Archive
Jan 6, 2009
Warning: Hope, Hype, and the Herd
By Andrew Mickey, Q1 Publishing
…most investors tend to project near-term trends—both favorable and adverse—indefinitely into the future.
That’s what value investor Seth Klarman told a group of investors last February. Klarman portfolio manager and co-founder of the Baupost Group where he has averaged just under a 20% annual return for 25 years. So when Klarman talks, I pay attention.
But hey, this bit of wisdom was from a speech back in February. That’s ancient history for Wall Street and the masters of the universe apparently already forgot Klarman’s sage advice...
Jan 3, 2009
2009’s Trade of the Year
By Andrew Mickey, Q1 Publishing
Phewww…I think we’re all breathing a collective sigh of relief - 2008 is officially over!
Don’t get me wrong, I wish the markets would go up forever and we all could be rich and never have to worry about a thing. Realistically, that just isn’t going to happen. Those of us prepared for what is ahead, however, realize its times like these when genuine opportunity is created.
In that spirit, I’d like to reveal the Trade of Year...
Jan 1, 2009
Looking Ahead
By Andrew Mickey, Q1 Publishing
This is the time of year when the world looks back. We get inundated with the Top 10 of practically everything. Sports, music, news, people – everything.
Now, more than ever, it’s time to look ahead. The next year promises to be more exciting than ever. And the opportunistic few who are willing to make it through all this will be well rewarded.
Right now, it seems like nothing could go right next year. The economy is worsening, states and local governments will be ratcheting up taxes, and we’ll likely see the biggest bailout yet for state and local governments.
There’s not much to get excited about. But if you look hard enough, there are some positive signs out there...
Dec 30, 2008
You Should Be Getting Excited About 2009
By Andrew Mickey, Q1 Publishing
Sometimes it seems there’s just no light at the end of the tunnel. Even those of us who try to look at the bright side of things are getting worn down a bit. On the surface, it seems like there is nothing good coming around the corner.
Housing prices continue to drop. Commercial real estate prices are catching up fast. State budgets are facing deep deficits and a couple of them (Michigan for sure) are headed for bankruptcy. Retailers are cannibalizing each other by slashing prices just to get any sales at all (ain’t capitalism grand – if you’re prepared?).
To top it all off, the next round of unemployment data...
Dec 25, 2008
A Holiday Message
By Andrew Mickey, Q1 Publishing
It’s that time of year when families gather and everyone gets a chance to catch up on the past year.
Looking back, the past year has been a lot of things…painful, stressful, and, if nothing else, interesting. And that’s just the financial markets.
So, I’d like to pass on a quick thank you...
Dec 23, 2008
The Best 3 Ways to Give the Gift of Prosperity
By Andrew Mickey, Q1 Publishing
They’re the worst possible gift you can give a grandchild, niece, nephew, or any other young person in your life despite they’re ongoing popularity. You’d never know how bad they are from the high praise they receive.
Kiplinger’s calls them the gift you buy for a newborn niece or nephew.
Bankrate.com says they’re the gift that keeps on giving.
The U.S. Treasury calls them a gift for any occasion.
I guess that’s a big part of why 55 million Americans now own them. That’s more than one in six Americans.
I’m talking about...
Dec 20, 2008
Cashing in on Desperation
By Andrew Mickey, Q1 Publishing
This level of undervaluation represents what we believe is a very rare opportunity—one we have never witnessed in more than 30 years of managing convertible portfolios.
That’s what Nick Calamos recently said about convertible bonds.
And who better to know we’re looking at a very rare opportunity in convertible bonds?
Calamos is Co Chief Investment Officer of Calamos Investments which manages about $23.8 billion in assets with a big chunk of them in convertible bonds. The New York Times calls Calamos...
Dec 18, 2008
OPEC: Too Little, Too Late
By Andrew Mickey, Q1 Publishing
In March of 1974, in the midst of the oil-dependent world’s first oil shock, economist and Nobel Laureate Milton Friedman noted:
Higher [oil] prices induced consumers to economize and other producers to step up output…In order to keep prices up, the Arabs would have to curtail their output to zero…Well before that point the cartel would collapse.
Jump ahead 24 years and we’re going through it all over again.
A few days ago OPEC’s president warned...
Dec 16, 2008
These Assets Haven’t Been This Cheap Since 1932
By Andrew Mickey, Q1 Publishing
Stocks are pricing in a recession, and bonds are priced for a depression.
That’s what Bill Gross, Managing Director of PIMCO and the world’s Bond King, has been telling anyone who would listen for months now.
Stocks are cheap, but bonds are at irresistibly cheap levels. If you’re looking to buy low, sell high and collect 9% or 10% interest in between, corporate bonds are definitely worth a look right now.
The past year has been painful. Two million jobs have been lost, trillions of dollars in paper wealth has evaporated, the U.S. dollar is just off multi-year highs (showing its first signs of cracking though), and hurting exports…I could go on and on...
Dec 13, 2008
Will 2009 Be Even Scarier?
By Andrew Mickey, Q1 Publishing
Great Depression II…15% drop in home prices…Food riots…9% unemployment…Another 50% drop in the Dow…
My how the world has changed?
A year ago, the bulls were off and running. Many were buying on the dip. Commodity prices were soaring. Farmers were making a killing. Emerging markets consumers couldn’t get enough of anything.
It seemed like the boom would never end. Any talk of a full scale global depression or 50% decline in the Dow would have been laughed off. This year, it’s a totally different story. The bears are out in force and the leading opinion-makers in the investment community couldn’t be more...
Dec 11, 2008
When Rewards Outweigh Risks
By Andrew Mickey, Q1 Publishing
Risk has quickly regained its status as a four-letter word. No wants to hear about, no one wants to think about it, but those willing to take it on (pragmatically, mind you) will likely earn greater rewards than they would have at any other point in the past twenty years.
Right now, everyone is absolutely afraid of risk. Yesterday, the bond market went upside-down again. Investors were buying up the “safest” assets in the world as fast as they could. At one point in the day, T-bills were yielding less than zero...
Dec 9, 2008
History Shows It’s Time To Buy
By Andrew Mickey, Q1 Publishing
The market can be frustrating. Just a few weeks ago it looked like the markets were about to reach lows we haven’t seen since the early 90’s.
The commodity bubble was bursting, hedge funds were imploding, and it seemed like the selling would never stop. To add fuel to the fire, unemployment was getting worse, consumers started saving again (seemingly all at the same time, which isn’t very helpful), and practically every week another bank failed.
It was disastrous. The government was handing out cash to banks and guaranteeing private companies’ commercial paper while putting trillions of dollars it doesn’t have at risk. It seemed like a depression wasn’t out of the question. But all that’s starting to change...
Dec 6, 2008
How to Buy Gold Stocks for Free
By Andrew Mickey, Q1 Publishing
Managing your own investments can be either one of the most rewarding or the most frustrating experiences you’ll ever have.
Investing successfully is like becoming successful at most everything else. It takes a good bit of time and a willingness to learn. It takes a good bit of humility…if not, you’re going to learn a bit of humility. Basically, it’s not easy.
Over time though, achieving financial independence in exchange for riding out the ups and downs, buying when no one else is willing to, and taking the time and exercising patience is truly worth it...
Dec 4, 2008
Is Now the Time to Buy Gold?
By Andrew Mickey, Q1 Publishing
Just a few months ago the race was on for gold. In March, gold blew past $1,000 an ounce. Commentators were jumping over each other to make a more attention-getting prediction than anyone else.
$1,500 an ounce…$2,000…$3,000 – they would say.
The gold bulls were getting very aggressive. Some even...
Dec 2, 2008
A Slippery Slope Ahead for Oil
By Andrew Mickey, Q1 Publishing
Dr. James Schlesinger says the U.S. attitude towards oil - has only two modes – complacency and panic.
Schlesinger should know. In the 70’s he closely watched the Middle East as the U.S. Secretary of Defense. Then he would move onto become the first U.S. Secretary of Energy when oil prices were really starting to move...
Nov 29, 2008
A Legend Speaks
By Andrew Mickey, Q1 Publishing
History is a guide to navigation in perilous times. History is who we are and why we are the way we are.– David Mccullough, Historian and Author
You won’t see him on TV or writing an editorial piece for a major newspaper. Most retail investors have never heard of him, but he has one of the best long-term track records of any investment manager in the world...
Nov 26, 2008
Unprecedented Bright Spot in Market Downturn
By Andrew Mickey, Q1 Publishing
It’s Thanksgiving and the markets are taking a well-deserved break. Frankly, they sure could use it. The recent volatility is unprecedented.
In the past 25 years there has been 50 days when the market moved up or down four percent. That seems like an average trading day now. It should. Half of those 50 moves occurred in the past two months. That’s right, 25 years of volatility was...
Nov 25, 2008
Why Contrarians are Itching to Buy Stocks – But Should Not
By Andrew Mickey, Q1 Publishing
The last twelve months have been one of the toughest times to be an investor I’ve ever seen.
It wasn’t long ago we waded through the panic stricken days when a currency crisis enveloped the Asian Tigers. Then Russia’s debt default spooked global markets again. Then the tech bubble burst.
You could put all of those “crises” together and they still wouldn’t compare to what the markets have gone through in just the past few months...
Nov 22, 2008
The Next Boom Emerges
By Andrew Mickey, Q1 Publishing
The current bear market is pretty bleak. The recent market swings have pushed a lot of investors out of the market completely. The auto makers, China, oil commodities, alternative energy, etc. are all down in the dumps and the near-term upside is very, very limited.
There’s almost no refuge where you can get a decent return. Earlier this week, the average interest rate for a one year bank CD was 3.36%, the average money market account yielded below 3%, and 1-year treasury bonds were yielding less than 1%.
Sometimes it seems like there are no good investments to make right now. Rest assured though, new bull markets are born from the bodies of dead ones. It is never different this time (just look at oil). And that is why it is more important now to start looking ahead. This is where to start looking...
Nov 20, 2008
Investing in a Rapidly Changing World
By Andrew Mickey
Chief Investment Strategist, Q1 Publishing
As I write, the Dow is down another 5%. Shares of smaller companies have fallen even further. Oil prices continue to slide. Investors are starting to price in a long, sustained downturn.
Despite all the doom and gloom, as I look outside my office, there’s a lot going on. Road workers still have the street closed down as they repave it. People are still shopping. The restaurants are just as active as they were a year ago. It appears no one is saving every penny in case the world enters a prolonged depression. But I do notice some changes that must happen as part of a new reality we face.
This type of overcrowding cannot and will not last through a prolonged downturn. Ensure you are prepared by...
Nov 18, 2008
Profiting From Bailout Nation
by Andrew Mickey
Chief Investment Strategist, Q1 Publishing
It’s bailout season and every overleveraged business that failed to plan for a downturn is lining up for a share of the $700 billion pie.
General Electric (NYSE:GE) is about to come a bank with access to the Fed’s free money. American Express (NYSE:AXP) anticipates such rough times ahead, it plans to become a bank with access to the Federal Reserve’s deep pockets as well.
Over the weekend, Bloomberg reported Home Depot (NYSE:HD), Dow Chemical (NYSE:DOW), and Textron (NYSE:TXT) asked for the Fed to fund their ongoing operations by buying their second-tier commercial paper.
Even city governments are throwing their hats into the ring. Philadelphia and Atlanta asked for multi-billion dollar bailouts as well.
It seems like everyone wants a handout. But here's how you can take advantage...
Nov 15, 2008
The Future of Oil
by Andrew Mickey
Chief Investment Strategist, Q1 Publishing
Now is a good time to buy.
That’s what R.S. Sharma, the chairman of India’s national oil exploration company ONGC, said last week.
Sharma added, The world financial crisis and slumping oil prices have made energy assets more attractive.
Is he right?
Well, yes and no. It’s a good time to buy oil. But a great time is likely right around the corner...
Nov 13, 2008
China's $585 Billion Renovation
China Begins $585 Billion Renovation
by Guy Bennett
President, Q1 Publishing
The global recession has hit China in a big way. Over 67,000 factories have closed in the last three months. An estimated 50 million Chinese workers are now unemployed, according to the usually overly positive government estimates. Protests or “mass incidents” are springing up all over the country.
The official Chinese GDP growth rate plummeted 30% in the last quarter. Independent data coming out of the manufacturing sector, however, suggests a much sharper decline. Chinese stocks have surging up and down, just as they have in the U.S. There are ways to profit from this global market volatility. Certainly China presents a unique set of opportunities.
The fact is, the Chinese have been running surpluses for 20 years. They hold about $2 trillion in foreign exchange reserves and they’re about to start spending it in a big way.
Earlier this week, China announced a $585 billion stimulus package to get its economy back on track.
Nov 11, 2008
Investors Should Fear This Payday
by Guy Bennett
President, Q1 Publishing
A pure free market economy is great on paper. Goods and services are exchanged under conditions mutually agreed upon by the seller and the buyer. The efficiency of the system is enforced by the natural laws of supply and demand, leading to lower pricing and increased quality of service.
Under this theory, government regulation is an evil which distorts the market and dilutes the purity of the relationship between the consumer and producer.
As we’ve been reminded recently, a free market economy also has its downside.
In hindsight, lending money to low-income home owners with “teaser rates” that triple 18 months into the contract maybe wasn’t the greatest idea.
Nov 7, 2008
Renegade Trader Makes $1.7 Billion in Bear Market
by Guy Bennett
President, Q1 Publishing
Last month as the Dow dropped 20% and portfolios got battered, one investor was prepared. Nassim Nicholas Taleb, who founded the risk management firm Universa Investments, watched his portfolio soar 65% and 115%.
If Taleb’s name sounds familiar that’s because his book The Black Swan: The Impact of the Highly Improbable, spent 17 weeks on the New York Times Bestseller list.
Universa was launched in December 2007 with $300 million in assets. It is now estimated to be worth close to $2 billion. Technically Taleb is an “external advisor” to Universa, which is managed and owned by former professional trader Mark Spitznagel.
How did Universa Investments gain 115% in the vortex of the worst bear market in two decades?
Nov 6, 2008
The Real Story Behind China’s Manufacturing Crisis
by Guy Bennett
President, Q1 Publishing
We’re pretty much dead now. We cannot pay our workers’ salaries. We are about to be bankrupt.
- Mao Youming, Factory Owner, Shaoxing, China Oct 30, 2008
The Chinese government claims that their annualized GDP grew by 9% between July and September.
Mainstream media outlets like are parroting the cheery party line despite an avalanche of data from the manufacturing sector that suggests the Chinese economy is faltering and on the brink of collapse.
Nov 4, 2008
Another Man's $52 Billion Treasure
by Guy Bennett
President, Q1 Publishing
We’re rich. We have less than 4,000 people living here and we have millions of dollars in the bank.
- Town Administrator, Fox Township Pennsylvania
It’s tough to imagine in this economic climate, but some small towns are getting rich.
That may be a surprise. After all, dozens of state and local governments are broke and on the verge of being downgraded to junk status. State pension funds have been decimated. A few pundits have even predicted state and local governments’ debt loads may trigger another phase in the credit crisis.
But some have more cash than ever by...
Oct 31, 2008
Petro Dollar Shopping Spree Starts Now
By Guy Bennett
President, Q1 Publishing
As we twist in the wind, watching the markets rise on vapors and plummet on gossip, the financial pundits are trying to figure out whether the current mini-rally is here to stay.
History indicates that there will be plenty of rallies as we bounce across the bottom. After all, the stock market is a self correcting system. When prices get low enough, people will start buying. And when they start buying, prices will move up.
However, there’s a new wrinkle this time around...
Oct 30, 2008
Red Friday: Coming to a Mall Near You
By Andrew Mickey
Chief Investment Strategist, Q1 Publishing
It’s become somewhat of an annual tradition. After stuffing one’s self on the fourth Thursday in November, it’s customary to wake up at the same time as newspaper delivery boys, and line up for hours just before the official start of the holiday shopping season as retailers extend huge bargains.
As someone who has lived outside of the United States for a big part of my life, I can easily say there is nothing more American than the rampant consumerism following Thanksgiving Day.
It’s Black Friday and retailers celebrate the part of the year when the real profits are made. But this year Black Friday has all the potential of pushing retailers deeper into the red.
Oct 28, 2008
5 Signs of a Market Bottom
By Andrew Mickey
Chief Investment Strategist, Q1 Publishing
We’ve hit bottom!
Pundits around the world have signaled “All Clear” and it’s time to go all in, right?
Wrong.
We’ve been avoiding calling a bottom here at Q1 Publishing for months now.
However, that could be about to change. Four of our five bottom indicators are turning bullish and we’re just waiting for one more.
Oct 26, 2008
Don't Buy Into Stock Buybacks
By Andrew Mickey
Chief Investment Strategist, Q1 Publishing
Bull Market - A random market movement causing an investor to mistake himself for a financial genius. – Anonymous
The bull market is over and the days when everyone was an expert are gone. Merely buying a stock and watching it go up day after day is history. “Buy and hope” is dead.
But that doesn’t mean you can’t make money and get your portfolio back in shape. You can. You just have to separate the fact from fiction. And one of the most dangerous myths that could cost you even more money is that share buybacks are good.
You see, the world is not coming to an end. The economy will recover…eventually. A new bubble will form. And greed will replace fear. It always does.
And here’s the best part, a few companies will emerge stronger than they were before. The trick is to identify which ones will make the best of a bad situation.
This is a time when great companies increase their market share. The strong get stronger and well…the weak disappear. You can tell the difference by...
Oct 22, 2008
Supersized Survivors Defy Economic Gloom
by Guy Bennett
President, Q1 Publishing
You won’t find Lynn Landgraff featured in the pages of the Wall Street Journal or Businessweek. But she’s a good example of how some people are sidestepping the current economic turmoil.
Lynn owns and operates a McDonald’s (NYSE:MCD) in small town of Greer, South Carolina. According to the Greenville news, [Lynn] hired 65 people to work at her new store, and may be looking to hire about 10 more as business picks up during the holidays.
McDonald’s is an extremely resilient business. It has already survived the Italian based slow food movement and the Oscar-nominated documentary Super Size Me which showed the filmmaker gaining 30 pounds and developing toxic shock after eating nothing but McDonald’s food for a month.
Oct 21, 2008
California Economy Sends Warning Signal
by Guy Bennett
President, Q1 Publishing
There is no question that this area is in a recession. We are the canary in the mine shaft. - John Husing, California Economist
We are all living in the shadow of a gigantic question mark. What is happening to the global economy? Are we slipping into a recession? How bad will it be? Millions of Americans are asking: Will we lose our homes? Our dignity? Our ability to feed our children?
The fact is, nobody knows what is going to happen. In fact, most people aren’t exactly sure what is happening. Except that all the charts are pointing down.
Last week, I talked to a London-based investment banker who is convinced that that many senior bank officials do not understand their own “financial instruments”. Not just why they failed, by how they worked in the first place.
When the big picture is so cloudy, financial pundits look for smaller pictures to bring into focus. One popular obsession is trying to “call the bottom”. In other words trying to predict when stocks - as a group – will reverse their descent and begin going up (and yes this will eventually happen).
“The bottom” will come when we get the first signal that better economic times are ahead. Some financial analysts think we are there now. Others think we’ll get there in Q3, 2009. Like I said, no one knows.
As it turns out, the key to identifying the bottom this time around will be...
Oct 18, 2008
Timber! Look Who’s Loading up on Lumber
by Andrew Mickey
Chief Investment Strategist, Q1 Publishing
We have been concerned for some time about the risks in asset-backed bonds, particularly bonds that are backed by home equity loans, automobile loans or credit card debt (we own no asset-backed bonds). – Prem Watsa, 2004 Letter to Shareholders
By now it all seems so obvious. All the warning signs were there. The “Bad Credit, No Problem” slogan at car dealerships, banks’ no-standard lending practices, etc. We all knew the good times had to come to an end; it was only a matter of when.
That “when” is now and the good times have come to a fairly quick end. A sustained bear market has set in, banks are afraid to even lend to each other, and a harsh recession that I don’t believe the “recessionless” generation is prepared for is on the horizon.
Regretfully, a lot of investors weren’t prepared. One man was not only prepared, he made a killing in this downturn. Now, he’s taking his winnings from a big bet on risky loans going bad and pouring the cash into timber land at rock bottom prices.
I know what you’re thinking…“Trees…now!?!”
That’s right. I’ll explain...
Oct 16, 2008
Where the Safe Money is Going
by Guy Bennett
President, Q1 Publishing
After the recent wild fluctuations in the Dow, many investors have lost faith in the market and the banks. Bank deposits have decreased an average of $500 million a day over the last 90 days. Meanwhile the stock market has shed around $8 trillion in value. Those are difficult numbers to wrap your head around.
One thing is for sure, people are sick of losing money. In the current climate, many investors have given up trying to make their capital grow. They are solely focussed on keeping it safe. As it turns out, spooked investors are taking the notion of “safe” literally.
SentrySafe, the nation's top safe manufacturer, reported that sales have surged 50 percent in the past three weeks. Home Depot reported a big spike in the sales of safes and some stores are running low.
“People are looking to gain control,” explains Doug Brush, SentrySafe's business manager, “They are bringing things that are valuable and important to them home.
The paranoia isn’t just about the markets and the financial institutions anymore.
Some high-end safe buyers have requested 2 a.m. deliveries to keep neighbors (or domestic staff?) from knowing that their homes are storage facilities for gold and cash.
But money will only stay hidden so long. When the storm passes money will return to the markets. Once we get the first whiff of an upturn in the economy (which could be a year or so away) the markets will slowly come back to life some will surely head into...
Oct 14, 2008
Stock Market Rally: 3 Reasons Why it Won't Last
By Andrew Mickey
It’s all over. Stocks are back. The Dow roared back to life in record fashion yesterday. After the worst sell-off in decades, it’s time for a tremendous rally.
Will it last? Is it time to buy?
It’s a tough time to be an investor. Frankly, there is still a lot of uncertainty in the market despite yesterday’s rally.
The CBOE Volatility Index (VIX), which is a good indicator of the level of fear in the markets, still sits well above its previous decade highs.
On top of that, closed-end funds tell an equally bearish story. A closed-end fund trades like a stock and holds a group of securities that are tough for individual investors to buy. For instance, some hold distressed debt, municipal debt, or China’s “A” shares which only Chinese citizens are able to buy. They will also trade at a premium or discount to relative shares.
Almost every closed-end fund is selling at a very steep discount to Net Asset Value. There are about 654 closed-end funds traded on major exchanges. As of Friday, 636 of them are selling at a discount. Only 18 are fetching a premium.
I've got to warn you, we haven't hit bottom yet because...
Oct 11, 2008
How to Take Advantage of a Bull Market in Volatility
By Andrew Mickey
Chief Investment Strategist, Q1 Publishing
“VIX hit 46, you buying anything?”
That was what one of my brokers e-mailed on September 29th.
The “VIX” is the nickname for the CBOE Volatility Index. It’s often called the Fear Index. In the past, it has been a good indicator of when fear has peaked.
The VIX tracks the amount of premium someone is willing to pay for S&P 500 option contracts. It is a basically a measure what it costs to insure against a market collapse. It’s basically the cost of portfolio insurance.
When the index hit the mid-40’s in 2003, it was the bottom. When it surged to the mid-50’s (the previous all-time high) in 1998 when Russia defaulted on its debt, it was a fantastic time to buy. So this time, when it hitting new 5-year highs in late September, a lot of hopeful people were expecting a bottom.
Those who did probably didn’t fare too well. Since it hit 46 in late September, the Dow has fallen more than 2000 points, an additional $2 trillion dollars of wealth was wiped away, and a lot of stocks have fallen even more. Take advantage of it all by simply...
Oct 9, 2008
Markets R.I.P: The Great Unwind
By Andrew Mickey
Chief Investment Strategist, Q1 Publishing
Pensions & Investments magazine warn, “Bloodbath Ahead.”
Reuters predicts, “D-Day for Hedge Funds as Redemptions Roll In.”
CNN cautions, “Hedge Fund Blues are Just Beginning.”
The markets sit perilously on the edge of disaster. A downward spiral is getting stronger and there’s not much that can be done about it. And one of the leading has been and will be hedge funds.
Frankly, the consequences can be dire if you’re holding the same stocks as the funds. The news isn’t all bad. As you’ll see in a few moments, the mass sell-off will create a few stellar short-term and long-term opportunities in...
Oct 7, 2008
5 Market Myths Destroying Your Portfolio
By Andrew Mickey
Chief Investment Strategist, Q1 Publishing
It has been a wild couple of weeks. To say the markets are going haywire is a tragic understatement. The market has started a vicious cycle and there’s no sign of it turning around.
All the recent volatility is causing massive sell-offs forcing share prices into a dangerous downward spiral.
Half of the stocks on the NYSE set a new 52-week low yesterday. The NASDAQ is almost in as bad a shape. And anything with a market cap of less than a $1 billion…you don’t even want to look at it.
As we watched a few weeks ago, all of the uncertainty is causing investors to pull out of mutual funds as fast as they can. Last week more than $7 billion was pulled out from equity mutual funds according to AMG Data services. And an additional $2.6 billion was redeemed from bond funds.
The sell-off was on top of an absolutely horrible July when investors yanked out more than $23 billion. August wasn’t much better when about $6 billion was pulled out.
It’s getting ugly. Mutual fund flows are a key indicator of sentiment. And right now, investor sentiment is at a precariously low point.
The worst part of it all, I’m afraid, is too many investors are succumbing to...
Oct 4, 2008
How Argentina Survived Its Banking Collapse
by Guy Bennett
President, Q1 Publishing
From Buenos Aires, Argentina
“We are witnessing the First World popping like a bubble.”
- Cristina Fernandez de Kirchner, President of Argentina
Last night I had dinner with an Argentine businessman at a small restaurant in downtown Buenos Aires. He’s involved in the development of shopping centers here in Buenos Aires.
I mentioned to him that I’d purchased a local newspaper earlier in the day at the Plaza de Mayo. An image of a jumbo jet made of U.S. dollar bills took up almost the entire cover.
I’d assumed it was about the U.S banking crisis. But after laboriously translating the headline and the first few paragraphs I discovered...
Oct 2, 2008
Escape to South America Uncovers Opportunities
by Guy Bennett
President, Q1 Publishing
The Dow is up 200. Down 700. Up 400. Have we hit bottom? Or is it 1929 all over again? Some say, “Grab a parachute.” The markets are as volatile as ever and uncertainty lies in the United States.
It can be hard to think straight in the midst of so much hysteria.
The Dow has had a rough year, but emerging markets have been hit far harder. Once-hot South American markets have taken an even worse beating.
The markets are certainly following the old adage, “When the U.S. sneezes the rest of the world catches a cold.”
The world has changed a lot though and we have to ask ourselves, “Is the adage still true?”
There’s only one way to find out...
Sep 30, 2008
The Bull Market No One is Talking About
By Andrew Mickey
Chief Investment Strategist, Q1 Publishing
The financial world didn’t get its relief yesterday. The bailout plan and any accompanying reprieve just weren’t in the cards. The Dow tumbled and investors rushed to the exits.
I’m not going to harp on the bad news again, I’m sure you’ve heard it all by now. That’s because opportunity is knocking right now.
I will say the bailout plan, or some form of it, will be formalized and approved. Too many politicians have too much riding on it. And then all will go back to normal…for a few days.
We could even get a nice bounce in the markets following the new (and therefore better?) bailout plan that eventually gets approved. If by some miracle the door is slammed shut on banking problems by a swipe of the pen, the next door will open. I’m afraid, what is behind the next door is a lot uglier: the economy.
That’s what really matters here. The economy…it’s always the economy.
When bailout euphoria hit the markets a few weeks ago, we focused on what matters most. Although the U.S. is technically not in a recession yet, we’re headed for one. The looming recession is reducing demand for everything, profits are getting squeezed, and some very smart money is quietly buying some highly undervalued stocks. And we can buy right along with them...
Sep 27, 2008
Why Warren Buffett is Betting on Banks Now
By Andrew Mickey
Chief Investment Strategist, Q1 Publishing
Bank stocks could be the buy of a lifetime right now. The bailout is moving forward, the markets have stabilized, and Warren Buffett has put up a $5 billion bet on Goldman Sachs (NYSE:GS) this week.
Is it time to follow Buffett’s lead and go “all in” on banks now?
The answer is a simple no.
Buffett got a very sweet deal from Goldman that has reduced his risk, gave him a high degree of income, and didn’t eliminate a single cent of the potential profits from the deal. And there’s a little known way we get all that in our investments too. Here's how...
Sep 24, 2008
How to Profit from the $700 Billion Bailout
By Guy Bennett
President, Q1 Publishing
It’s difficult to tell whether the levels of irony are odd or even. America, the bastion of market capitalism, is on the verge of nationalising its banking industry. The $700 billion price tag comes out to about $7,000 per American household.
The Bush Administration attempted to muscle the bailout package through congress with a panicky threat, reminiscent of the build-up to the Iraq War: “Do this now or something terrible will happen!”
Once bitten, twice shy - Congress is taking a few days to mull over its options. Headlines from the business pages trace the outline of the general response: “Congress Condemns Bail-out,”“FBI Investigates Companies at Heart of Meltdown,” and “US Lawmakers Express Anger,” etc..
Sep 23, 2008
The Only Certainty in an Uncertain Market
By Andrew Mickey
Chief Investment Strategist, Q1 Publishing
Don’t let the market rebound last week fool you, cleaning this mess up is going to take quite a while.
Sure, the Dow climbed 700 points in two days to close out last week, most bank stocks roared back to life, and we’ve got a $700 billion commitment from the government, but there are so many questions left to answer.
Will the government buy all the bad loans off the banks? At what price will they pay for them? Who’s going to run this operation? How long will it take to get a bill through Congress? Is $700 billion enough?
The biggest question of all is: when will the U.S. economy recover?
For investors, that is the key. Even if we make it through this immediate banking crisis, the U.S. is still headed toward recession.
We can be certain that uncertainty is domiting the markets,and we can turn all that uncertainty into our own opportunity by...
Sep 20, 2008
The Best Way to Cope With a Wild Market
By Andrew Mickey
Chief Investment Strategist, Q1 Publishing
It’s a bear market…bordering on panic…and most investors have been paralyzed. They feel there is nothing they can do. But that‘s not necessarily the case.
Yesterday two colleagues told me how they are coping with a bear market. I’ll tell you what they’re doing. And then we’ll go over the single best strategy to use now to cope with a bear market.
Sep 17, 2008
How the Smart Get Richer
By Guy Bennett
President, Q1 Publishing
As the bear market deepens success stories are getting harder to find.
So a few eyebrows were raised when a Massachusetts fund recently announced it posted an 8.6% return over the past twelve months. Hours away from Wall Street, this fund masterfully uses a basic investment strategy that many of us have forgotten about.
This fund has trounced the returns of all-star money managers over the same period, beating most of the greats including Warren Buffett, Ken Heebner, Bill Miller, Bruce Berkowitz, Marty Whitman, and T. Boone Pickens.
Sep 15, 2008
What to do During a Market Adjustment
By Andrew Mickey
Chief Investment Strategist, Q1 Publishing
"I know Americans are concerned about the adjustments that are taking place in our financial markets." – President Bush
Adjustment!?!
What on earth is a financial market “adjustment?”
Despite the sugar-coating, President Bush did get one thing right, Americans are concerned. More like afraid. Fear has taken over the markets. And I’ve got to tell you, I’m loving every second of it, and you should be...
Sep 12, 2008
An Ocean of Opportunity in Water
By Guy Bennett
President, Q1 Publishing
The Dow is bouncing up and down like a yo-yo. Every chart looks like a ski slope. A few investors are profiting from these wild market mood swings, while others are seeking refuge in industries that feature non-discretionary items, like water.
Approximately 40% of the world population lacks adequate fresh water. In the next decade an estimated $800 billion is going to be spent globally to bring fresh water to those who don’t have it. With that kind of money flowing into a sector, you can bet now is a time to start paying attention to water.
Water stress is severe in China, India, and Africa and it’s is also rising in developed nations. Sure there are infrastructure issues, but one of the biggest problems is simply a lack of water. Most of the earth’s surface is water, but less than 3% is drinkable.
The world’s freshwater resources are not sufficient to keep up with demand. As the world population grows and water tables decline, a solution has to be developed. Right now, that solution is...
Sep 10, 2008
Expiring Patents Ignite Biotech Boom
By Andrew Mickey
Chief Investment Strategist, Q1 Publishing
It’s tough to find anything positive to talk about in this market.
The U.S. Government stepped in and assigned Fannie Mae (NYSE:FNM) and Freddie Mac (NYSE:FRE) a value of zero through governmental decree.
Even a cutback in oil production from OPEC can’t stop oil prices from falling. Gold, silver, and fertilizer stocks are falling too. Even Brazil’s stock market, the top-performing BRIC nation of 2008, is starting to fall.
It’s bad out there for most industries. But there’s no sector worse off than the pharmaceutical sector. Big Pharma stocks like Pfizer (NYSE:PFE), Merck (NYSE:MRK), and Glaxosmithkline (NYSE:GSK) are having a rough time and it looks like more stormy weather ahead. And these companies are giants headed for a fall.
Sep 8, 2008
Which Candidate is Best for Your Portfolio?
By Andrew Mickey
Chief Investment Strategist, Q1 Publishing
To say uncertainty is dragging down the markets is an understatement.
The financial crisis continues to unravel in the United States. Every financial commentator is talking up the U.S. government’s list of more than 100 “problem banks.”
Fears of another Asian financial crisis are gaining steam. The Thai baht, the Russian ruble, and the Chinese yuan are all well off their highs and in a downtrend. Even commodities are getting rocked. Precious metal, oil, natural gas, and base metals are all in freefall.
Yet there are some surprises...
Sep 5, 2008
RUST BELT REVIVAL: FROM DOOM TO BOOM
By Andrew Mickey
Chief Investment Strategist, Q1 Publishing
The locals call it “The Pointes.”
Gross Pointe was one of the highest rent neighborhoods in the country. It sits between Detroit and Lake St. Clair. Its wooded scenery, mild summer weather, and proximity to industrial areas have made it a popular residential neighborhood for industrial titans for a century.
The Pointes was one of the hottest real estate markets in the 1920’s. You had to have a mansion in Gross Pointe If you were an executive in Detroit’s booming auto industry.
Flash forward 90 years and we’ve got a completely different picture.
Sep 3, 2008
Forget Oil, This is China’s Biggest Shortage
By Guy Bennett
President, Q1 Publishing
In 2007 approximately 280,000 Chinese children under the age of five died from preventable diseases caused by lack of clean drinking water.
According to the UN, contaminated drinking water causes five times the number of child deaths than are caused by HIV/AIDS.
More than 300 million rural Chinese citizens lack access to clean drinking water. Sewage is often dumped into the fields creating a breeding ground for disease in rural China.
The World Bank estimates that health and environmental problems cost the Chinese about $50 billion a year.
Sep 2, 2008
Cameco Must Go Shopping, Here’s How to Take Advantage
By Andrew Mickey
Chief Investment Strategist, Q1 Publishing
It’s called “burying.”
Governments have turned it into an art form.
At some time or another, every major organization is forced to release some bad news that they would like to hide.
But they can’t hide it. So they bury it.
Aug 30, 2008
$450 BILLION INDUSTRY ACHEIVES 100% GLOBAL PENETRATION
By Guy Bennett
President, Q1 Publishing
Bill Gates can’t live without his. Factory workers in Xiamen need it. Nomads on the Sahara desert fought wars over it.
It’s more important than oil.
It’s a $450 billion industry growing globally at a double-digit clip.
Investor attention in this sector is heating up, and it’s a good time to get in.
Yes, I’m talking about water.
Aug 28, 2008
CIBC REPORT: “THE RACE IS ON TO RAMP UP CAPACITY...”
By Guy Bennett
President, Q1 Publishing
Buried deep in a recently released 70-page report, analysts at CIBC, Canada’s 4th largest bank, states:
"With the lack of announced greenfield projects needed to match growing demand in the next six to eight years, we believe the race is on to ramp up capacity, to take advantage of current potash prices of US$1,000/t or more."
CIBC goes on to detail the now all too familiar macro-fundamentals that have made potash into the top story so far in 2008. This is great news for Potash One (TSX:KCL), who were one of the earliest movers into potash.
Aug 26, 2008
The Last Time This Happened, Investors Made 5,973%
By Andrew Mickey
Chief Investment Strategist, Q1 Publishing
Crisis investing is not an easy thing to do. It takes nerves of steel. After all, buying what no one else is willing to seems absolutely foolish. But in the markets, history has proven repeatedly that crisis investing can be extremely profitable.
In 1998 the Russian financial crisis nearly put a stop to the runaway gains the Dow and Nasdaq scored almost every day. Russia ran out of money. Rock bottom oil, natural gas, metals and timber prices pushed the Russian economy to the brink of disaster. The country couldn’t make the interest payments on its debt. The whole world was about to foreclose on Russia. It was a complete disaster.
Aug 23, 2008
RECESSION PROOF INDUSTRY GAINS 27% IN 2008
By Guy Bennett
President, Q1 Publishing
When the economy falls, the demand for escapist entertainment rises. History has proven this over and over again. During “The Great Depression” (1929 – 1939) 25% of American families had no income and 40% of factory workers were unemployed. In 1930 there were 200,000 evictions in New York City alone.
Despite this, movie box office receipts during the 1930s soared 22%. In many cases people elected to see a movie, rather than eat. That’s how desperately North Americans needed to escape (mentally) from the weight of their problems.
And if you think things are different now, think again.
Aug 21, 2008
COMMODITIES: BRIEF CORRECTION OR BURSTING BUBBLE?
By Andrew Mickey
Chief Investment Strategist, Q1 Publishing
“When investors cast aside the lessons of history, those lessons come back to haunt them.” – Martin Meyer, Markets
It’s a tough time to be an investor. A financial crisis and housing downturn in the United States has dragged down the markets. The world’s largest economy is headed straight for a recession. Meanwhile, inflation is rising in the U.S. and downright surging around the world.
Investors are very afraid right now. Over the medium term, however, the global economy is still strong. Copper, one of the best economic indicators, is still well above $3 and doesn’t show much weakness. The economy will recover. . It always does.
Aug 18, 2008
HOW TO TAKE ADVANTAGE OF A $7 BILLION SCAM
By Guy Bennett
President, Q1 Publishing
As money continues to flow out of the resource and energy sectors (it’s a correction folks - not the end of the Supercycle) investors are turning to tech stocks to rebuild their damaged portfolios. Last week I wrote about some tech companies that are thriving during the economic downturn by helping corporations cut costs (Tech Sector Provides Safe Haven).
Those tech companies have watched their shares outperform the markets in recent months. It’s been a great place to be while the rest of the market is falling apart. Of course, cost-cutters are not the only tech sub-sector doing well right now.
There is another one: internet fraud prevention.
Aug 14, 2008
TECH STOCKS PROVIDE SAFE HAVEN
By Guy Bennett
President, Q1 Publishing
The Dow continues its downward spiral. The financial, housing, and retail sectors are in the tank. Even high-flying oil, gold, and agriculture stocks have been pounded in recent weeks..
A few commentators have started comparing the commodity correction to the tech crash of 2001. That’s an overstatement. The declines are not vertical and there will be a time to reinvest in commodities.
This time, the tech sector is not the villain. In fact it’s been the saviour.
Aug 11, 2008
WRONG TIME TO BAIL OUT OF VENEZUELA
By Guy Bennett
President, Q1 Publishing
On August 5th, 2008 Venezuelan President Hugo Chavez issued 26 new laws edging the country deeper into a Cuban-style socialism.
Chavez has declared that the country “will favour national interests over foreign interests.”
Predictably, Crystallex (AMEX: KRY) sunk 14% on the news.
They have been developing the Las Cristinas Mine in the environmentally sensitive Imataca Forest. The property holds an estimated 17 million ounces of gold.
Every time Chavez opens his mouth, Crystallex shareholders get kicked in the gut.
Jul 31, 2008
THE MAJORS GO SHOPPING – WHO’S NEXT?
By Guy Bennett
President, Q1 Publishing
www.q1publishing.com
Today, Goldcorp (NYSE: GG) announced that it is planning to buy Canadian junior, Gold Eagle Mines (TSX: GEA) for $1.5 billion. Last week Kinross Gold Corp (TSX:K) made a friendly $1.2 billion all-stock offer for Aurelian Resources Inc. (TSX: AUR) .
In the last 24 months, many juniors have proved up their resources in a climate of soaring metal prices only to see their stock price chopped in half.
Junior Resource Explorers are now so cheap that if the retail investors don’t buy them, the majors will.
Jul 24, 2008
WHY THE DOW IS GOING TO 8,000 AND AMERICA IS STILL GREAT
By Guy Bennett
President, Q1 Publishing
www.q1publishing.com
“I predict future happiness for Americans if they can prevent the government from wasting the labors of the people under the pretence of taking care of them.” - Thomas Jefferson
When Miss USA collapsed to the floor during the Miss Universe Competition in Mexico last week - for the second year running - the symbolism was complete.
The beauty queen has lost her confidence and her grace.
Jul 16, 2008
WILL COAL STOCKS GET YOU BACK IN THE BLACK?
By Guy Bennett
President, Q1 Publishing
www.q1publishing.com
How hot is coal?
Goldsource Mines Inc. (GXS: TSX-V) were searching for diamonds in Saskatchewan last May when they stumbled on a high quality coal seam and their stock soared 9,100% in 3 months.
The irony of a diamond exploration company striking it rich by discovering coal can hardly be overstated.
Supply shortages create opportunities for investors.
Jun 11, 2008
Follow the Big Money To Big Profits
I was watching Italy lose to The Netherlands in the Euro 2008 tournament a couple of days ago when a BBC analyst commented dryly that Italian centre back Marco Materazzi, “needs to be better”.
This reminded me of the oft-repeated advice to investors to “Buy Low - Sell High”.
Materazzi knows that “being better” would be a good strategy - but easier said than done.
Retail investors (regular folks like you and me) want to “be better” and “buy low” – but unfortunately the majority of investors have difficulty doing this.
The most successful investors have disciplined themselves to think and act counter-intuitively, by positioning themselves in stocks that look weak (undervalued) and avoiding those that appear strong (over-valued).
What can investors do to change their psychology and profit from this simple formula that is so easy to understand, and yet so difficult to execute?
The answer to that question could - and does - fill volumes.
But there is one under-utilized strategy that will radically increase your chances of picking a winner.
Find out where the BIG money is and place your bets on them.
Apr 26, 2008
Potash Makes Plants and Bank Accounts Grow
If Potash were a movie it would be “Little Miss Sunshine”. A feel-good investing story brimming with upbeat subplots, it is impossible to dislike. Let’s get rich while feeding the hungry.
Potash is mined from deposits left behind when ancient sea beds evaporated. 95% of the world’s Potash supply is used in fertilizer. There is no commercial substitute. Surging global demand is being driven by macro-economic factors like global population growth, a decrease in arable land and increased consumption of meat in India and China.
Subprime mortgage fallout? A pull back on gold? Recession in the US? Not a concern for stakeholders in the Potash industry. As one wag put it: “As long as people are eating and having sex – Potash prices will continue rising”.
Apr 25, 2008
About Q1 Publishing
Q1 Publishing is committed to providing investors with well-researched, level-headed, no-nonsense, analysis that will allow you to secure enduring wealth and independence.
The financial world is filled with a lot of “noise.” We will filter out 98% of it by getting on planes, talking to CEOs, touring factories, studying financial reports – and generally doing the trench work that you are too busy to do.
We will also detail the simple strategies used by world’s wealthiest and most successful investors on how to attain, maintain, and grow your wealth.
Q1 is dedicated to the idea that your portfolio should be working for you, not the other way around. In less than 20 minutes a week, we can give you the freedom to enjoy your life, without worrying about gyrations in the stock market.
Guy Bennett
President, Q1 Publishing
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