Saturday, May 31, 2014

Mortgage REITs: Agency Paper Rejoices in No Taper

It was just about one year ago that QE3 made its debut, and mortgage REITs, particularly agency-only players like Annaly Capital (NYSE: NLY  ) , Armour Residential (NYSE: ARR  ) , and American Capital Agency (NASDAQ: AGNC  ) began moaning about the increased competition for mortgage-backed securities guaranteed by Fannie Mae and Freddie Mac.

As the spread between short-term and long-term interest rates began to contract, strangling profits, competition for MBSes also caused prices to rise. Other agency mREITs were nervous, too. CYS Investments (NYSE: CYS  ) noted at the time that QE3 turned the Federal Reserve into the sector's biggest rival for mortgage bonds, and as spreads began to shrink, so did dividends. By December of last year, Annaly, Armour, and Capstead Mortgage (NYSE: CMO  ) had all trimmed their payouts.

Fast forward...
But, that was months ago, and the market has grown accustomed to quantitative easing -- so much so, that just a whiff of anything remotely resembling a tapering of the monthly MBS and bond purchases sent the mREIT sector reeling. When the Fed announced yesterday that the taper will not occur until economic indicators are more favorable to a slow QE3 exit, mREITs responded with exuberance.

Annaly rose by nearly 5% before the market closed yesterday, and American Capital Agency clocked a 5.3% gain. Poor Armour, which has really been getting clobbered lately, saw its share price gain almost 7%. CYS increased by 5.45%, while Capstead logged a lower, but still respectable, hike of nearly 2%.

5 Best Gas Stocks To Invest In Right Now

So, the worst is over, right?
It's wonderful to see the battered sector finally get some investor love, but there is some definite short-sightedness going on here. The FOMC decision is, at best, a reprieve, since QE3 can't go on forever. The pain will return with the FOMC's October meeting, as analysts and investors await the meeting minutes to arrive in November. Then, just as occurred when the July minutes were released last month, everyone will scour the report for the slightest hint of taper talk.

By the time the December meeting comes around, complete with a summary of the committee's take on the economy and a press conference, markets will be in a lather again. No doubt, mortgage REITs will have jumped back on the roller coaster long before the FOMC's last meeting of the year.

For the long-term mREIT investor, times will be tough, but there is a silver lining, here: Buying on the dip becomes much easier. Savvy investors who monitor taper talk and keep an eye on share prices should be able to pick up some sweet deals the next time the Nervous Nellies spring into action.

The long-term view is still the best
Dividend stocks can make you rich. It's as simple as that. While they don't garner the notoriety of high-flying growth stocks, they're also less likely to crash and burn. And over the long term, the compounding effect of the quarterly payouts, as well as their growth, adds up faster than most investors imagine. With this in mind, our analysts sat down to identify the absolute best of the best when it comes to rock-solid dividend stocks, drawing up a list in this free report of nine that fit the bill. To discover the identities of these companies before the rest of the market catches on, you can download this valuable free report by simply clicking here now.

Best Internet Stocks To Own Right Now

Best Internet Stocks To Own Right Now: eBay Inc.(EBAY)

eBay Inc. provides online platforms, services, and tools to help individuals and merchants in online and mobile commerce and payments in the United States and internationally. Its Marketplaces segment operates ecommerce platform; vertical shopping sites, such as StubHub, Fashion, Motors, and; and classifieds Websites, including Den Bl Avis, BilBasen, Gumtree, Kijiji, LoQUo,,, Alamaula,, eBay Anuncios, eBay Kleinanzeigen, and eBay Annunci, as well as provides advertising services. The company?s Payments segment offers payment and settlement services for consumers and merchants on and off eBay Websites and other merchant Websites. This segment operates PayPal, which enables individuals and businesses to send and receive payments online and through mobile devices; Bill Me Later that enables the United States merchants to offer, the United States consumers to obtain, credit at the point of sale for ecommerce and mobile tra n sactions; Zong, which allows users with mobile phones to purchase digital goods and have the transactions charged to their phone bill; and BillSAFE that enables customers pay for purchases upon receipt of an invoice. Its GSI segment offers an ecommerce services suite for enterprise clients that operate in general merchandise categories, including apparel, sporting goods, toys and baby, health and beauty, and home; and marketing services comprising full-service digital agency, enterprise email marketing, mobile advertising, affiliate marketing, advertisement retargeting, and in-depth analytics services. The company also offers X.commerce platform that provides software developers access to the company?s applications programming interfaces to develop functionality for various merchants; and Magento Connect, which allows developers to market and sell add-on functionality and solutions to merchants that use a Magento storefront. eBay Inc. was founded in 1995 and is headquar! ter e d in San Jose, California.

Advisors' Opinion:
  • [By Rex Crum]

    Other decliners included Microsoft Corp. (MSFT) , eBay Inc. (EBAY) , Inc. (AMZN) and Micron Technology Inc. (MU) .

  • [By Dan Caplinger]

    But the key to payment processing's future remains the mobile market, and there, VeriFone faces huge competition. eBay's (NASDAQ: EBAY  ) PayPal has consistently upped the ante in mobile payments, with incentives like offering transaction-fee-free processing for businesses that replace cash registers with iPad-based transaction management. With smaller companies like Square and Flint having emerged in the mobile space, it's likely only a matter of time before bigger companies acquire the upstarts to move their mobile-payment presence forward. For instance, if Groupon (NASDAQ: GRPN  ) is serious about trying to make waves in mobile payments, purchasing Square would be a natural fit for the company.

  • [By Selena Maranjian]

    eBay's (NASDAQ: EBAY  ) global brand value jumped 40%, to roughly $18 billion. It's specifically aiming at global domination, with a forecast of enabling $300 billion in global commerce by 2015. It's spreading internationally in large part by acquisition, and is increasing its emerging-markets staffing by 50% this year. For several years now, it has been raking in more internationally than domestically. The stock's forward P/E of 17 is a bit ahead of its five-year average of 16. You might prefer that your stock picks have lower P/E numbers, but eBay's strong growth record and prospects make it a compelling long-term proposition. Many consider eBay's PayPal business to be its crown jewel, but while it! poses a ! threat to the likes of Visa, it's vulnerable to threats, too.

  • source from Top Penny Stocks For 2015:

Friday, May 30, 2014

Why a $1 Million Goal for Retirement Still Matters

Top 10 Food Stocks To Watch For 2015

background with money american... Shutterstock A million dollars isn't what it used to be, but it's still a lot of money. It's enough to be a life-changing amount of cash, even if it winds up not being enough to completely fund your retirement on its own. On its own, using the 4 percent withdrawal rule as a guide, that cool million should provide you around $40,000 per year in inflation-adjusted income. Still, for typical American retirees, personal savings is just a start: Social Security adds supplemental income -- around $15,600 a year for a typical retiree. Medicare covers a substantial portion of health insurance costs for Americans age 65 or older. Typical retirees pay neither Social Security nor Medicare taxes on their non-wage incomes. If you've paid off your mortgage by the time you retire, your housing costs are a mere fraction of what they normally would be. If your kids are grown and independent, the costs of raising them can vanish. With that total picture in mind, even today, a $1 million nest egg still should provide a great foundation for a comfortable retirement in most of the country. There's More to Retirement Of course, you may want more out of your retirement than what that type of nest egg can provide you. Things like international travel, spoiling the grandkids and/or a summer home up north and a winter home in the Sun Belt can easily chew through the kind of income that size nest egg can provide. In addition, as you get deeper into retirement, you may start needing help managing your home and daily activities, which could add substantially to your costs.

5 Best Prefered Stocks To Invest In Right Now

5 Best Prefered Stocks To Invest In Right Now: KB Home (KBH)

KB Home is a homebuilding company. The Company constructs and sells homes through its operating divisions under the name KB Home. The Company operates in nine states and 32 markets, including California, Arizona, Nevada, Colorado, Texas, Florida, Maryland, North Carolina and Virginia. The Company organizes its homebuilding operations into four segments: West Coast, Southwest, Central and Southeast. In July 2012, it acquired land within the Elworthy Ranch property in the town of Danville. In September 2012, it acquired Mason Ranch, which is a 330-acre land asset in Cedar Park/Leander West, submarkets in metropolitan Austin. In December 2012, the Company acquired 65 lots in Fuquay-Varina, N.C.


The Companys homebuilding operations offers a variety of homes designed primarily for first-time, move-up and active adult homebuyers, including attached and detached single-family homes, townhomes and condominiums. It offers homes in developme nt communities, at urban in-fill locations and as part of mixed-use projects. During the fiscal year ended, November 30, 2011 (fiscal 2011), the Company, through its homebuilding segment, delivered 5,812 homes. During fiscal 2011, homebuilding operations accounted for 99.2% of the total revenues.

Financial Services

The financial services segment provides title and insurance services to its homebuyers. This segment also provided mortgage banking services to the Companys homebuyers indirectly through KBA Mortgage, LLC (KBA Mortgage), a former unconsolidated joint venture of a subsidiary of ours and a subsidiary of Bank of America, N.A., from the ventures formation until June 30, 2011, when it ceased offering mortgage banking services. Effective June 27, 2011, it entered into a marketing services agreement with MetLife Home Loans, a division of MetLife Bank, N.A. Under the agreement, MetLife Home Loans personnel, located on site at several of! its new home communities, can offer financing options and re! sidential consumer mortgage loan products to its homebuyers, and originate residential consumer mortgage loans for homebuyers who elect to use MetLife Home Loans. The Companys homebuyers may also elect to use other providers of mortgage banking services. Its financial services operations accounted for 0.8% of the Companys total revenues in fiscal 2011.

Advisors' Opinion:
  • [By Anora Mahmudova]

    Shares in KB Home (KBH) fell 2.7%, while Toll Brothers (TOL) shares lost 1.6%.

  • [By Core Equity Research]

    The above chart shows the change in stock prices of D.R. Horton as compared with its peers which include KB Home (KBH), Lennar Corp. (LEN) and Pulte Group Inc. (PHM). The chart clearly represents that over this period the company's stock price has increased by 97.9% whereas other similar stocks have managed to post an increase of more than 200% over this period.

  • [By Will Ashworth]

    The housing market isnt firing on all cylinders. Any investments at the moment should be made with care. Although there are better industries to be investing at the moment — banking and casinos are two names that come to mind — these three homebuilders are worth serious consideration.

    Homebuilders to Buy: KB Home (KBH)

    KB Home (KBH) delivered its first Q1 profit since 2007 last week on the back of strong price increases across all four of its regions. Chief among the increases was its West Coast region which saw the average sale price increase 30% year-over-year to $525,000. The bad news is that only 346 homes were delivered on the West Coast in Q1 compared to 509 a year earlier.

  • [By DailyFinance Staff]

    LM Otero, AP The housing market has been leading the economic recovery, but have hous! ing stock! s hit the ceiling? They're jumping today after a very bullish report on housing starts: New construction projects last month topped the 1 million annual rate for the time since before the financial crisis began in 2008. That's lifted shares of leading homebuilders by two to four percent today, adding to the huge gains over the past year. KB Homes (KBH), Pulte (PHA) and Hovnanian (HOV) have all doubled in price over the past year. Lennar (LEN) is up 44 percent, D.R. Horton (DHI) is up 47 percent and Toll Brothers (TOL) 33 percent. Those gains have prompted several other builders to go public this year. Taylor Morrison Home (TMHC), Tri Pointe, and William Lyon Home have all moved higher since their IPOs. And even though there's plenty of optimism that housing will continue to lead the broader economic recovery, there's some concern that these stocks may slow down. Homebuilder stocks can no longer be considered cheap. So some analysts see alternate routes for investors looking to play the housing boom. One way is through home-improvement retailers, which benefit from sales of both new and existing homes. Other plays include lumber, furniture and appliance companies. It's also worth noting that today's report on home construction showed that starts of single-family homes actually declined in March. It was the more volatile multi-family sector that led the advance. But there may be some stock market opportunities in REITs – real estate investment trusts – which focus on apartments. Among the biggest ones are Post Properties, Essex Property Trust and Associated Estates. They make money from collecting monthly rents. And these stocks generally trade below the value of the properties they own. Even some builders known for single-family homes are moving into the multi-family segment. Lennar announced in January that it plans to enter the apartment rental mar

  • source from Top Penny Stocks For 2015:! t-prefere! d-stocks-to-invest-in-right-now.html

Thursday, May 29, 2014

Top 5 Communications Equipment Companies To Own For 2015

Top 5 Communications Equipment Companies To Own For 2015: Alcatel Lucent SA (ALU)

Alcatel Lucent, incorporated on June 18, 1898, is engaged in mobile, fixed, Internet Protocol (IP) and Optics technologies, applications and services. The Company is a partner of service providers, enterprises, industries and governments worldwide. Alcatel-Lucent includes Bell Labs centres of research in communications technology. Its operations are in more than 130 countries. The Company operates in three business segments: networks, applications, and services. On December 31, 2010, the Company completed the sale of its Vacuum pump solutions and instruments business to Pfeiffer Vacuum Technology AG. In September 2010, the Company acquired OpenPlug, a mobile software and applications development tools vendor. In June 29, 2010, the Company acquired ProgrammableWeb.

During 2010, the Company launched the Digital Media Store, a multicontent digital storefront that allows service providers to deliver content to end-users. Launched during 2010, Optism is a permissi on-based mobile marketing solution. During 2010, it launched Alcatel-Lucents Mobile Wallet Service (MWS), which allows the mobile operator to leverage its secure network to deliver a mobile payment capability through a mobile handset. During 2010, it also launched Alcatel-Lucents Application Exposure Suite to facilitate the development of new services by third-party application developers and content providers.

Networks Segment

The Networks segment supplies a portfolio of products and offerings used by fixed, wireless and converged service providers, as well as enterprises and governments for their business communications. The Companys IP portfolio consists of four product families that deliver multiple services, including broadband triple play for residential customers; Ethernet and IP Virtual Private Network (VPN) services for Enterprise customers, and wireless second-generation (2G), third-generation (3G) and lon! g term evolution (LTE) br oadband services for mobile operators. The main product fami! lies include Internet Protocol/Multiprotocol Label Switching (IP/MPLS) service routers, Carrier Ethernet service switche, Multi-service wide-area-network (or MS WAN) switches and Content Delivery Network (CDN) appliances.

Internet Protocol/Multiprotocol Label Switching (IP/MPLS) service routers direct traffic within and between carriers national and international networks to enable delivery of a range of IP-based services (including Internet access, Internet Protocol TV (IPTV), Voice over IP (VoIP), mobile phone and data, and managed Enterprise VPN services) on a single common network infrastructure with superior performance, with application intelligence, and with scalability (such as the simultaneous support of many diverse types of traffic and customers); Carrier Ethernet service switches. Carrier Ethernet service switches enable carriers to deliver residential, business and wireless services, and these products are mainly used in metropolitan area networ ks; Multi-service wide-area-network (MS WAN) switches. Multi-service wide-area-network (MS WAN) switches enable fixed line and wireless carriers to transition their existing networks to support newer technologies and services, and Content Delivery Network (CDN) appliances. Content Delivery Network (CDN) appliances distribute and cache (store) Web and video content.

The Companys Internet Protocol/Multiprotocol Label Switching (IP/MPLS) and Carrier Ethernet products are designed to facilitate the development and availability of applications for the more participatory and interactive Web 2.0 business and consumer services. Its service routers are particularly well suited to deliver complex services to business, residential and mobile end-users. Its IP/MPLS service routers and Carrier Ethernet service switches are often used in conjunction with its DSL and Gigabit Passive Optical Network (GPON) access products to deliver these newer tri! ple-play ! services, or with its wireless access products to deliver LTE solutions, or w! ith its D! ense Wave Division Multiplexing (DWDM) and optical switching products to deliver converged backbone transformation solutions for optimizing IP transport. Its Optics division designs and markets equipment for the long distance transportation of data over fiber optic connections via land (terrestrial) and under sea (submarine), as well as for short distances in metropolitan and regional areas.

The Companys transport portfolio also includes the microwave wireless transmission equipment. Its terrestrial optical products offer a portfolio designed to seamlessly support service growth from the metro to the network core. With its products, carriers manage voice, data and video traffic patterns based on different applications or platforms and can introduce a range of managed data services, including multiple service quality capabilities, variable service rates and traffic congestion management. These products allow carriers to leverage their existing network infrast ructure to offer these new services. Its submarine cable networks can connect continents (using optical amplification required over long distances), a mainland and an island, several islands together, or many points along a coast. It offers a portfolio of point-to-point microwave radio products meeting both European telecommunications standards (ETSI) and American standards-based (ANSI) requirements.

The Companys Wireless All Around message developed during 2010 is a combination of wireless and IP products. The version of CDMA technology, known as 1X EV-DO Revision A, enables operators to offer two-way, real-time, high-speed data applications, such as VoIP, mobile video, push-to-talk and push-to-multimedia. The introduction of High Speed Packet Access (HSPA) and HSPA+ (the latest evolutions of W-CDMA technology) on networks and devices has led to increases in data speeds available to broadband devices. The Company develops mobile! radio pr! oducts for the second generation (2G) Global System for Mobile communications (GS! M) standa! rd, including General Packet Radio Service / Enhanced Data Rates for GSM Evolution (GPRS/EDGE) technology upgrades to that standard.

LTE offers service providers a compelling evolution path from all existing networks (GSM, W-CDMA, CDMA or WiMAX) by simplifying the radio access network and converging on a common IP base. RFS designs and sells cable, antenna, tower systems and their related electronic components, providing an end-to-end suite of radio frequency products. RFS serves original equipment manufacturers (OEMs), distributors, system integrators, network operators and installers in the broadcast, wireless communications, microwave and defense sectors. Specific applications for RFS products include cellular sites, in-tunnel and in-building radio coverage, microwave links, television and radio. The Company offers products that extend from legacy switching systems to IP multimedia subsystem (IMS) solutions for fixed, mobile, and converged operators. It has d eployed its next-generation network (NGN) products in more than 170 fixed NGN networks, and it has provided the core network for more than 66 full IMS fixed and mobile networks. Its fixed access solutions allow carriers to offer triple-play services over a single access line. Its carrier customers are offering both residential and business customers multiple services, such as a number of broadcast channels, video on demand, high definition television (HDTV), VoIP, high speed Internet, and business access services.

Applications Segment

The Applications segment develops software-based applications and solutions that contribute to the personal communications for users. The Applications group is divided into two businesses: Enterprise Applications and Network Applications. The Enterprise Applications business includes its IP-based communications and collaboration applications for enterprises, including the Genesys! contact ! center business. The Network Ap plications business develops applications used by service pr! oviders t! o deliver a range of services to their customers, and also includes Motive, which provides software for service providers to remotely manage their customers at-home networks, networked devices and broadband and mobile data services. During the year ended December 31, 2010, its Applications segment accounted 12% of its total revenue.

The Applications segment is investing resources in next generation collaboration and communications systems offered by its Enterprise Applications division; customer contact, customer engagement and service management areas addressed by its Genesys and Motive businesses; carrier applications, such as communication and messaging, next-generation telephony, digital media and multi-screen delivery of content and personalized advertising, device agnostic location based address book services, and technologies, such as Long Term Evolution (LTE), IP multimedia subsystem (IMS), and Application Enablement.

Services Segment

The Services segment is focused in helping the service provider and customers realize the potential of media, information technology (IT) and telecommunications services and technologies. These services address the lifecycle of its customers networks and operations, and encompass business consulting, systems design and integration, maintenance and managed services. The service offerings are organized around four areas: network and system integration, managed and outsourcing solutions, multi-vendor maintenance, and product-attached services.

The Company competes with Avaya, Cisco Systems, Ericsson, Fujitsu, Huawei, ZTE and Nokia Siemens Networks.

Advisors' Opinion:
  • [By Laura Brodbeck]


    Earnings Expected From: Hilton Worldwide Holdings Inc. (NYSE: HLT), Ralph Lauren Corporation (NYSE: FL), Alcatel Lucent (NYSE: ALU) Economic Releases Expected: British manufa! cturing p! roduction, British industrial production, German trade balance

    Posted-In: European Central Bank Federal Reserve Janet YellenNews Previews Hot Pre-Market Outlook Markets Trading Ideas Best of Benzinga

  • [By Andrew Tonner]

    Several months after teetering on what seemed like the brink of bankruptcy, shares ofAlcatel-Lucent (NYSE: ALU  ) have recovered nicely from their sub-$1 lows. And while much has improved for the struggling telecom equipment giant, it's by no means out of the woods. The company still faces plenty of risk as it attempts to further execute on its long-term restructuring efforts. Given so many moving parts, what's the bottom line? In this edition of our Ask a Fool series, Fool contributor Andrew Tonner give his take on Alcatel and how investors should play this recovery story.

  • source from Top Penny Stocks For 2015:

Wednesday, May 28, 2014

Toll Brothers: About That Beat…

Good news goes a long way when the market isn’t expecting much, and that seems to be the case with Toll Brothers (TOL) today.

Nate Luke for The Wall Street Journal

Toll Brothers reported a profit of 35 cents, beating forecasts for 26 cents, on sales of $860.4 million, topping the Street consensus for $828 million. MKM Partners’ Megan McGrath and Ross Sparenblek note that Toll Brothers also “essentially raised its revenue guidance.” They explain:

Toll essentially raised its revenue guidance for the full year via higher ASP estimates. The company continues to expect closings of 5,100-5,850, but now expects ASPs of $690k-$720k (vs. prior $675k-$720k). Given the company’s long build cycle, we suspect that the higher guidance is likely more of a statement on the anticipated mix of closings rather than a signal that prices are being raised more aggressively.

McGrath and Sparenblek rate give Toll Brothers a Buy rating and a $43 price target.

Sterne Agee’s Jay McCanless and Annie Worthman have their doubts about whether business is really improving:

Housing revenues exceeded our estimates on purchased backlog, but without the benefit of a lower tax rate and other non-operating income benefits, we believe TOL’s F2Q14 EPS would have been below our $0.31 EPS estimate…

We believe EPS benefited from approximately $0.06/share of interest income and joint venture income above our estimate (related to the refinancing of a multi-family mortgage), and also had a $0.04/share benefit from a 30.2% income tax rate versus our 39.0% forecast.

Best Defensive Companies To Own For 2015

McCanless and Worthman rate Toll Brothers Underperform with a $28 price target.

Shares of Toll Brothers have gained 1.9% to $36.32 at 11:59 a.m., but its strength hasn’t really translated into big days for other home builders. KB Home (KBH) has gained 0.4% to $16.65, DR Horton (DHI) has risen 0.4% to $23.22 and Lennar (LEN) has dipped 0.3% to $40.37.

Is Education Bad for Younger Workers?

Is education bad for younger workers? Yes, but not in the way one might think.

Higher levels of education attained by older workers are keeping them in the workforce longer, crowding out younger workers that are looking for jobs.

In its latest issue brief, the Center for Retirement Research at Boston College reports that over the past 25 years, the labor force participation of men ages 60 to 74 jumped from 35% to 44%.

At the same time, the educational levels of older workers increased dramatically in both absolute terms and relative to prime-age workers.

“Over much of the twentieth century, each generation of workers received more education than the previous one,” according to the issue brief. “As a result, younger workers maintained a consistent educational advantage over older workers.”

No longer; increases in schooling among younger cohorts of males slowed dramatically after the mid-1970s.

“As a result, when the baby boom generation of men entered the ranks of the aged, beginning in 2006, the educational advantage of the young compared with the old nearly vanished.”

Better educated workers are healthier and have more opportunities, and the issue brief claims education levels account for more than half of the increase in older workers' labor force participation.

Additionally, the structure and solvency of government and private retirement plans are also having an impact.

“Social Security benefits available at any given age will continue to decline measured as a percentage of workers’ lifetime average earnings,” the brief says. “Older workers will increasingly rely on 401(k) plans rather than traditional workplace pensions for retirement income. Both these trends are likely to push workers toward later exit from the workforce.”

Yet going forward, it adds, gains in education by older workers will slow considerably, as baby boomers move through retirement. This will slow further increases in their labor force participation.


Check out Olivia Mitchell: You Might Live to 100. Will Your Money? on ThinkAdvisor.

Tuesday, May 27, 2014

Top 5 Biotech Companies To Watch For 2015

Top 5 Biotech Companies To Watch For 2015: bluebird bio Inc (BLUE)

bluebird bio, Inc., incorporated on April 16, 1992, is a clinical-stage biotechnology company, the Company is focused on transforming the lives of patients with severe genetic and orphan diseases using gene therapy. Gene therapy seeks to introduce a functional copy of the defective gene into a patient's own cells, a process called gene transfer. Through gene transfer, a functional copy of the mutated gene is delivered to the patient's cells, thereby correcting the underlying genetic defect that causes aberrant gene expression. As of December 31, 2012, the Company is conducting a Phase I/II clinical study in France evaluating an earlier generation of its LentiGlobin vector for the treatment of ß-thalassemia major and SCD. Initial proof-of-concept data from this study were published in Nature. During the year ended December 31, 2013, the Company plans to initiate an extension of this study under a revised protocol for LentiGlobin, which the Company refers to as the HGB- 205 Study. The Company also plans o initiate a second Phase I/II clinical program in the United States for LentiGlobin, which the Company refers to as the HGB-204 Study, for ß-thalassemia major. In March 2013, the Company entered into a strategic collaboration with Celgene Corporation, or Celgene, to discover, develop and commercialize, disease-altering gene therapies in oncology.

Its gene therapy platform is based on viral vectors that utilize a modified, non-replicating version of the Human Immunodeficiency Virus Type 1 (HIV-1) virus, that has been stripped of all of the components required for it to self-replicate and infect additional cells. The HIV-1 virus is part of the lentivirus family of viruses, as a result of which the Company refer to its vectors as lentiviral vectors. Its lentiviral vectors are used to introduce a functional copy of a gene t! o the patient's own isolated blood stem cells, called hematopoietic stem cells (HSCs), which reside in a pa tient's bone marrow and are capable of differentiating int! o a wide range of cell types. HSCs are dividing cells, thus its approach allows for sustained expression of the modified gene as the Company is able to take advantage of a lifetime of replication of the gene-modified HSCs. Additionally, the Company has developed a cell-based vector manufacturing process that is both reproducible and scalable.


Adrenoleukodystrophy is a rare X-linked, inherited, neurological disorder that is often fatal. ALD is caused by mutations in the ABCD1 gene which encodes for a protein called the ALD protein (ALDP), which plays a critical role in the breakdown and metabolism of long-chain fatty acids (VLCFA). Without functional ALDP, VLCFA accumulate in cells including neural cells in which they cause damage to the myelin sheath, a protective and insulating membrane that surrounds nerve cells in the brain. This damage can result in decreased motor coordination and function, visual and hearing disturbances, the loss of cognitive function, dementia, seizures, adrenal dysfunction and other complications, including death. ALD is divided into various sub-segments with three main phenotypes that impact brain function: CCALD (Childhood cerebral adrenoleukodystrophy, AMN (Adrenomyeloneuropathy) and ACALD (Adult Cerebral ALD).


ß-thalassemia is a rare hereditary blood disorder caused by a genetic abnormality of the ß-globin gene resulting in defective red blood cells (RBCs). Genetic mutations cause the absence or reduced production of the beta chains of hemoglobin, or ß-globin, thereby preventing the proper formation of hemoglobin A, which normally accounts for greater than 95% of the hemoglobin in the blood of adults. Hemoglobin is an iron-containing protein in the blood that carries oxygen from the respiratory organs to the ! rest of t! he body. Hemoglobin A consists of four chains-two chains each of a-globin and ß-globin. Normally existing at an approximate 1:1 ratio, genetic mutations that impair t! he produc! tion of ß-globin can lead to a relative excess of a-globin, premature death of red blood cells. The clinical implications of the a-globin/ß-globin imbalance are two-fold: first, patients lack sufficient RBCs and hemoglobin to effectively transport oxygen throughout the body and can become severely anemic; and second, the shortened life span and ineffective production of RBCs can lead to other complications such as splenomegaly, marrow expansion, bone deformities, and iron overload in organs.

Sickle cell disease

Sickle cell disease (SCD) is a hereditary blood disorder resulting from a mutation in the ß-globin gene that causes polymerization of hemoglobin proteins and abnormal red blood cell function. The disease is characterized by anemia, vaso-occlusive pain crisis (a common complication of SCD in which there is severe pain due to obstructed blood flow in the bones, joints, lungs, liver, spleen, kidney, eye, or central nervous system), infections , stroke, overall poor life and early death in a subset of patients. Under low-oxygen conditions, which are exacerbated by the red blood cell abnormalities, the mutant hemoglobin aggregates causing the RBCs to take on a sickle shape (sickle cells), which causes them to aggregate and obstruct small blood vessels, thereby restricting blood flow to organs resulting in pain, cell death and organ damage. If oxygen levels are restored, the hemoglobin can disaggregate and the RBCs return to their normal shape, but over time, the sickling damages the cell membrane and the cells fail to return to the normal shape even in high-oxygen conditions.

Advisors' Opinion:
  • [By Jay Silverman]

    Some of the biggest leaders in that field, and there have been dozens in fields, if not more this year, such as Bluebird (BLUE) and Stemline Therape! utics (ST! ML) and have all pulled back to significantly lower levels; even below, in Bluebird's case, the price that had actually opened up as an IPO, even though it's above its IPO price.

  • [By David Williamson]

    In this video, health-care analyst David Williamson takes a look at the tremendous success of the Bluebird Bio (NASDAQ: BLUE  )  IPO. The company increased the size of its initial public offering, and priced shares at $17 -- above the top end of its range -- but that still couldn't contain investor appetite for this stock. Shares shot up 50% on the opening day of trading, and have remained there.

  • source from Top Stocks Blog:

Monday, May 26, 2014

LoJack names its 10 most stolen cars

Honda Accord ranks as the most stolen and most recovered car for the fifth year among vehicles equipped with a LoJack tracking-device, the maker says.

LoJack says that after Accord comes:

2. Honda Civic

3. Toyota Camry

4. Toyota Corolla

5. Chevrolet Silverado.

6. Acura Integra

7. Cadillac Escalade

8. Ford F-350

9. Nissan Altima

10. Chevrolet Tahoe

Most of the cars on the list are among the best-selling cars on the road, but a few are surprises. Acura Integra remains on the list of most stolen and recovered cars even though it was last available in the U.S. as a sedan or coupe for the 2001 model year.

Also, F-150 is the nation's best-selling pickup truck, but it's the heavy-duty F-350 that makes the most-stolen list.

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The oldest Lojack-equipped car recovered last year was a 1963 Cadillac convertible. The priciest was a 2011 Porsche Panamera valued at $103,400. The most common color of stolen cars was black, which is one of the most common car colors, while the least common color was turquoise.

Best Building Product Companies To Buy Right Now

Best Building Product Companies To Buy Right Now: Redwood Trust Inc.(RWT)

Redwood Trust, Inc., a real estate investment trust, together with its subsidiaries, engages in investing, financing, and managing real estate assets. The company?s investments include residential and commercial real estate loans; and securities backed by residential and commercial loans, including senior and subordinate securities. The senior securities are those interests in a securitization that have the first right to cash flows and are last to absorb losses; and subordinate securities are those interests in a securitization that have the last right to cash flows and are first in line to absorb losses. As of March 31, 2011, it had 77 real estate owned properties primarily in Arizona, California, Colorado, Florida, and Georgia. It would elect to be taxed as a real estate investment trust (REIT) for federal income tax purposes. As a REIT, the company would not be subject to federal income tax, if it distributes at least 90% of net taxable income to its stockholders. Red wood Trust, Inc. was founded in 1994 and is based in Mill Valley, California.

Advisors' Opinion:
  • [By Amanda Alix]

    On the mortgage front, Two Harbors notes that it has acquired a passel of prime jumbo home loans, which it likely plans to securitize. The company's CEO, Tom Siering, also addresses this issue on the earnings call, where he states that the trust was involved in a $400 million securitization of prime jumbo loans. This puts Two Harbors in the company of mREIT Redwood Trust (NYSE: RWT  ) , which has nearly single-handedly brought back the jumbo-loan securitization market over the past two years. If Redwood's success is any indication -- it recently reported first-quarter net income of $61 million, compared to the year-ago figure of $30 million -- Two Harbors is on the right track.

  • [! By Amanda Alix]

    Luxury market is doing just fine
    Jumbo loans are back, and these mortgages -- which start at $625,000 in some affluent areas -- are being given out like candy to those with the wealth to back them up. Once considered risky because they are not backed by Fannie Mae or Freddie Mac, lenders are falling over themselves to make these loans, driven by a securitization market dominated by entities like Redwood Trust (NYSE: RWT  ) and JPMorgan Chase (NYSE: JPM  ) . Earlier this month, Redwood offered its seventh securitization backed by jumbos, and JPMorgan just recently announced its second offering of the year, as well.

  • source from Top Stocks Blog:

Thursday, May 22, 2014

Investing: Average investor smarter than you think

A 2011 Allstate survey found that 64% of Americans rated themselves "very good" or "excellent" drivers. At the same time, only 29% rated their close friends in the same way, and 22% give people their age the same rating. Even more remarkably, 56% reported being in an accident, but only 28% thought the accident was their fault.

It's human nature to think that you're better than average at most things – driving, lawn care, defusing nuclear devices. ("Step away from there. Everyone knows it's the red wire you have to cut.") The one exception may be investing. Survey after survey shows that individual investors are lousy at investing – and in fact, individual investors' rotten skills are a legendary Wall Street indicator. When you see the individual pile in to one area of the market, sages say, the smart money gets out.

The problem is that all these surveys are offered by companies that sell financial advice, and that in today's marketplace, most of the money flows are controlled by professionals, who really are the herd on the Street. While seeking advice is a wise thing, individuals aren't the nitwits they are portrayed to be, either.

Let's start with the notion that individuals are rotten investors. This stems from the 1920s, when the smart money really did have an edge. Many of those edges are now called "illegal." Large pools of money would combine to run up certain stocks, or send them tumbling, and the little guy was always in at the top and out at the bottom.

An apocryphal story has Joseph Kennedy, the late president's father, selling his stocks when offered a tip from a shoeshine boy. If everyone, including shoeshine boys, were in the market, he figured, there was no one left to buy stocks.

A favorite way to measure what the dumb money – individual investors – are doing is to look at the inflows of money to stock mutual funds. (We're talking purchases minus redemptions, or net new cash flow, in fund industry parlance.) In the 12 months ended April 30, investors ! have poured an estimated net $158 billion into stock mutual funds, which is a very large number indeed.

Golly. Those silly mutual fund investors. Bad things must be about to happen to the stock market. But there are three things wrong with this argument.

• Fund investors have been largely right. The Standard and Poor's 500 stock index has gained 18% during that period. Had you exited the stock market because you saw an influx of mutual fund investors, you would have been wrong.

• Fund investors are largely conservative. In March, the latest data available from the Investment Company Institute, the funds' trade group, showed investors had $7.9 trillion in traditional stock funds and $1.4 trillion in exchange-traded stock funds. Holy cow, that's a lot of money. But total mutual fund assets, including ETFs, were $16.3 trillion, meaning fund investors were 55% invested in stocks. By most accounts, that's a highly conservative position, especially when you consider that $2.6 trillion was in money market funds.

• Most fund investors use some form of professional help. Sixty-one percent of individuals own mutual funds outside of retirement plans. Of those, 81% bought their funds from an investment professional, the ICI says. Inside retirement plans, such as 401(k) savings plans, about 34% of investors get some form of help, with the most likely source of help being a target-date fund, says a study by Financial Engines, a company that offers financial advice, and Aon Hewitt.

The latter point bears some further examination, especially if you plan to use mutual fund flows as a contrary indicator. Just 18% of fund investors buy their funds directly from a fund company, the ICI says. The majority, but not the vast majority, use some form of professional help when they purchase funds. If you're going to argue that the individual is the dumb money, and that that mutual fund flows are a good indicator of the dumb money, you have a fundamental contradiction to deal with.

Your b! est advic! e is to not try and be a contrarian, and to disregard fund flows as a contrary indicator. A real contrarian doesn't look for trends and do the opposite. The herd, whether professional or amateur, is typically right longer than you can remain solvent, as John Maynard Keynes noted. A true contrarian looks for peak excesses of behavior, which is a lot harder than it sounds – and also why there are so few successful contrarians around.

Instead, you should try and figure out what combination of stocks, bonds and money market funds will allow you to reach your goals and sleep at night. For many people, this involves paying a professional for advice, and if that gets you to where you're going, then it's money well worth spending.

The Financial Engines survey, for example, shows that many investors are using target-date funds poorly. These funds manage your portfolio so that when you arrive at retirement, you have a proper mix of stocks, bonds and money market funds to see you through your golden years. Ideally, you should put all your money in one target-date fund and forget about it. Most people, however, seem to be just adding a target-date fund into their mix of other investments, which defeats the purpose.

And many financial professionals do lean toward low-cost funds, which is one of the single best things you can do to improve your long-term performance. So don't hesitate to seek financial advice if you feel you need it. But you're probably not as dumb as self-serving surveys would have you think.

Wednesday, May 21, 2014

Gallagher: SEC Fiduciary Rule Won’t ‘Stave Off’ DOL Redraft

A fiduciary rulemaking by the Securities and Exchange Commission would not “stave off” the planned upcoming release of a fiduciary redraft by the Department of Labor, SEC Commissioner Daniel Gallagher said Tuesday.

“I don’t necessarily feel that people should take solace in an SEC rulemaking to stave off a DOL rule,” Gallagher said during a one-on-one discussion with Richard Ketchum, CEO of the Financial Industry Regulatory Authority, during the self-regulator’s annual conference in Washington.

The rerelease of a DOL rule proposal to amend the definition of fiduciary under the Employee Retirement Income Security Act is “a very real issue, and we have to take it into account,” he said.

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The SEC is “getting called out by all sectors” for moving slowly on a fiduciary rulemaking, Gallagher continued, “but it’s the best of what the SEC does: acting deliberately.”

Said Gallagher: “Some folks have come to us and said do a rulemaking because it will stave off Labor. I don’t like rulemaking to stave off other people; [An SEC fiduciary rule has] to make sense based on the merits. And I’m not convinced that [an SEC proposal] would” stop the DOL from reissuing a rule proposal.

DOL is “going to do what they do,” and DOL is “dealing with different issues and a very different statutory construct” under ERISA, Gallagher said. Plus, he said, Section 913 of the Dodd-Frank Act is “very limited” in the authority it gives. “It is important that our staffs are working closely together [on the fiduciary rulemaking], and they are.”

While SEC Chairwoman Mary Jo White has said the commission would decide this year whether to move forward on a fiduciary rule, Gallagher said that “in many languages, 2014 can mean never.”

Gallagher, a Republican, who reiterated that he has yet to be convinced that an SEC fiduciary rulemaking is needed, also noted that he wasn’t sure whether DOL would stick to its planned August redraft release.

He also said that he worries about moves by special interest groups who see the fiduciary issue as a “great election year issue” to push for roll out of the DOL and SEC fiduciary rulemakings between now and the November elections.

Gallagher also revisited comments he made in a recent speech about the need to boost the number of advisor exams, and that the commission should fix the exam imbalance between brokers and advisors by allowing third-party advisor exams — including “potentially, defining the term ‘third party’ to include SROs in order to allow the SROs currently involved in broker-dealer oversight to conduct examinations of ‘dual hatted’ investment advisors as well.”

Gallagher said during the FINRA event Tuesday that the commission’s current seven-year exam cycle of advisors is leaving the agency vulnerable to missing another Madoff-type fraud. “We are just sitting there as an institution with our chin out waiting to get pummeled,” he said. “We’re not even ‘there’ with advisors” in terms of an adequate number of exams. /* .premium-promo { border: 1px solid #ddd; padding: 10px; margin: 0 10px 10px 0; width: 200px; float: left; } .premium-promo li, .premium-promo ul { list-style-type: none; margin: 0; padding: 0; } .premium-promo li { margin: 0 0 10px; padding: 0 0 10px; border-bottom: 1px dotted #ddd; } .premium-promo h3 { text-transform: uppercase; font-size: 11px; } .premium-promo h4 { font-size: 16px; } .premium-promo a { text-decoration: none !important; } .premium-promo .btn { background: #0069a1; border-radius: 4px; display: inline-block; padding: 5px 10px; clear: both; color: #fff; font-weight: bold; } .premium-promo .btn:hover { background: #034c92; } */ Gallagher suggested at the FINRA event that the SEC create a rule to allow advisors to have third-party exams. But such a rule, he said, would “not mandate SROs” (such as FINRA) to be the third party, noting that such a rule would “allow choice.”

However, he conceded that how the SEC would oversee those third-party auditors would have to be determined.

In talking with reporters on the sidelines of the FINRA event, Gallagher clarified that given that the SEC already has the authority to examine advisors, the rulemaking regarding allowing third-party audits would delve into “how [the SEC] examines advisors,” giving advisors the option to get a third-party review.  

"I congratulate Gallagher on bringing that issue [of third-party exams] forward," Ketchum said during a coversation with reporters, noting that he see little political appetite for Rep. Maxine Waters' bill, the Investment Adviser Examination Improvement Act of 2013, H.R. 1627, which would allow the SEC to collect user fees from advisors to fund their exams.

Tuesday, May 20, 2014

You Can Make Money in Stocks (Especially These Three) No Matter What Rates Do

It's commonly held wisdom that stock markets go to heck in a hand basket when interest rates rise. So, the thinking goes, you'd be better off selling ahead of time before that happens.

No doubt it's tempting to head for the hills with rates at historical lows, but it pays to do your research before you hit the "sell" button.

The three companies I'm going to show you today, for example, can actually benefit from rising rates.

First, let's take an "Econ 101" look at the impact interest rates can have on stocks, especially when rates start rising...

How This Urban Legend Got Started

Like most urban legends, there's a grain of truth when it comes to interest rates and your money. That's because interest rates are quite literally a reflection of the time value of money. When rates are rising, the cost of borrowing goes up. When rates are falling, money gets cheaper.

Economic theory tells us that more expensive money decreases the amount of money in circulation because customers tighten up while cheaper money increases the amount of money at work. That's why the Fed, which subscribes to this theory, has kept rates so low for so long. Team Bernanke and now Team Yellen want to ensure there's money available and, by implication, that people borrow enough to keep it moving and the economy in recovery mode.

Practically speaking, you see this in everything from credit card statements to home mortgages. As rates rise, the propensity to borrow declines and there's less discretionary money spent. But as they fall, consumers head out to spend based in good part on borrowing that has "stimulated" the system. Personally, I think it's a sad state of affairs that debt has become so critical to our way of life, but that's really a story for another time.

What you need to know today is how the relationship I've just described impacts stock prices.

Companies are valued based on earnings. And earnings, in turn, are a function of the time value of money associated with all future cash flows. Loosely speaking, therefore, the more a company earns, the higher the expected stock price is ahead.

Theoretically, if rates rise that means money is getting more expensive so the cost of debt rises and revenue from customers drops. Earnings then take a nose dive and, not surprisingly, so do stock prices which, in turn, makes stock ownership less desirable.

Here's where it gets sticky.

By stimulating the economy and keeping rates so low for so long at the same time, the Fed is clearly fanning inflationary embers while seemingly acting to keep rates low. Every dollar the Fed kicks into the system diminishes the value of every other dollar already out there.

Ultimately rates will have to rise to compensate for the lost value, goes the argument for millions of investors.

Take Winners on the Overlooked Rising Rate Bounce

But here's the thing. You don't just immediately jump from a slight increase in "Treasury yields that's barely noticeable on a ten-year chart to hyperinflation even when it's the worry du jour," according to Jim Cramer in his book Getting Back To Even.

As we talk about so frequently, there has to be growth first. More to the point, there's also got to be a real, meaningful rise in interest rates to affect the markets on anything more than a short- term basis.

Look, you and I both know that rates will eventually rise. That's a harsh reality that our political leaders don't understand, which is why they're constantly kicking the can down the road and spending our country into oblivion.

But pulling your money out of the markets preemptively when we haven't had real interest rate hikes based on growth yet is a mistake. It's one thing to take heed of the lessons that led up to the Financial Crisis and entirely another to fall prey to erroneous conclusions by keeping your finger on the sell button or hitting it too early.

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That's not to say the thinking isn't compelling - it is, especially since it's based on the intense emotional distress of the Financial Crisis. It's just not in your best interest. Ask anybody who sat out the rally off March 2009 lows. They've missed an amazing 273% S&P 500 run to new all-time record highs.

And that brings me to what happens when rates actually do rise.

Believe it or not, stocks have rallied for nearly two full years following the first interest rate hike according to Sadoff Investment Management and Fed data.

Here's something else.

Since 1929, the average increase in short-term rates is 107% before the markets falter. Practically speaking, this means the 10-year Treasury yield would have to rise from a July 2012 of 1.53% to 3.16% before we hit the threshold. That's another 61 basis points or 23.9% above where the yield is today, according to Bloomberg.

So how do you invest until then?

Plenty of Great Investment Runway Ahead

First, you miss 100% of the shots you never take, and what I mean by that is that you stand to gain nothing if you aren't in the markets. DALBAR data shows that the average investor may be 200% to 300% behind the markets because they are prematurely trying to time the markets. Ouch!

The Fed has made it very clear that it won't be raising rates until mid-next year at the earliest and only if Yellen gets comfortable with progress in the meantime. So, barring an economic meltdown or global market reset, we've got some runway in front of us.

My preference is definitely for "global challengers" with strong cash flow, experienced management, and powerful brands in the meantime. Examples include ABB Ltd (ADR) (NYSE: ABB), Becton Dickinson and Co. (NYSE: BDX), and American Water Works Company Inc. (NYSE: AWK) that are drawn from our Money Map Report recommendations. Not only are these companies and others like them tapped into global money flows that continue unabated, but these types of companies can actually benefit from rising rates rather than get crushed by them. Remember, earnings... earnings... earnings!

Second, new highs are inevitably accompanied by short-term market noise, so it's not uncommon to get some give and take as the markets digest the implications of record price levels. In fact, I'd bet on it.

Make sure you have trailing stops in place ahead of time to protect profits and your capital in the event there is a hiccup. My suggestion is that 25% below your entry price is a pretty good place to start. You can always tighten that up if you like, but that's really splitting hairs. Protection against the unexpected at all times is the issue. [Editor's Note: You can track your trailing stops much more easily now. Money Morning Members have access to the best deal (in the world) on TradeStops. Learn more.]

If you don't like trailing stops, consider using options or a specialized inverse fund to protect your money and take the sting out of any short-term market movements that catch others by surprise.

Third, you want to be constantly hunting for new opportunities. I am sure your parents instructed you on the importance of "buy low and sell high." So wading in on pullbacks when everybody else is heading for the exits makes sense as a path to bigger profits...

...especially when the markets could run for a lot longer than interest rate doomsters think.

Sunday, May 18, 2014

What goes into making a winning organization?

Q: Yo, bro ... I'll bet you $5 bucks that my San Antonio Spurs will beat your Portland Trailblazers in the second round of the playoffs. What say you? -- Rod

A: So, did I take my pal Rodney up on his bet? Let's see.

It is true that my Portland Trailblazers had a fantastic season, exceeding all expectations, winning 20 more games than they did last year and catapulting themselves into the second round of the NBA playoffs with an incredible buzzer beater by Damian Lillard that has already been dubbed "The Shot."

And it is also true that the team has a devoted fan base, a committed owner, and they were young and hungry and on a roll. So sure, what the heck, why not take the bet, it's only 5 bucks, right?


As you may know, the Spurs won the series. I would have lost the bet, but that's not the point. The point is that you don't bet against a good business, nay a great business. And that's what the Spurs are – a great business, and one that can teach us all something.

Anyone who follows the NBA knows the drill by now: "The San Antonio Spurs are the best organization in the whole league, maybe in all of sports." So, just what is it they do right? What is it about the Spurs organization that the Trailblazers and a half a dozen other NBA franchises admire and want to emulate?

1. Culture. The first thing is the Spurs hire and retain great talent. Whether it is David Robinson or Tim Duncan or Kawhi Leonard or coach Greg Popovich, the Spurs have installed a system that allows them to identify talent, and then, once identified, they do what is necessary to keep that talent and make them happy.

In the rest of the NBA, stars come and go, coaches are hired and fired. LeBron leaves Cleveland for Miami. Carmelo Anthony bolts Denver for New York. Mike Woodsen lasts three seasons in New York. But in San Antonio, people stick around. Why is that? Well, why do some companies attract and keep great talent, while others lose it? Why do people want to work at Apple?

! Culture.

Great businesses make working for them a hard-to-pass-up opportunity. When employees are respected and well-compensated, when the workplace is fun and interesting, when the work you do is appreciated, when the experience of work is far more positive than negative, employee loyalty is not the oxymoron that it is in other places.

2. Stability. An offshoot of their culture is that the Spurs are also a predictable, and predictably successful, organization. Because people stick around, and because Pop remains the coach, everyone not only knows what to expect, but they know what their roles are in the success of the whole.

Compare that with the small business that is constantly reaching for, but never getting, the brass ring. In response, it is constantly changes policies and employees and systems. This scatter-shot approach means that no one can ever master their job, no one feels secure and employees never really know what is expected of them.

3. The Success System. The amazing thing about watching the Spurs play basketball is that they can seemingly, and seemingly effortlessly, plug new people into their system and it still works to almost perfection. Patty Mills is a fine basketball player sure, but in the Spurs' system, he is a killer.

What is your success system? If you don't have one, you need to get one, and then you need to refine it, teach it, swear by it and stick with it. The more you do, the stronger and more stable your business will be.

4. Luck. Can we all agree that luck plays no small part in business success? For the Spurs, they were lucky that the year David Robinson was hurt, they got the first pick in the next draft, and then lucky again that it was the year that Tim Duncan came out of Wake Forest.

But Dodger GM Branch Rickey once observed that "luck is the residue of design," and Tony Robbins has stated that "the meeting of preparation with opportunity generates the offspring we call luck." Another team, one that did not have a success s! ystem in ! place, that did not have such a great culture, might have lucked into Duncan, but they wouldn't have him around 15 years later.

So yes, a lot goes into winning in basketball, and business, and what we hope is that we learn from the best. And with that, I can confidently say: Go Blazers!

Today's Tip: The latest issue of the Bank of America "Small Business Owner Report" (a company I do some work with) was released last week, and with a focus on women entrepreneurs, the results were quite interesting indeed. Among other things, the report found that female entrepreneurs this year are more optimistic about their businesses than small business owners generally, with 56% saying they planned on hiring more staff this year and fully 70% saying they expected revenues to increase this year. You can check out the full report here.

Friday, May 16, 2014

Top 5 Valued Stocks To Own For 2015

SEATTLE (AP) ��Mark Zuckerberg and his wife, Priscilla Chan, were the most generous American philanthropists in 2013, with a donation of 18 million shares of Facebook stock, valued at more than $970 million, to a Silicon Valley nonprofit in December.

The Chronicle of Philanthropy reported Monday that Zuckerberg's donation was the largest charitable gift on the public record in 2013 and put the young couple at the top of the magazine's annual list of 50 most generous Americans in 2013.

The top 50 contributors made donations last year totaling $7.7 billion, plus pledges of $2.9 billion.

The Chronicle's editor says the most significant fact from the list was the amount of money coming from living donors, which totaled about the same amount as the two previous years combined.

Top 5 Valued Stocks To Own For 2015: Caterpillar Inc.(CAT)

Caterpillar Inc. manufactures and sells construction and mining equipment, diesel and natural gas engines, industrial gas turbines, and diesel-electric locomotives worldwide. It operates through three lines of businesses: Machinery, Engines, and Financial Products. The Machinery business offers construction, mining, and forestry machinery, including track and wheel tractors, track and wheel loaders, pipelayers, motor graders, wheel tractor-scrapers, track and wheel excavators, backhoe loaders, log skidders, log loaders, off-highway trucks, articulated trucks, paving products, skid steer loaders, underground mining equipment, tunnel boring equipment, and related parts. It also manufactures diesel-electric locomotives; and manufactures and services rail-related products and logistics services for other companies. The Engines business provides diesel, heavy fuel, and natural gas reciprocating engines for Caterpillar machinery, electric power generation systems, marine, petrol eum, construction, industrial, agricultural, and other applications. It offers industrial turbines and turbine-related services for oil and gas, and power generation applications. This business also remanufactures Caterpillar engines, machines, and engine components; and offers remanufacturing services for other companies. The Financial Products business provides retail and wholesale financing alternatives for Caterpillar machinery and engines, solar gas turbines, and other equipment and marine vessels, as well as offers loans and various forms of insurance to customers and dealers. It also offers financing for vehicles, power generation facilities, and marine vessels. The company markets its products directly, as well as through its distribution centers, dealers, and distributors. It was formerly known as Caterpillar Tractor Co. and changed its name to Caterpillar Inc. in 1986. Caterpillar Inc. was founded in 1925 and is headquartered in Peoria, Illinois.

Advisors' Opinion:
  • [By Dan Caplinger]

    Caterpillar (NYSE: CAT  ) has dropped 1.1% after heavy-equipment peer Deere (NYSE: DE  ) reported earnings this morning. Deere has fallen more than 5% despite beating estimates for its first-quarter results, as investors instead focused on a weakening sales forecast. Although Deere's agricultural-equipment focus leaves it somewhat more exposed to unpredictable events like weather and crop prices, Caterpillar shares the same general vulnerability to overall economic conditions that have led some customers to defer making large capital expenditures. Without a broader-based recovery, Caterpillar may continue to lag.

  • [By Adam Levine-Weinberg]

    Biggest losers
    Illinois saw the biggest year-over-year jump in unemployment in the U.S. last month. At 9.5%, the Illinois unemployment rate is at a level last seen in 2011. Even worse, the labor force shrank last month, suggesting that tens of thousands of people gave up looking for work. The seasonally adjusted unemployment rate has risen by nearly a full percentage point since December. Moreover, things may not get better anytime soon; earlier this month, Caterpillar (NYSE: CAT  ) announced that it would permanently lay off 460 workers in the state due to falling demand for mining equipment.


    Susan Walsh/APSen. Carl Levin of Michigan. WASHINGTON -- Caterpillar executives defended a tax strategy Tuesday that has saved the manufacturing giant billions in U.S. taxes. They got support from Republican senators, including one who said the company deserves an award. Caterpillar (CAT) has avoided paying $2.4 billion in U.S. taxes since 2000 by shifting profits to a wholly-controlled affiliate in Switzerland, according to a report released by Sen. Carl Levin, D-Mich. Levin chairs the Senate investigations subcommittee. On Tuesday, Levin grilled Caterpillar executives and their accountants at a hearing on the company's tax strategy. "Caterpillar is an American success story that produces iconic industrial machines," Levin said. "But it is also a member of the corporate profit-shifting club that has transferred billions of dollars offshore to avoid paying U.S. taxes." Julie Lagacy, a Caterpillar vice president, was adamant that the Peoria, Ill.-based manufacturer follows all tax laws. "We pay everything we owe," she told the subcommittee. Caterpillar got support from Sen. Rand Paul, R-Ky., who questioned why the subcommittee was even holding the hearing. "I think rather than having an inquisition, we should probably bring Caterpillar here and give them an award," Paul said. "You know, they've been in business for over 100 years. It's not easy to stay in business." Paul said Caterpillar and its accountants have an obligation to shareholders to minimize their taxes. "It is a requirement that you try to minimize your costs. So rather than chastising Caterpillar we should be complimenting them," Paul said. Caterpillar is the world's leading manufacturer of construction and mining equipment, with sales and revenues last year of nearly $56 billion. The company says it has increased U.S. employment by 13,000 jobs since 1999, growing to nearly 52,000 workers last year. The company says it has 118,000 employees in 21 countries. In the U.S., it has 69 ma

  • [By Justin Loiseau]

    Although Caterpillar (NYSE: CAT  ) reported lackluster earnings last week, it's not out of the limelight yet. The company thinks its stock is cheap, and it announced a $1 billion buyback program yesterday that pushed shares up 1.2%. Shares are still down 2.9% from last Monday, but a billion dollars is a lot to bet on a bluff.

Top 5 Valued Stocks To Own For 2015: Schlumberger N.V.(SLB)

Schlumberger Limited, together with its subsidiaries, supplies technology, integrated project management, and information solutions to the oil and gas exploration and production industries worldwide. The company?s Oilfield Services segment provides exploration and production services; wireline technology that offers open-hole and cased-hole services; supplies engineering support, directional-drilling, measurement-while-drilling, and logging-while-drilling services; and testing services. This segment also offers well services; supplies well completion services and equipment; artificial lift; data and consulting services; geo services; and information solutions, such as consulting, software, information management system, and IT infrastructure services that support oil and gas industry. Its WesternGeco segment provides reservoir imaging, monitoring, and development services; and operates data processing centers and multiclient seismic library. This segment also offers variou s services include 3D and time-lapse (4D) seismic surveys to multi-component surveys for delineating prospects and reservoir management. The company?s M-I SWACO segment supplies drilling fluid systems to improve drilling performance; fluid systems and specialty tools to optimize wellbore productivity; production technology solutions to maximize production rates; and environmental solutions that manages waste volumes generated in drilling and production operations. Its Smith Oilfield segment designs, manufactures, and markets drill bits and borehole enlargement tools; and supplies drilling tools and services, tubular, completion services, and other related downhole solutions. The company?s Distribution segment markets pipes, valves, and fittings, as well as mill, safety, and other maintenance products. This segment also provides warehouse management, vendor integration, and inventory management services. Schlumberger Limited was founded in 1927 and is based in Houston, Texas.

Advisors' Opinion:
  • [By Lee Jackson]

    Schlumberger Ltd. (NYSE: SLB) is the other top services name to own for 2014. The company looks to grow its share of E&P spending in 2014 and expects its margins to run higher than in the past. The Merrill Lynch analysts are negative on small and mid cap North American focused service companies. Investors are paid a 1.4% dividend. The Merrill Lynch price objective for the stock is $111, and the consensus target is set at $110.�Shares�closed Monday at $87.32.

Best Mid Cap Stocks For 2015: Dollar Tree Inc.(DLTR)

Dollar Tree, Inc. operates discount variety stores in the United States and Canada. Its stores offer merchandise primarily at the fixed price of $1.00. The company operates its stores under the names of Dollar Tree, Deal$, Dollar Tree Deal$, Dollar Giant, and Dollar Bills. Its stores offer consumable merchandise, including candy and food, and health and beauty care, as well as household consumables, such as paper, plastics, household chemicals, in select stores, and frozen and refrigerated food; variety merchandise, which includes toys, durable housewares, gifts, party goods, greeting cards, softlines, and other items; and seasonal goods, such as Easter, Halloween, and Christmas merchandise. As of April 30, 2011, it operated 4,089 stores in 48 states and the District of Columbia, as well as 88 stores in Canada. The company was founded in 1986 and is based in Chesapeake, Virginia.

Advisors' Opinion:
  • [By Lawrence Meyers]

    This isn�� some growing new industry set to take the world further into the 21st century. It�� an old concept that hasn�� innovated, won�� innovate, and will slowly but surely die out over this century. When I walk into a Walgreens, I see a miniature Target (TGT), a more expensive Dollar Tree (DLTR), and a provider of prescriptions in a world where everything is becoming mail order.

  • [By Demitrios Kalogeropoulos]

    Costly market share gains
    The problem is that Family Dollar has had to pay up for its increasing market share and sales levels. The company's gross profit margin fell by more than a full percentage point, to 34.7% last quarter. In contrast, Dollar Tree (NASDAQ: DLTR  ) booked an expansion of profits, to 35.2%, continuing a trend that's seen it pull away from Family Dollar.

Top 5 Valued Stocks To Own For 2015: Tupperware Corporation(TUP)

Tupperware Brands Corporation operates as a direct seller of various products across a range of brands and categories through an independent sales force. The company engages in the manufacture and sale of kitchen and home products, and beauty and personal care products. It offers preparation, storage, and serving solutions for the kitchen and home, as well as kitchen cookware and tools, children?s educational toys, microwave products, and gifts under the Tupperware brand name primarily in Europe, Africa, the Middle East, the Asia Pacific, and North America. The company provides beauty and personal care products, which include skin care products, cosmetics, bath and body care, toiletries, fragrances, nutritional products, apparel, and related products principally in Mexico, South Africa, the Philippines, Australia, and Uruguay. It offers beauty and personal care products under the Armand Dupree, Avroy Shlain, BeautiControl, Fuller, NaturCare, Nutrimetics, Nuvo, and Swissgar de brand names. The company sells its Tupperware products directly to distributors, directors, managers, and dealers; and beauty products primarily through consultants and directors. As of December 26, 2009, the Tupperware distribution system had approximately 1,800 distributors, 61,300 managers, and 1.3 million dealers; and the sales force representing the Beauty businesses approximately 1.1 million. The company was formerly known as Tupperware Corporation and changed its name to Tupperware Brands Corporation in December 2005. The company was founded in 1996 and is headquartered in Orlando, Florida.

Advisors' Opinion:
  • [By Arie Goren]

    After running this screen on May 21, 2013, before the markets' open, I discovered the following eight stocks: Sunoco Logistics Partners LP (SXL), Leggett & Platt Inc (LEG), Copa Holdings SA (CPA), RPC Inc. (RES), Tupperware Brands Corp. (TUP), Herbalife Ltd. (HLF), John Wiley & Sons Inc. (JW.A) and C.H. Robinson Worldwide Inc. (CHRW).

Thursday, May 15, 2014

Flying This Summer? Expect Lots of Company

Summer Travel Brennan Linsley/AP NEW YORK -- More travelers will take to the skies this summer, the U.S. airlines' trade and lobby group predicted Thursday. About 210 million passengers -- or 2.28 million a day -- are expected to fly on U.S. carriers between June 1 and Aug. 31. That's up 1.5 percent from last summer and the highest level in six years, according to the trade and lobbying group, Airlines for America. The forecast includes 29.9 million travelers -- or 325,000 a day -- flying U.S. airlines to international destinations, an all-time high. Canada, Mexico, the United Kingdom, Germany and Japan are the top five nonstop international destinations, based on published schedules. Airlines for America doesn't forecast summer airfares. The average cost of a ticket last year was $381, up 0.1 percent from 2012. Airlines typically charge more for tickets around holidays and other peak travel times and industry watchers expect a slight increase this summer. Those fares don't include the price of checking luggage -- typically $50 roundtrip -- or any associated change fees. Airlines collected $3.35 billion in baggage fees last year and an additional $2.81 billion in reservation change fees. Those fees, along with a 5 percent drop in fuel prices, helped the nine publicly traded U.S. airlines post a $401 million net profit in the first three months of this year, traditionally the hardest quarter for airlines.

Wednesday, May 14, 2014

The Fed's "Growth-Buying" Scheme Is Failing

The numbers are in. And they are ugly...

Based on preliminary first-quarter data, U.S. GDP (gross domestic product) growth is 0.1%.

That's not much.

But then again what do you expect for $3.4 trillion of Federal Reserve spending to boost the economy?

So the question is, how is it possible that we've got nonexistent economic growth, or worse, negative growth and possibly another recession looming, when the Federal Reserve since September 2008 has spent $3.4 trillion to prime the economic pump?

This could push the whole economy past the brink...

The Ugly Truth on Fed Intervention

First of all, the preliminary GDP number, which is the total output of goods and services produced by labor and property minus imports, will be revised on May 29, 2014.

A majority of economists are already revising their estimates down into negative territory.

The consensus view expects the revised or "second" GDP number will actually show the economy contracted by 0.5% to 1% in the first quarter.

Not that the second quarter is expected to be bad just because of a slow first quarter. In fact, a majority of pundits, including the Federal Reserve itself, are saying because the first quarter was so bad the economy will bounce robustly in the second quarter.

But if they're wrong and the second quarter shows negative growth, that's really bad.

It's bad because two consecutive quarters in a row of negative GDP growth is the definition of a recession.

Why has the Fed intervention failed so miserably in spurring growth? It's an ugly truth but needs to be told.

Since the credit crisis, which spawned the Great Recession, the Federal Reserve has been trying to build a bridge to growth. The truth is they've spent trillions on their bridge efforts, but they can't deliver the destination.

Here's what's frightening: What seems like misguided Federal Reserve policies to stimulate economic growth by printing egregious amounts of money was never a misguided policy of trying to stimulate the economy. It was a massive liquidity and profit-making program designed to first save, then enrich, the nation's biggest banks.

Economic growth was the expected byproduct of the Fed's "trickle-down" banking bonanza.

Why It Didn't Work

The reason we're not seeing that trickle-down growth is because the banks aren't lending as they were expected to.

They aren't lending robustly into the economy because they've had to pay out billions of dollars in fines and legal costs.

That plus their former freewheeling speculative trading gambits with depositor money are being shut down thanks to Dodd-Frank and the Volcker rule, and they are facing their worst free-market enemy, a flattening yield curve.

It's common knowledge that all the nation's too-big-to-fail banks would have all failed if the Fed hadn't bailed them out. Any one of them collapsing, after what happened when Lehman Brothers imploded, would have brought down all of them like a professional bowler throwing a 50-pound ball down an alley with gutter guards.

It's impossible for there to be any economic activity if there are no banks. So, the Fed did what it had to do to save the big banks.

It flushed them with trillions of dollars.

To get their footing back, the Fed took bad loans off their books and opened up its discount window to all comers for all they needed.

They also took in underwater mortgage-backed securities (MBS) and bad loans as collateral for the cash they lent them. To ensure their return to massive profitability, the Fed then embarked on quantitative easing, or QE.

QE is another giveaway program for the big banks. The Fed buys tens of billions of dollars a month in treasuries and MBS from the banks.

The banks in turn get cash, and they lend overnight at the fed funds rate. The Fed set the fed funds rate to essentially zero, and with their borrowed cash the big banks buy more treasuries and MBS to sell next month to the Fed.

It's a great way to make risk-free money and for the big banks to improve their capital ratios and reserves and profits. All of which makes them flush enough to raise dividends, which makes their equity stock look better to investors. And the icing on the cake is that they get to raise dividends to entice more investors. It's a great game.

Too bad the banks are the only ones benefiting directly. The whole trickle-down thing isn't working.

What Has the Big Banks Terrified

Besides hoarding money to pay ongoing and future fines for criminal activities, all the big banks are terrified of the shape of the yield curve.

The yield curve is a graphical representation of interest rates. On the vertical left axis are interest rates rising from zero to whatever height they attain. The horizontal axis is time, with one day all the way on the left and going out to 30 years on the right end of the axis.

Banks borrow from each other, usually for a day at a time, at the fed funds rate, which is a market rate but a rate that the Fed largely controls. The fed funds rate is somewhere between zero and .025% now, as that's where the Fed manipulated it to. As the line that traces interest rates moves to the right, it trends higher. That's because you pay a higher interest rate to borrow money you intend to pay back over a longer time.

Normally the yield curve slopes upward steadily, so that interest rates to borrow for a day might be .25% (on an annualized basis) and 5% or 6% or more for a 30-year mortgage.

But the yield curve is flattening, not steepening, for a few reasons.

Investors are buying 10-year and 15-year and 30-year bonds because their yield is better than what they would be paid if they bought shorter maturity bonds.

One reason that longer-term interest rates aren't as high as they are expected to be is because rates are so artificially low (courtesy of the Fed' manipulation) that investors are going further out on the "risk spectrum," meaning they're willing to lend out money for longer to get more yield.

But another reason there's so much interest in longer-dated bonds is that investors are seeking a safe place to park their cash in anticipation of falling yields because of a market crash or some global macro-event that panics markets.

In other words, investors are fearful.

One of the reasons is that they don't believe the Fed's low interest rate policies are creating growth and that the economy could fall back into recession, which would cause yields to fall even further.

So they want to lock in whatever higher yields they can get now.

The flattening of the yield curve is bad for banks.

When they lend out for a long period of time, they want to charge as much interest as they can.

But if the yield curve is flat and investors are willing to take less interest, they can't charge as much interest as they would like.

If you're a bank and you make loans, you price them according to your risk of being paid back and how long you're making the loan for.

Banks don't want to make long-term loans and not get paid; that's too much risk. That's why they're not making loans hand over fist, even though they have the money to lend.

Thanks to the Fed's QE, banks are better off doing business with each other and the Fed than the public. If there's no credit, there's no economic growth.

And that's the dilemma we're facing.

And most frightening of all, the consequences of no growth and the Fed's money printing are about to devastate equities (again), some bond investments, commodities, real estate (again), and other asset classes.

Don't wait for the Fed to scuttle the economy. Shah helped create a powerful index that you can use to make money no matter what happens. You'll need this when the crash comes...

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Tuesday, May 13, 2014

The Myth of Cheap U.S. Natural Gas: Opinion

NEW YORK (TheStreet) -- We're hearing plenty of talk that the U.S. has been pushing the E.U. to enact sanctions against Russia related to its actions towards Ukraine. If the E.U., as an ostensible extended arm of the U.S., were to get further involved in the game, it's likely the natural gas supply across the region would be severely hampered. 

The E.U.'s involvement in the conflict region, sanctions or otherwise, should be for its own independent reasons and not premised on the erroneous belief in the salvation of supposedly cheap U.S. natural gas.

The development of the so-called shale gas boom in the U.S. follows a script employed by Wall Street: A topic is medially placed. Investors begin with high expectations and then securities are purchased for which the buyer assumes big profits based on production forecasts. In order to meet these expectations, the business is expanded, invested and promoted without regard to the real financial situation and the actual costs of operations. Option programs serve some decision-makers here as a thinking aid. The capital expansion is funded through the sale of new shares, bonds or structured vehicles.

Grotesquely high exhaustion rates of the gas fields, which let the prevailing expectations from investors (and politicians) appear completely ridiculous, join a below-cost production. From politicians we are accustomed to thinking in terms of legislative periods, investors should do better.

Selling U.S. subsidized gas to Europe is discussed as the new savior for the financially troubled industry. However, while Europe is dreaming of procuring cheap gas because gas is less expensive in the U.S, the U.S. expects extra revenue due to higher gas prices in Europe. This difference has not been acknowledged, yet. Ultimately, how can an entity sell its product for a profit, off site, when it is unable sell the exact same product onsite? Include the horrendous costs of the transportation and compression to LNG (liquefied natural gas) and the profit margins are further reduced. Apart from that, the conditions are present for neither an export nor for cost-covering production and the dreamy forecasts to the centenarian reserves meanwhile dissolve in hot air. The cheap energy supply to the E.U. by shale gas is a myth. The sooner one realizes this, the less money burnt and the less foreign policy porcelain is damaged. These gas companies must raise investment capital that would not or could not get covered by the sale of new shares. And investors in the commodity sector tend to forget the dilution effect, which is brought by the offering of new shares.

In a similar field, buyers of mining stocks still wonder why their stock prices are stuck in the muck. The expansion of the field of view and the inclusion of the market capitalization of each company is pretty helpful. It turns out that many business valuations are not as diluted their stock prices suggest. Rather, the number of outstanding shares has been increased by constantly offering new shares to the chagrin of owners of old shares. Wall Street, it seems, has orchestrated the shale gas boom and, in so doing, searched for alternatives to the constant sale of new shares. Voila: Volumetric Production Payments (VPPs) were born. With this type of financing, the company receives capital from a buyer and sells entitlements to future production. In other words, the company remains the owner of the assets, but sells a portion of its future production. For shareholders, this is not a windfall. While this method creates no dilution, future earnings are diminished. This type of financing is similar to classical royalty-structures in which commodity buyers are able to acquire large flow rates on the products in advance. The only condition is that the expected quantities actually can be encouraged. In shale gas there is every reason to doubt that this will occur. According to Surge Capital, these companies are currently using this structure: Noteworthy is the percentage of output obligated. If shareholders wonder why, even in better times, they end up with less than expected return, the answer can be explained by the table above. The juxtaposition of the total value of production based on the sale price of the said shares is also noteworthy. The investor can see how little it may be worth it if a company is debt free. Both, the permanent dilution and the irreversible sale of future production harms the investor. As a result, I recommend a close look at a several year worth of annual reports before investing mid to long term. >>Read More: 'Peak Oil' Burned as Exxon, Chevron, Shell See $100 a Barrel >>Read More: Big Coal Is Downsizing in China, and Stock Investors Like It >>Read More: Cool Heads Quietly Dominate Heated South China Sea Dispute At the time of publication the author held no positions in any of the stocks mentioned. Surge Capital Corp. chart used by permission. This article represents the opinion of a contributor and not necessarily that of TheStreet or its editorial staff.

Monday, May 12, 2014

Geithner's regrets on financial crisis

NEW YORK — Former Treasury secretary Timothy Geithner, at the center of the response to the financial meltdown in 2008, defends pursuing policies that bailed out some of those who had gotten the country into trouble in the first place. When "the plane's on fire and smoke is filling the cabin," he says, the focus has to be on landing it safely.

But in an exclusive interview with USA TODAY, he also says Americans deserved stronger law enforcement action — and he backs efforts to hold more bankers and others accountable. "How could you argue the opposite?" he asks.

In his new book, Stress Test: Reflections on Financial Crises, published today by Crown, Geithner details the frantic efforts behind the scenes to keep a crippling recession from becoming an even more devastating depression. Now 52, he was at the center of the action, first as president of the New York Fed, then as head of the Treasury Department.

In the interview, he discusses the best and worst decisions made during those tumultuous years and his biggest personal failing — his inability to explain effectively to Americans the risks ahead and policy choices being made. He offers some advice to his successor for when the next crisis inevitably strikes. "Use overwhelming force, and plan for a long war," he says.

Questions and answers have been edited for length and clarity.

Q: You write, "We saved the economy, but we lost the country doing it." You mean the suspicion that the banks got bailed out, but ordinary people didn't?

A: If you look at what we faced, it was a classic financial panic, something Americans hadn't seen since the Great Depression. There's no memory of that, no understanding of that, no experience of that. And in a classic financial panic, you have to do the opposite of what seems intuitive, what seems to make sense, what seems fair. Because to protect people from the risk of mass unemployment, you have to make sure you keep the financial system running, stable, t! o protect their savings, to make sure people can borrow, businesses can stay open. But that means to do that you have to do things that look deeply unfair. It looks like you're rewarding the arsonists, the people that were central to helping cause the crisis.

Q: The most frequent criticism of you is that you were too cozy with the Wall Street banks.

A: It's a perfectly understandable criticism, again because Americans had not seen anything like this in their lifetimes. How could you convince them that it could have been dramatically worse? ... It's like you're in the cockpit and the plane's on fire and smoke is filling the cabin. And you've got a bunch of people on the plane — you've got some terrorists, or you've got some people who built the plane or didn't design the fire system right — and people want you to come out of the cockpit and put them in handcuffs or beat them up. And it's understandable, but you've got to land the plane safely if you want to protect people from the risk of catastrophe.

When you land the plane, then you can figure out how to hold people accountable and make the plane safer in the future. But first you have to land the plane. That's the just and necessary thing to do.

Q: When I interviewed Massachusetts Sen. Elizabeth Warren a few weeks ago about her new book, she said some bankers should have gone to jail. Should they?

A: I have a lot of respect for Elizabeth, although we didn't agree on everything, sort of understandable. And I think that's a really important question. ... I didn't get to make those choices. That wasn't my responsibility. I think it's really important that we build a system — and I think we've created a much better system than we had before the crisis — where there is much clearer rules of the game, less of the Wild West where anything is possible, with enforcement authorities that have the resources to go after and punish and deter the kind of behavior that was so damaging in this crisis. And there was a lot of terri! ble behav! ior. And I think Americans deserved a stronger enforcement response.

Q: Should there be more enforcement action now against some of the people who helped bring about this crisis?

A: First of all, of course there should be. How could you argue the opposite? But you have to talk to the prosecutors across the country about this. ... They're gradually trying to build a record of actions.

Q. Elizabeth Warren's book is called A Fighting Chance, but it was originally titled Rigged. Is the American system rigged?

A: I guess I would say it a little differently. I mean, if you look at our country today – and we're an enormously lucky country, a very fortunate country. But if you look at the levels of poverty in this country, if you look at the long period we've had of almost no growth in the median income for many Americans, if you look at the rise of inequality, or you look at the basic inequality of opportunity many Americans face – think of it, if you're born in the United States today, how well you do in life, the quality of education you get, the quality of health care you get, depends a lot still on the color of your skin or whether your parents were poor.

That's something fundamentally that all Americans should be worried about. And to make more progress on that basic, core sense of hope and opportunity, you have to have a government that rediscovers some capacity, a Congress that rediscovers some capacity to do things that can make a difference in the lives of ordinary Americans. And today Americans have understandably, they watch what's happening in Washington: frozen, damaged, paralyzed debate; people who enjoy fighting more than they do solving problems. They've lost confidence in the ability of our government to provide that. So we have to figure out some way for Washington to earn back that confidence.

Q: Did the financial crisis make that inequality worse?

A: Oh, absolutely. One reason financial crises are so unfair and devastating is because the damag! e they ca! use falls disproportionately on the relatively poor, people of modest income. They are deeply unfair. Before the crisis we had rising inequality, poverty, no growth in the median income, and the crisis made those things dramatically worse. Now we're gradually healing the damage from the crisis, but there's a lot of damage left over. And you need to produce an economy growing more quickly over a longer period of time to try to repair that.

Q: What was the best decision you made during the financial crisis?

A: The most important thing we did was to have a Federal Reserve using overwhelming force. President Obama got the Congress — and he was excellent in making these tough, hard decisions quickly in the fog of the crisis — to get Congress to put in place a level of stimulus, tax cuts and benefits, to the American people on a scale larger than what was done in the Great Depression in relative terms and then to find a way to restructure and recapitalize the financial system very aggressively and very quickly. Because of the scale of that support — dramatically different strategy than used really by any country in the last 100 years — we took a situation where we had a financial shock that was five times greater than happened in the beginning of the Depression, and we got the economy growing again in six months.

And again, the recession was still tragic in its damage, and we're still living with the scars of that. But the force of that response, which was very creative — parts of it seemed unfair. It was messy at times. But it was very effective in preventing the most important thing, which was to protect people and the global economy from the risk of a second Great Depression.

Q: The worst decision?

A: The worst thing we faced was in the fall of '08. If you think about what September felt like, think about Lehman (Brothers) weekend, when the United States of America, the most powerful country on the planet, faced a classic financial panic with what were terribly weak ! tools, a ! very weak fire station, until Congress was scared enough to give us bigger authority. The worst part of the crisis was when we were watching the fire burn. We knew that there was a risk that it would get out of control, and we at that point, until it was possible to go to Congress and convince them to give us more authority, had limited tools to act.

Q: That's not really a mistake you made, though. Is there one?

A: I wasn't the best – I mean, I wasn't hired really to be the PR person, to be the explainer. It wasn't my natural talent. And that was hard because perceptions matter a lot, and I was not able to help give people a better feeling for what the risks were and what our choices were at that time, and of course that's something I very much regret.

Q: Let's look ahead. Will we face a financial crisis like this again?

Financial systems are inherently risky, and there's no chance we've banned the risks of crises from the face of the planet, because what produces crises like this in some sense is also paradoxical. That usually what happens is you have a long period of confidence when people feel more comfortable they're going to keep their jobs, that their house prices will rise, their savings will rise in value. And what happens in that context is people take more risks, to lend more and to borrow more. That sense of confidence, that belief that is the underpinning of most crises, or booms in borrowing, is something you can't regulate away. What you can do is you can make sure you force the financial systems to operate with much thicker shock-absorbers against risk, and make sure you have a strong fire department that's available for when things fall apart.

I think the things we did in the crisis — however messy and imperfect — they have a very good chance of providing a long period of relative stability and resilience in our financial system. But we're going to face the risk in the future again of a severe crisis, and I hope that if you give people a better feeling! for the ! choices we made, a better feeling for how to make decisions in the fires of a crisis, that our successors will be able to use the strength of the United States to do a better job of protecting people from the damage that can cause.

Q: Where will the next crisis come from – from here, from abroad?

The thing about crises are that they're what you can't see, what you don't expect. Usually in the world we live in today, everybody's got a long list of risks that they worry about, think about every day. That's not really what hurts you in the end. What hurts you is the unimaginable, or the thing where memories faded. ... It doesn't mean that you're powerless to protect people from that. It just means you have to constantly keep out what I call the forever war, this basic challenge of how to make sure you're limiting risks where you can. And you keep the fire station powerful enough to come in and protect people. You're not going to eliminate the risk of crisis by eliminating the fire station. It doesn't make fires less likely.

Q: When that next crisis comes, what's your advice to your successor?

A: Overwhelming force as quickly as you can on a massive scale. If you do that – again, it seems counterintuitive – if you do that, you're much more likely to protect people from mass unemployment, much more likely to get the economy growing again, much more likely to end up costing the taxpayer less money, and in some ways, you're more able to force the restructuring you need.

If things are too fragile, it's hard to force the restructuring you need to make the system stronger. You should use overwhelming force and plan for a long war because these things are hard and they take a long time to heal. Don't stop too soon.