% this week after it missed earnings by a penny.

And save a spot in your hearts Tower Group International (TWGP), which dropped an S&P-1500 worst 41% after the insurer had to set aside far more cash to cover losses than investors had expected, and Ariad Pharmaceuticals (ARIA), which plunged 78% after the FDA halted one of its drug trials because the medicine in question was too dangerous. They serve as a reminder that no matter the shenanigans among politicians, fundamentals will almost always have the last say.

No machete needed.